By David Owen
June 4 – English Premier League clubs achieved their first aggregate pre-tax profit for 15 years in 2013-14, as lucrative new broadcasting deals combined with more effective cost control to spark a remarkable financial turnaround.
According to the Annual Review of Football Finance published by professional services firm Deloitte, this aggregate pre-tax profit of £187 million was almost four times the previous record, set in 1997-98 when Arsenal won the Double in their first full season under Arsène Wenger.
At the operating level, combined profits reached a mammoth £614 million, against £82 million in 2012-13, with only West London club Fulham – now languishing in the lower reaches of the second-tier Championship – registering a loss.
Manchester United generated an all-time record operating profit of £117 million, while North London club Tottenham Hotspur – revealed by Insideworldfootball in April as the league’s somewhat surprising 2013-14 profitability champions based on pre-tax figures – recorded the highest-ever pre-tax profit of £80 million.
Dan Jones, partner in Deloitte’s sports business group, explained that while the broadcast deal accounted for 78% of overall revenue growth, Premier League clubs also showed “relative restraint” in terms of wage costs. He said the league’s wages:revenue ratio dropped from 71% to 58% – “the lowest it has been since the 1998-99 season”.
The broadcast deal “comes as cost control regulations, at both domestic and European level, have caused many clubs to rein in their spending relative to the revenue they are now capable of generating,” Jones said. “The end result has been a remarkable turnaround in profitability.”
Combined revenues of the ‘Big Five’ European leagues climbed 15% to €11.3 billion, with the Premier League more than €1.6 billion above its closest rival, the Bundesliga, which generated €2.3 billion. Deloitte is predicting that the Premier League may surpass the Bundesliga in commercial revenue terms in 2014-15, “and hence lead the world in all three key revenue categories”.
To date, however, Premier League clubs have struggled to convert this clear, even dominant, financial advantage into on-field results.
Deloitte said that Premier League clubs reduced their aggregate level of net debt by 6% to £2.4 billion, of which over two-thirds was non-interest-bearing. Three clubs – Arsenal, Aston Villa and Tottenham – cut net debt by a combined £205 million.
As previously reported, Tottenham’s noteworthy financial success in 2013-14 is thought to have been attributable in part to the outstandingly lucrative September 2013 transfer of Welsh star Gareth Bale to Real Madrid.
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