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Swansea's success, Cardiff's failure

Football finance in 2010/11 has been at the forefront of news this week with the publication of the Deloitte report and while Swansea have the lowest revenues and wage bill of any of the three clubs promoted to the Premiership in 2011, Cardiff's failure to gain promotion came at a cost.

Only six Championship clubs made a bigger loss than the Bluebirds in the 2010-11 season, according to an annual report into football finances. In Dave Jones’ final season as manager the club’s annual loss was just over £12m.

However, that figure pales in comparison with the £25.4m pre-tax loss posted that season by promotion-winning Queen’s Park Rangers, only three Championship teams made a profit during the year – Leeds United, Scunthorpe and Watford.

One alarming statistic in the Premier League was that Player Wages / Turnover ratio was 70% which is clearly unsustainable in the Championship.

Swansea’s wage bill doubled on the previous year, increasing by 109% from the £8.3m the club paid its players in the 2009-10 season. However, the significant rise is likely to be due to the bonuses paid out by the club during the promotion winning season.

Cardiff did make a £460,000 profit on its transfer activity, but delivered a pre-tax loss for the year of more than £12m.

Adam Bull, consultant in the sports business group at Deloitte, commented:

“Despite the increase in revenue generated by Premier League clubs, operating profits reduced by £16m (19%) to £68m in 2010/11 and combined pre-tax losses were £380m.

“The challenge for clubs remains converting impressive revenue growth into sustainable profits. This will become even more important for a number of clubs as the financial results for 2011/12 will, for the first time, count towards their UEFA Financial Fair Play break-even calculation.”

Alan Switzer, director in the Sports Business Group at Deloitte, said people should not underestimate the importance of the Championship.

“The Football League’s achievement in attracting fans and growing revenues is often overlooked,” he said.

“The Championship is the fourth best attended league in Europe, ahead of the top divisions in Italy and France.

“Whilst Championship revenues have held up well, a wages/revenue ratio of 90%, combined operating losses of £130m and record pre-tax losses of £189m, are a cause for concern.

Cardiff's wage bill reflects the club's Premier League ambitions but even with continued financial support is unsustainable as a long term objective.


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