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Deloitte report on football finance

The publication of the authoritative and comprehensive Deloitte report on football finance is always one of the highlights of the year for those of us interested in the business side of football. It shows that the new television rights deal sent the revenue of Premiership clubs soaring to £1.932m in 2007/8 and revenues are estimated to have reaching £2bn in 2008/9.

In a sign of football's resilience to the economic downturn, Deloitte expects England's top clubs will continue to grow revenue in 2009/10, albeit at a slower pace. Dan Jones, a partner in Deloitte's Sport Business Group commented, 'The domestic and international popularity of the Premier League continues to generate remarkable growth. Between 1992 and 2008, revenues for the top 20 clubs grew at a compound rate of 16 per cent, compared with 5.4 per cent for the UK economy as a whole. Revenue increased by 26 per cent in 2007/8 and Premier League clubs generated £800m more revenue than their nearest rivals in the other "big 5" leagues'.

Jones admitted, 'It will, of course, be hard to maintain this pace in the immediate future. The new economic realities may lead to flat matchday revenues. While attendances continue to hold up well, many clubs have frozen or reduced ticket prices. However, the stepped increases in the current domestic broadcast deal and the new UEFA Champions League TV deal make it likely overall revenues will edge up.' The majority of the increased broadcast revenue has been spent on player wages and transfers. Wage costs in the Premiership increased by £227m (23 per cent) in 2007/8 to reach £1.2 billion, the biggest increase recorded by the Premiership. Spending in both the Summer 2008 and January 2009 transfer windows reached record levels with an estimated £675m investment in new players.

Alan Switzer, director in Deloitte's Sport Business Group, commented: 'Despite this increase in wage costs, Premier League clubs improved their wages/revenue ratio to 62 per cent and generated record operating profits in 2007/8 of £185m. However lower revenue growth in forthcoming seasons means clubs will have to focus on improving their cost control - both wages and other operating costs - if profits are to be maintained.' Paul Rawnsley, Director in Deloitte's Sport Business Group commented, 'While debt in the Premier League has risen, two thirds of the debt is in respect of just four clubs - Arsenal, Chelsea, Liverpool and Manchester United - and around £1.2 billion is non-interest bearing "soft loans".

On the positive side of the balance sheet, these four clubs also had £1 billion of assets in respect of investment in stadia and other facilities and a further £450m investment in players. Debt is not necessarily a bad thing, so long as it is manageable within a club's finances and is sustainable and repayable.' 

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