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Premier League clubs record their first profit for 15 years
26 March 2015
Premier League clubs generated a combined pre-tax profit of £190m in 2013/14, according to Deloitte, the business advisory firm. The first pre-tax profit in 15 years, the figure is almost four times greater than the previous record of £49m set in 1997/98. This is in sharp contrast to the £2.6 billion of pre-tax losses accumulated over the previous decade.
At an operating profit level, which excludes player trading, net interest charges and the amortisation of player contracts, Premier League clubs recorded a staggering £620m. This is over three times previous record of £185m in 2007/08, seven-and-a-half times the £82m recorded in 2012/13 and greater than the previous six seasons combined.
Dan Jones, Partner in the Sports Business Group at Deloitte, explained: “Last season was the first in the Premier League’s current three-year broadcast deal, which was a record breaker when it was struck. Combined with strong commercial growth at the highest revenue generating clubs, this has boosted Premier League revenue 29% to a record £3.3bn. However, despite this extra income clubs showed relative restraint in wage costs, which grew by 6% to £1.9bn.
“In the first year of the preceding two broadcast deals, 56% and 81% of respective revenue growth was absorbed by wage costs. This time it is less than 20%. Over the previous ten seasons wages grew by around 9% per year, which is higher than the average annual revenue growth of 7% over that period, demonstrating further what a remarkable turnaround the 2013/14 figures represent.”
This restraint has seen the Premier League’s wages/revenue ratio fall from the 2012/13 record high of 71% to just 58%, the lowest since the 1998/99 season.
Adam Bull, Senior Consultant in the Sports Business Group at Deloitte, said: “The introduction of cost control regulations at both a European and domestic level has caused many clubs to watch their spending more closely than ever before and created a useful tool for clubs to reduce the inflationary pressures during negotiations with players and agents. Also, the current broadcast deal has given Premier League clubs such a large revenue advantage over the vast majority of European clubs that they can still attract the top playing talent without over stretching themselves financially.”
With this record profit, the question now will be whether we are at the start of a new era of responsible spending and sustained profitability, and if so, how clubs will spend this money.
Jones, concluded: “The primary aim of a football club is, and always should be, on-pitch success for the fans. However, we do welcome these results, which show that the Premier League clubs are starting to convert their impressive revenue growth into a more sustainable net result. With the recent announcement of another record Premier League broadcast deal, the revenue increases show no sign of ending and should make this season’s profit a regular outcome. Such profits provide the clubs with a great opportunity to invest further in their facilities and youth development activities, but will also no doubt make Premier League clubs even more attractive to potential investors than they already were. They can now be reasonably profitable businesses as well as trophy assets.”
Notes to editors
Operating profit and profit before tax for premier league clubs 1998/99 to 2013/14
Note: Operating profit/ (loss) is defined as operating profit excluding amortisation of player registrations, profit/ (loss) on player disposals and certain exceptional items.
Source: Deloitte Analysis
Source: Deloitte Analysis
The analysis of the financial results of Premier League clubs for 2013/14 has been based on figures extracted from the latest available company or group financial statements in respect of each club and, for a few clubs, informed estimates.
In general, the financial figures are extracted from the annual financial statements of the legal entity registered in the United Kingdom which is at, or closest to, the ‘top’ of the ownership structure in respect of each club. In some cases Deloitte has made adjustments to club’s figures to enable, in our view, a more meaningful comparison of the football business on a club by club basis and over time.
The published financial statements of clubs rarely split wage costs between playing staff and other staff. Therefore, references to wage costs relate to total wage costs, including both playing staff and other staff. For the purpose of this analysis, references to operating result (profit or loss) is the net of clubs’ revenues less wages and other operating costs, excluding player trading (amortisation of transfer costs and profit/loss on disposal of players) and certain exceptional items.
For more than 20 years Deloitte has documented clubs’ business and commercial performance in the Deloitte Annual Review of Football Finance, applying consistent methodologies. The next edition of the Deloitte Annual Review of Football Finance will be published shortly after the end of the 2014/15 season, and will include more in-depth analysis including financial analysis on a club by club basis. More information about previous editions of the Deloitte Annual Review of Football Finance can be found on www.deloitte.co.uk/arff.
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.
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.
Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.
The information contained in this press release is correct at the time of going to press.
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