Figures revealed by Deloitte in the 21st Annual Review of Football Finance showed that profits dropped by £16m in 2010/11.
Revenue in the Premier League, however, reached a record £2,271m and there was an increase of nine percent to £2.9billion across the top four tiers of the English game.
More than 80 per cent of the Premier League clubs’ revenue increase was spent on wages, which increased by £201m (14 per cent) to almost £1.6 billion, and resulted in a record Premier League wages/revenue ratio of 70 per cent.
Adam Bull, Consultant in the Sports Business Group at Deloitte, said: “Despite the increase in revenue generated by Premier League clubs, operating profits reduced by £16m (19 percent) to £68m in 2010/11 and combined pre-tax losses were £380m.
“Gross transfer spending by Premier League clubs increased by £210m (38 per cent) to a record level of £769m. The challenge for clubs remains converting impressive revenue growth into sustainable profits. This will become even more important for a number of clubs as the financial results for 2011/12 will, for the first time, count towards their UEFA Financial Fair Play break-even calculation.”
Revenue in the Championship increased by £17m (4 per cent) to £423m, prompted by an increase in the solidarity payments from the Premier League and the promotion of some larger clubs into the division.
Alan Switzer, Director in 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 fourth best attended League in Europe, ahead of the top divisions in Italy and France.
“Whilst Championship revenues have held up well, a wages/revenue ratio of 90 per cent, combined operating losses of £130m and record pre-tax losses of £189m, are a cause for concern,” he added. “It is therefore encouraging that in April 2012 Championship clubs agreed to the implementation of new financial fair play regulations that aim to help clubs reduce the level of annual losses.”
Dan Jones, Partner in the Sports Business Group at Deloitte, said: “Top clubs in English football have continued to show impressive revenue growth despite a difficult economic climate. Premier League clubs’ revenues increased by 12 per cent in 2010/11, driven by broadcast revenue increasing by 13 per cent to £1,178m in the first year of a new three year broadcast cycle. This uplift was primarily due to an increase in overseas broadcast deal values, demonstrating once again the Premier League’s unrivalled global popularity.
“Matchday revenue increased by £20m (4 per cent) to £551m, however almost half the clubs suffered a reduction in matchday revenue in 2010/11.”
Of the £2.4 billion net debt in the Premier League, 62 per cent (£1.5 billion) is in the form of non-interest bearing ‘soft loans’, of which almost 90 per cent relates to three clubs – Chelsea (£819m), Newcastle United (£277m) and Fulham (£200m).