As the football season draws to a close, Premier League clubs collected a new record of £4.5bn in revenues last year up from £3.6bn the previous year, with wage costs across the league rising by 9% to £2.5bn, according to research from Deloitte
In the 2106/17 football season UK clubs generated a combined operating profit of £1bn and reported £500m in pre-tax profit, breaking another record.
Wages across the teams increased by 9% to £2.5bn up from £2.3bn the previous season.
Dan Jones, partner and head of the Sports Business Group at Deloitte, said: ‘As predicted last year, the Premier League’s three year broadcast deals which came into effect in the 2016/17 season helped drive revenue to record levels.
‘Despite wages increasing by 9% to £2.5bn, this increase is nowhere near the level of revenue growth noted. This relative restraint from Premier League clubs reflects both the extent of their financial advantage over other leagues and the impact of domestic and European cost control measures.’
Attempts to control clubs’ wages, spending only 23p of every extra £11 of revenue on increased wages, has seen an increase in operating and pre-tax profits.
All 20 Premier League clubs made an operating profit and 18 of 20 recorded a pre-tax profit. The collective revenue to wage ratio is down from 63% to 55% in the 2016/17 season, the lowest since the 1997/98 season.
Premier League teams have collectively made a pre-tax profit in three out of the last four years and, despite clubs posting a collective pre-tax loss in 2015/16 season (due to a small number of one-off exceptional costs), it is likely that profits will continue to rise.
Jones said: ‘Although we anticipate wage costs will continue to rise in the coming seasons, we do not foresee increases to be at a level which can jeopardise the profitability of the Premier League as a whole. The most significant wage increases have tended to occur in the year prior to the commencement of a new broadcast cycle once a substantial revenue increase is secured.
‘Despite the lack of growth in domestic broadcast deals announced to date, we still expect to see overall revenue growth in the coming seasons, and if this is complemented with prudent cost control, we expect that pre-tax profits will be achieved for the foreseeable future.’
Report by Amy Austin
