21% growth in commercial revenue helps Premier League club revenue top £2.5bn for the first time

Premier League clubs’ revenue reached a record £2,525m in 2012/13, according to the 23rd Annual Review of Football Finance from the Sports Business Group at Deloitte. In total, the revenue of the top 92 clubs in English football reached almost £3.2 billion.

Dan Jones, Partner in the Sports Business Group at Deloitte, commented: “Once again the global appeal of the Premier League has continued to drive commercial revenue growth, particularly at the highest ranked Premier League clubs. Matchday revenue also increased by 6% with fewer unsold seats at Premier League games than ever before.”

Jones also noted that the Premier League clubs will receive another significant increase in revenue in 2013/14: “We estimate that Premier League clubs’ revenue will have increased by almost 30% to £3.2 billion in 2013/14. This growth will be driven by the revenue from the first season of the Premier League’s new broadcast deals and further commercial revenue growth at the biggest clubs.”

Over 75% of the Premier League clubs’ revenue increase in 2012/13 was spent on wages, which rose by £125m (8%) to £1.8 billion and resulted in the overall Premier League clubs’ wages to revenue ratio reaching a record high of 71%.

This led to the aggregate operating profit falling by £2m to £82m, an operating margin of just 3% of revenue. However, 13 of the Premier League clubs made an operating profit in 2012/13 compared with 10 in the previous year.

Adam Bull, Senior Consultant in the Sports Business Group at Deloitte, added that wage costs are forecast to increase again in 2013/14: “The pattern in spending on wages following previous increases in broadcast deals, suggests it’s likely around 60% or more of the revenue increase in 2013/14 will flow through to wages. On that basis, we would expect Premier League total wage costs to reach a new record level of around £2.2 billion. However, given the forecast increase in revenue, this would also return the wages to revenue ratio below 70% for the first time since 2009/10.”

The 2012/13 season was a particularly bleak year for the finances of Championship clubs. A revenue reduction of £39m was compounded by a £40m increase in wage costs, leading to record operating losses of £241m. Pre-tax losses also increased by £170m, equivalent to an additional £7m per club, to £323m.

Bull commented: “The 2012/13 wages to revenue ratio for Championship clubs of 106% is the highest ever recorded by an English division and is clearly unsustainable without ongoing owner support. The introduction of the Championship Financial Fair Play Rules was widely seen, and advocated by the clubs who voted it in, as a necessary step to change clubs’ behaviour. The severity of the punishments applied to those who have not complied with the rules in the 2013/14 season and the eventual result of efforts to change the rules, will determine the extent to which they present an effective deterrent to widespread overspending.”

Other key findings of the Deloitte Annual Review of Football Finance 2014 include:

• The total European football market grew to a record £17.1 billion (€19.9 billion) in 2012/13;
• Premier League clubs generated the highest revenue (£2.5 billion) of any league in Europe in 2012/13, followed by Germany (£1.7 billion), Spain (£1.6 billion), Italy (£1.4 billion), and France (£1.1 billion);
• The Bundesliga remained Europe’s most profitable league with operating profits of £226m, followed by the Premier League, with operating profits of £82m;
• Average league capacity utilisation at Premier League clubs of 96% in 2013/14 was the highest level recorded in Premier League history and the 17th consecutive season above 90%;
• The top 92 English clubs invested £211m in stadia and facilities in 2012/13, the highest amount of capital investment since 2006. Capital investment by clubs across the top four divisions since the Premier League began has now exceeded £3.5 billion;
• Net debt in respect of Premier League clubs was £2.5 billion, an increase of £139m (6%) on 2012;
• The Government’s tax take from the top 92 professional football clubs was around £1.3 billion in 2012/13.

Of the £2.5 billion net debt in the Premier League, almost two thirds (£1.6 billion) is in the form of non-interest bearing ‘soft loans’ of which over 90% related to four clubs - Chelsea (£984m), Newcastle United (£266m), Queens Park Rangers (£166m) and Aston Villa (£72m).

End

Notes to editors:

Exchange rate
The exchange rate at 30 June 2013 has been used to convert figures between Euros and Pounds Sterling (£1 = €1.1668).

About the Sports Business Group at Deloitte
Over the last 20 years Deloitte has developed a unique focus on the business of sport. Our specialist Sports Business Group offers a multi-disciplined expert service with dedicated people and skills capable of adding significant value to the business of sport. Whether it is benchmarking or strategic business reviews, operational turnarounds, revenue enhancement strategies or stadium/venue development plans, business planning, market and demand analysis, acquisitions, due diligence, expert witness, audits or tax planning; we have worked with more clubs, leagues, governing bodies, stadia developers, event organisers, commercial partners, financiers and investors than any other adviser.

For further information on our services you can access our website at www.deloitte.co.uk/sportsbusinessgroup.

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