Member Article

North West football clubs drive revenues

The North West’s 20 Premier League and Football League clubs increased their combined revenue by 12% to £1bn in 2010/11.

According to Deloitte’s Annual Review of Football Finance, it represents more than a third of the UK.

Produced by Deloitte’s Sports Business Group, the research revealed that Premier League clubs’ combined turnover reached a record £2.3bn in the same period, a 12% increase on a year earlier.

Four clubs from the North West featured in the top 10 Premier League clubs by revenue, including Manchester United, Liverpool, Manchester City and Everton.

Elsewhere in the findings, Manchester United was shown to have the highest operating profit in the Premier League, and Manchester City’s operating loss of £82m was the highest in the Premier League for the second successive season.

The region’s eight Premier League clubs in 2010/11 saw wage costs increase by 16% to £690m, with Manchester City second, Manchester United third and Liverpool fourth, all among the division’s top spenders on wages.

Paul Rawnsley, director at the Sports Business Group, said: “Once again, the report highlights the significance of North West clubs and their contribution to the UK’s football economy.

“It is encouraging to note that eight out of the top 10 clubs from the region saw revenue increase during 2010/11, despite a difficult economic climate.

“However, cost control remains the game’s biggest challenge and the upcoming financial fair play regulations from both UEFA and the Football League should help clubs focus on achieving a better balance between cost and revenues in future.”

Blackpool’s revenue was more than five times what it was the previous season, following their promotion to the Premier League for the 2010/11 season, with operating profits of £22m, the fourth highest in the Premier League.

Dan Jones, Partner in the Sports Business Group at Deloitte, said: “Top clubs in English football have continued to show impressive revenue growth despite a difficult economic climate.

“Premier League clubs’ revenues increased by 12% in 2010/11, driven by broadcast revenue increasing by 13%, to £1,178m, in the first year of a new three year broadcast cycle.

“This uplift was primarily due to an increase in overseas broadcast deal values, demonstrating once again the Premier League’s unrivalled global popularity.

“Commercial revenue grew by 18% during 2010/11, although this was largely attributable to clubs with a more global profile.

“Matchday revenue increased by £20m (4%) to £551m, however almost half the clubs suffered a reduction in matchday revenue in 2010/11.”

Over 80% of the Premier League clubs’ revenue increase was spent on wages, which increased to almost £1.6bn - a record Premier League wages/revenue ratio of 70%.

Adam Bull, Consultant in the Sports Business Group at Deloitte, noted: “Despite the increase in revenue generated by Premier League clubs, operating profits reduced by £16m (19%) to £68m in 2010/11 and combined pre-tax losses were £380m.

“Gross transfer spending by Premier League clubsincreased by £210m (38%), to a record level of £769m.

“The challenge for clubs remains converting impressive revenue growth into sustainable profits.

“This will become even more important for a number of clubs as the financial results for 2011/12 will, for the first time, count towards their UEFA Financial Fair Play break-even calculation.”

Elsewhere, revenue in the Football League Championship increased by £17m to £423m, prompted by an increase in solidarity payments from the Premier League, and the promotion of some larger clubs into the division.

Alan Switzer, Director in the Sports Business Group at Deloitte, commented: “The Football League’s achievement in attracting fans and growing revenues is often overlooked.

“The Championship is the fourth best attended League in Europe, ahead of the top divisions in Italy and France.

“Whilst Championship revenues have held up well, a wages/revenue ratio of 90%, combined operating losses of £130m and record pre-tax losses of £189m, are a cause for concern.

“It is therefore encouraging that in April 2012 Championship clubs agreed to the implementation of new financial fair play regulations that aim to help clubs reduce the level of annual losses.”

This was posted in Bdaily's Members' News section by Tom Keighley .