Premier League football clubs’ revenue reached a record £2.5bn last year, driven by a 21% rise in commercial revenue, but wages are consuming an ever larger proportion of club earnings while the UK tax take from the sector hit £1.3bn, according to Deloitte.
Deloitte’s 23rd Annual Review of Football Finance shows that over 75% of the Premier League clubs’ revenue increase in 2012/13 was spent on wages, which rose by £125m (8%) to £1.8bn, putting the wages to revenue ratio at a record 71%.
In total, the revenue of the top 92 clubs in English football reached almost £3.2bn. Deloitte calculates that the government’s tax take from professional football clubs was around £1.3bn in 2012/13.
Premier League clubs generated the highest revenue of any league in Europe in 2012/13, followed by Germany (£1.7bn), Spain (£1.6bn), Italy (£1.4bn), and France (£1.1bn). The German Bundesliga remained Europe’s most profitable league with operating profits of £226m, followed by the Premier League, with operating profits of £82m.
Dan Jones, partner in the Sports Business Group at Deloitte, said: ‘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.’
Deloitte is predicting that Premier League clubs will post a hike of around 30% in revenues for the season which has just finished, as a result of new broadcast deals and further commercial revenue growth. The firm estimates revenues will hit £3.2bn in 2013/14.
Wages costs are also expected to have gone up, as they have done previously when broadcast deals improved. Adam Bull, senior consultant in the sports business group at Deloitte, said: ‘On that basis, we would expect Premier League total wage costs to reach a new record level of around £2.2bn. 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.’
Net debt in respect of Premier League clubs was £2.5bn, an increase of £139m (6%) on 2012. Of that total, almost two thirds (£1.6bn) 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).
Deloitte’s research also shows the 2012/13 season was a particularly bleak year for the finances of the Championship clubs, where a revenue reduction of £39m was compounded by a £40m increase in wage costs, leading to record operating losses of £241m. The introduction of the Championship Financial Fair Play Rules is designed to tackle ballooning costs, which saw the wages to revenue ratio reach 106%.
