Premiership clubs tackle wage bills
FOOTBALL clubs are finally tackling spiralling wage bills and improving their financial health, according to an influential study of the industry.
Total revenue for Premiership clubs in 2002/03 was £1.25bn, up 10% on the previous year. At the same time, wages rose only 8% to £761m.
This is the lowest increase since the formation of the Premier League and well below the average annual increase of 25% over the previous decade, according to the annual Football Finance report by accountants Deloitte & Touche. The wages to turnover ratio fell from 62% to 61%.
'We saw the hopeful sprouts of cash control last year,' said Alan Switzer, sports business consultant.
Clubs also benefited from spending less on the transfer market, with the bill falling from £323m to £187m in 2002/03. However, the figure is expected to rise again for the most recent season to around £260m, fuelled largely by £120m spent by Chelsea since Russian billionaire Roman Abramovich bought the club. This is still a long way from the peak of £423m in 2000/01.
Operating profits hit a record £124m. An average of £6.2m per club was the highest in the world and way ahead of second place Germany at £4m. However, pre-tax losses rose to £153m, largely due to the legacy of huge transfer fees in recent years – the cost is spread on the balance sheet across the length of a player's contracts.
A loss of £49m at Leeds made the relegated side the least profitable, followed by £26m at Chelsea and £23m at Fulham.
Manchester United headed the revenue league table at £175m followed by Liverpool and Arsenal, both at £104m.
Deloitte also said fears over falling income from television screening rights have proved to be unfounded. Broadcasters paid clubs £543m, representing 44% of total revenue, compared to £15m or 10% of income when the Premiership was formed more than a decade ago.
The study also pointed out that the Division One play-off for the Premiership is the most lucrative game in the world, worth at least £35m to the winners.
For the first time, Deloitte included tax paid by the industry – a whopping £400m – and information on money spent on stadiums. It said Premiership clubs spent £133m, with Arsenal taking the lion's share due to the new ground being built near Highbury in Ashburton Grove.
'Total investment added up to £1.2bn,' said Deloitte's Switzer. 'The Premiership now has by far the best stadiums in Europe. Most countries now look to us as the market leader.'
Despite the nascent recovery in football finances, Switzer believes it is unlikely clubs will head to the stock market for an investment injection as many did in the Nineties.
Listed clubs include Aston Villa (ASV),Birmingham City (BMC), Celtic (CCP), Charlton Athletic (CLO), Heart of Midlothian (HTM), Leeds United (HTM), Manchester United (MNU), Millwall (MWH), Newcastle United (NCU), Preston North End (PNE), Sheffield United (SUT), Southampton (SOO), Sunderland (SUA), Tottenham (TTNM), Watford (WFC) and West Bromwich Albion (WBA). Arsenal shares are listed on Ofex.
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