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Most of the money in English football is concentrated in the Premiership according to Deloitte's football finance report. Of the £1.75 billion of income generated in the top four divisions on 2003/4, the Premiership accounted for three-quarters of the total, showing an income growth of 6 per cent on 2002/3. Within the Premiership, the gap between the top five and the rest has grown, increasing in absolute terms from £44m in 1999-2000 to £74m in 2003-04. However, the Football League clubs can take heart from a year-on-year revenue growth of 7 per cent, slightly higher than the Premiership. They also reduced overall wages for the second year running. More income and reduced wages led to substantially smaller losses. Even so, there were operating losses of £52m and pre-tax losses of £67m. Paul Rawnsley of the Sport Business Group at Deloitte commented, 'The Football League clubs have undoubtely turned the financial corner post ITV Digital and are getting to grips with their cost base. A reduction in total wagses of ten per cent across the three divisions represents an impressive achievement, but further progress is required to reduce the current unsustainable level of losses. The Football League has been rightly applauded for the governance changes it has introduced, including sporting sanctions [point deductions] for insolvency, limits on wage spending and enhanced transparency in player agent dealing.' Deloitte's view is that the gap between the bottom half of the Premiership and the Championship can be more easily bridged than that within the Premiership. Dan Jones pointed out that Portsmouth and West Bromwich Albion have successfully survived in the Premiership and Birmingham City, Charlton and Fulham are now looking beyond survival. If a club is relegated, they are helped by parachute payments and selling their best players back to the Premiership. The net amount of transfer expenditure by Premiership clubs to lower division clubs increased from £32m to £40m. Clubs in Leagues One and Two face some of the most pressing problems and it will be interesting to see how the now launched experiment in community ownership at Rushden and Diamonds works out.
Financial Champions of Europe
The Premiership is the biggest football league in Europe by a record margin according to the report from Deloitte's Sport Business Group. Premiership clubs grew revenue by 6 per cent in 2003/04 to £1.3 billion. Average club revenue of £66.3m was over fifty per cent more than the £43m average in its nearest competitor, Italy's Serie A. Broadcast and matchday revenues showed an equal growth rate of nine per cent. Premiership clubs were also much more profitable than those elsewhere in Europe. The Premiership clubs returned record operating profits of £149m, although at £7.5m per club this is not exactly a large sum. However, in the other major leagues only German clubs recorded operating profits and they were down on the preceding year. Deloitte anticipate that there may be a small fall in Premiership revenues in 2004/5 due to the first year of the new broadcasting deals, although there is evidence that many clubs have been successful in increasing matchday and commercial revenues to compensate. Manchester United were once again top of the Premiership in terms of revenue generation with £172m revenue, but Chelsea narrowed the gap with £144m revenue. In terms of wages Chelsea were way ahead of the rest with a total bill of nearly £115m, followed by Manchester United with £77m and Arsenal with £70m. The skew in the distribution is shown by the fact that only two other clubs are above the Premiership average of £40.5m, Liverpool with £66m and Newcastle with £45m.
Slowdown in Wage Inflation
Excluding Chelsea, total and player wages declined for the first time in the Premiership's history in 2003-4 according to Deloitte. However, player costs exceeded £1 billion for the first time, in part due to Chelsea's record spending. Total wages increased by the lowest rate ever (7 per cent) in the Premiership's history and actually declined if Chelsea are excluded. In relation to player transfer costs, the substantial fall in 2002/3 was reversed with gross spending of over £400m largely driven by Chelsea. The amount of transfer fees leaving the English game to overseas clubs and agents was a record at £263m. Deloitte's Dan Jones commented, 'We expect the 2005 summer transfer window to quieten down. Big transfer fees and wages will continue to be paid for star players, but for the majority of players the new sense of "realism" will continue to limit transfer fees and we hope that more performance dependent wages will continue to be introduced for all players.'
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