By David Owen
March 26 – Premier League clubs generated their first pre-tax profit in 15 years in 2013-14, Deloitte, the business advisory firm, has confirmed, as increased revenues from the current, more lucrative broadcasting deal far outpaced any rise in costs.
Deloitte assessed the combined pre-tax profit of the 20 clubs at £190 million – almost four times higher than the previous record of £49 million set in 1997-98, when Arsenal did the Double and Dion Dublin and Chris Sutton tied as top goalscorer with Liverpool’s teenage sensation Michael Owen. At the operating profit level in 2013-14, the Premier League clubs generated what Deloitte described as a “staggering” £620 million.
The figures confirm Insideworldfootball’s exclusive story, published more than two weeks ago on March 8, which informed readers that the 2013-14 season would go down as “a major milestone” in the league’s business annals.
With results in from 12 of the 20 teams, we reported, “combined profits are running at close to £90 million.
“All in all, I would not be surprised to see a combined profits total pushing up towards the £200 million mark – an astonishing (and astonishingly fast) turnaround from the £316 million aggregate losses run up in 2012-13.”
Dan Jones, a partner in Deloitte’s sports business group, said the broadcast deal had helped to boost Premier League revenues by 29% to a record £3.3 billion. “However, despite this extra income, clubs showed relative restraint in wage costs, which grew by 6% to £1.9 billion. In the first year of the preceding two broadcast deals, 56% and 81% of respective revenue growth was absorbed by wage costs. This time it is less than 20%,” he said.
Adam Bull, senior consultant in the Deloitte team, said the introduction of cost control regulations at both a European and domestic level had caused many clubs to “watch their spending more closely than ever before and created a useful tool for clubs to reduce the inflationary pressures during negotiations with players and agents”.
Just as insideworldfootball said it seemed “logical to expect this profits explosion to spark a re-rating of Premier League club valuations” if investors thought the new landscape was sustainable, so Jones concluded that the promise of regular profits, with another record broadcast deal already done, “will…no doubt make Premier League clubs even more attractive to potential investors than they already were.
“They can now be reasonably profitable businesses as well as trophy assets,” he said.
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