Premier League profits boost worries rivals

Premier League clubs posted record revenues last season to book an aggregate pre-tax profit for only the second time this century.   The increasing financial success of the Premiership is becoming a big worry for its rivals.

Clubs in the top flight made a combined pre-tax profit of £120m in 2014-15, according to the business advisory firm Deloitte.   This was down from £190m in 2013-14, but is the first time Premiership teams have recorded two consecutive years of profit.

Premier League clubs posted record revenues last season to book an aggregate pre-tax profit for only the second time this century.   The increasing financial success of the Premiership is becoming a big worry for its rivals.

Clubs in the top flight made a combined pre-tax profit of £120m in 2014-15, according to the business advisory firm Deloitte.   This was down from £190m in 2013-14, but is the first time Premiership teams have recorded two consecutive years of profit.

Revenues, which have risen sharply since 2013 when a new TV deal boosted income, rose 3 per cent to a combined £3.4bn, a record sum.   Before the 2013 TV deal, Premier League clubs made a combined pre-tax loss for 14 consecutive seasons.

Clubs wage costs rose by 6 per cent in 2014-15, to a total of £2bn, a record spend on salaries. That increased the wages-to-revenue ratio to 60 per cent. However, despite the increase in wage costs, the ratio was still the second lowest seen in the Premier League in the last 10 years.

Increased competition for players and the money available from the new television deal could push up spending on wages next season.   Clubs will have to ensure that they are kept under control.

All but three clubs – Aston Villa, Chelsea and Queens Park Rangers – posted an operating profit last season.  Dan Jones of Deloitte Sports Business belives the improved profitability will be sustained. ‘With further significant revenue increases already guaranteed for the next broadcast cycle, starting in 2016-17, there is every reason to be confident of the Premier League clubs’ profitability being here to stay.’

The increased profitability could lead to more clubs being taken over from abroad.  Adam Bull, senior consultant at Deloitte said,  “The security of world-leading revenues, now augmented with sustained profitability, aided by cost-control measures in place for both domestic and European competitions, makes clubs playing in the Premier League, and those with aspirations to get there, particularly attractive to investors from around the globe.”

Soccer economics guru Stefan Szymanski told the Financial Times, ‘Now that the annual revenues of the Premier League are almost double those of their nearest financial rival [the German Bundesliga], the English clubs can attract the best players and still have money left over.’

Szymanski told the Pink ‘Un, ‘The other European leagues are terrified about what is happening.  The EPL is emerging as a dominant league … with the other European leagues becoming minor league feeders.’  A bit overstated perhaps, but the gap is widening.