Premier League rewards rising quicker than revenue

THE Premier League continues to buck the economic downturn with total revenue exceeding £2bn for the first time, according to figures released today.

Deloitte’s Annual Review of Football Finance, which covers the 2009-10 season that saw Hull City as Yorkshire’s only representative in the top flight, shows that the total income for the 20 elite clubs was significantly bolstered by a seven per cent rise in cash from broadcast deals (£1,040m).

However, despite this £49m increase in revenue to £2,030m, total wage costs (£64m) rose at a faster rate to leave a record wages/revenue ratio of 68 per cent.

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Alex Byars, senior consultant in the Sports Business Group at Deloitte, said: “Of the £49m increase in Premier League clubs’ revenue, less than 10 per cent (£4m) fed through to operating profits, which increased from £79m to £83m.

“The challenge for clubs continues to be converting impressive revenue growth into sustainable profits that allow for investment in both infrastructure and talent.

“The record pre-tax losses of £445m in 2009-10 are a concern. It may also, in part, explain why gross transfer spending by Premier League clubs decreased by more than 20 per cent from the record £713m in 2008-09 to £559m in 2009-10.”

Deloitte’s 20th Annual Review also revealed that revenue in the Football League Championship exceeded £400m for the first time, a rise of around nine per cent on the previous season.

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Alan Switzer, director of the Sports Business Group at Deloitte, said: “The Football League’s achievement in attracting fans and growing revenues is often overlooked.The Championship is the third-best attended League in Europe, ahead of the top divisions in Spain, Italy and France.”

Switzer added: “While revenues have held up well, a wages/revenue ratio of 88 per cent is a cause for concern and will need to be addressed by the Championship clubs – particularly given that Football League clubs have been put on notice about the need to rein in spending due to the forthcoming 25 per cent reduction in the value of live TV rights, effective from 2012-13.

“The Football League has calculated that over 80 per cent of contracts will have expired before the new TV deals start, which gives clubs time to reduce their cost base.”

Clubs in the second tier of English football are set to introduce their own financial fair play system where teams can only spend what they earn.

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Football League chairman Greg Clarke has revealed that the Championship clubs have voted in principle to mirror the UEFA system that will affect clubs in European competition from 2014.

The system will be proposed at the Football League’s agm in Cyprus today. A proposal for League One clubs to move towards the introduction of the salary cap currently in force in League Two, where teams can spend a maximum of 60 per cent of their turnover on wages, is also set to be put forward.