Premier League clubs defy global recession

Premier League clubs continue to defy the global recession as a new report shows revenue from the top 20 teams in England reached a record 1.981 billion pounds in 2008-09 and is likely to have exceeded two billion pounds in the 2009-10 season.

According to the latest Annual Review of Football Finance from the Sport Business Group at Deloitte, new broadcast contracts will drive a further increase in revenues to 2.2 billion pounds in 2010-11.

In total, the 92 English clubs saw revenues increase by 100 million pounds to over 2.5 billion pounds in the 2008-09 season.

Dan Jones, Partner in the Sports Business Group at Deloitte, said: “Despite the sharp economic contraction, Premier League clubs were able to increase revenues by 3% in 2008-09.

“Whilst commercial income fell marginally, both matchday and broadcasting revenues increased. For the 2009-10 season just ended, combined attendances for the Premier League and Football League exceeded 30 million — a level not seen since well before the introduction of all seated stadia.

“When you factor in the recently negotiated Premier League overseas broadcast deals, which come into effect from 2010-11, football has shown remarkable recession resistance during these difficult economic times.”

While the overall picture remains bright for English football’s big-guns, the problems of Portsmouth, who last season became the first Premier League club to go into administration and have debts of 130 million pounds, show that owners of less powerful teams must keep a tighter rein on spending.

The Deloitte reports shows that Premier League clubs’ operating profits more than halved from 185 million pounds in 2007-08 to 79 million pounds in 2008-09.

“The challenge for clubs continues to be converting their impressive year on year revenue growth into sustainable levels of profits that allow for continued investment in infrastructure and talent,” Jones said.

“This is particularly the case as credit is likely to remain less available to football clubs than it was two or three years ago.”

The 49 million pounds increase in Premier League clubs’ revenue was less than half the 132 million pounds increase in wage costs, driving total wages up to more than 1.3 billion pounds.

Gross transfer spending by Premier League clubs also increased from 664 million pounds in 2007-08 to a record 713 million pounds in 2008-09.

Alan Switzer, Director in the Sports Business Group at Deloitte, added: “The record wages to revenue ratio of 67% in the Premier League in 2008-09 is a concern, and we expect wages growth to outstrip revenue increases again in 2009-10.

“This will further reduce operating profitability, a decline that cannot continue indefinitely. However, clubs have the opportunity, via the revenue uplift from the new broadcast deals from 2010-11, to get wage levels down to a more sustainable share of revenue. It’s not the first such opportunity. It remains to be seen whether they grasp it.”

Meanwhile, the report showed Premier League clubs generated the highest revenue (two billion pounds) of any league in Europe in 2008-09, followed by Germany, Spain and Italy (each 1.3 billion pounds).

However, the Premier League lost its status as the most profitable football league in the world for the second time in three years, again to the Bundesliga.