Premier League football clubs saw revenues and profits soar to record levels last season with English Premier League clubs now raking in more than those of Spain’s La Liga and Italy’s Serie A combined.
A £5.6billion TV rights deal combined with the impact of Financial Fair Play (FFP) regulations, boosted Premier League clubs collective profit for the first time in fifteen years.
The total combined revenue of the 20 top tier clubs in 2013-14 was £3.26billion; a rise of 29% compared to the previous year, while pre-tax profits of £187million was Premier league first since 1998/99 Season.
Manchester United posted the highest turnover of £433million while Cardiff City’s £83million was the lowest, according to reports published by Deloitte.
Operating profits also increased massively by 649% from £532million to £614million, beating the previous record by nearly £430million.
Deloitte report revealed a gap in revenues between England’s top division and those in Europe, with the Premier League raking in over £1billion more than its nearest rival, Germany’s Bundesliga, and more in total than Spain’s La Liga and Italy’s Serie A combined.
European football’s governing body UEFA introduced the FFP rules to improve club finances, requiring them to break-even or face sanctions.
The new rules allow overspend on income generated and encourage investment in facilities and youth development but also provide some limitations on the amount investors may be expected to lose.
Dan Jones, partner at Deloitte’s Sports Business Group, analysed the impact of FFP to the Bosman ruling, which radically improved football by allowing players to become free agents at the expiration of their contract.
“We suggested last year that Financial Fair Play could be the most significant development in the football business since the Bosman ruling. Early signs are that this is the case,” he said.
“Following recent announcements of commercial deals for a host of the largest clubs, we expect the Premier League to surpass the Bundesliga in commercial revenue terms and hence lead the world in all three key revenue categories from 2014-15.”
“Indeed the change in club profitability in 2013/14 was more profound than anything we could have forecast.
“This year’s edition may mark a turning point in football finance and the dawn of a new age of significant profitability for Premier League clubs,” Jones added.
Sky and BT will pay a combined £1.7billion a season to show Premier League matches, an increase of over £1.1billion compared to just four years previously.
Matches are broadcast to over 645 million homes across 212 territories. Players come from over 50 countries and the majority of clubs have main sponsors from overseas.
More than half of the 2014/15 Premier League clubs have a majority owner born outside the UK.
Broadcast revenue reached £1.76billion in 2013/14; the league’s highest revenue stream accounting for 54% of total revenue, and the increase in profitability could attract future investment.
“The transformation of Premier League club profitability reported here will fuel even greater global investor interest in Premier League clubs.
“With significant future revenue growth already secured through the recently agreed domestic broadcast rights deals from 2016/17 to 2018/19, as well as the success of cost control regulations, the risks associated with investment in Premier League clubs seem to be diminishing.”
Nineteen of the twenty of EPL clubs recorded an operating profit, amounting to £614million.
Championship revenue also increased by 12% to a record of £491million, driven by a rise in parachute payments to clubs relegated from the Premier League.
Total wage costs in the Championship exceeded £500million for the first time, with the wages-revenue ratio over 100 per cent for the second consecutive season.
Deloitte cautioned against overspending.
“With wage costs still exceeding revenues across the division as a whole, only increases in Premier League parachute payments were able to stop the league from having a truly disastrous financial picture,” Jones concluded.
Anthony Nlebem
@AnthonyNlebem
