Deloitte Annual Report on Football Finance

[Macmoish]

"...In the summer of 2012, the Premier League clubs had a total debt of £2.4bn.

Of that, some £1.4bn was in interest-free soft loans from owners (2011: £1.5bn), of which around 90% related to three clubs: Chelsea (£895m), Newcastle United (£267m) and Queens Park Rangers (£93m).




Deloitte Annual Report on Football Finance

Premier League clubs’ revenues increase 4%, to £2.4 billion, in 2011/12, following 15% growth in commercial revenue


6 June 2013

Premier League clubs’ revenue reached a record £2,360m in 2011/12, according to the 22nd Annual Review of Football Finance from the Sports Business Group at Deloitte. In total, the revenue of the top 92 clubs in English football exceeded £3 billion for the first time.

Dan Jones, Partner in the Sports Business Group at Deloitte, commented: “Despite operating in a challenging economic environment, English club football’s profile, exposure and increasingly global interest have continued to drive revenue growth for the top clubs. The combined revenue of the Premier League clubs increased by 4% to almost £2.4 billion, with another year of impressive commercial revenue growth, largely focussed among the highest ranked Premier League clubs, and relatively stable matchday and broadcast revenues.”

Adam Bull, Senior Consultant in the Sports Business Group at Deloitte, noted that further strong Premier League revenue growth is forecast: “Premier League clubs’ revenue is estimated to have grown by a further 5% to £2.5 billion in 2012/13. There will then be a significant increase of around £600m, almost 25%, in 2013/14, with the first season of the Premier League’s new broadcast deals, taking the projected revenue of Premier League clubs above £3 billion for the first time.”

Almost 75% of the Premier League clubs’ revenue increase in 2011/12 was spent on wages, which increased by £64m (4%) to £1.7 billion and resulted in the overall Premier League clubs’ wages to revenue ratio remaining at 70%.

Alan Switzer, Director in the Sports Business Group at Deloitte, noted: “The aggregate operating profit of Premier League clubs improved to £98m in 2011/12, though this is a margin equivalent to only 4% of revenue with half of the clubs making an operating loss. The Premier League clubs have agreed to a system of enhanced financial regulations, designed to improve the sustainability of its clubs. The successful implementation of these rules, coupled with the imminent boost to broadcast revenues, could provide huge benefits to the long-term development, growth and stability of the game and its clubs.”

Revenue in the Football League Championship increased by £53m (13%) to £476m in 2011/12. This was driven in part by the number of clubs being in receipt of parachute payments from the Premier League and the change in the mix of clubs.

Paul Rawnsley, Director in the Sports Business Group at Deloitte, commented: “Whilst Championship clubs’ revenues have held up well, their wages to revenue ratio has hovered threateningly at around 90% for the last four seasons, with operating losses once again reaching record levels in 2011/12. The Football League’s Financial Fair Play Rules look to be a necessary step to help change clubs’ behaviour in respect of spending on players. The application of sanctions in respect of the clubs’ results for the 2013/14 season should focus the minds of clubs who have been making heavy losses.”

Other key findings of the Deloitte Annual Review of Football Finance 2013 include:

The total European football market grew to a record £15.7 billion (€19.4 billion) in 2011/12;
Premier League clubs generated the highest revenue (£2.4 billion) of any league in Europe in 2011/12, followed by Germany (£1.5 billion), Spain (£1.4 billion), Italy (£1.3 billion), and France (£0.9 billion);
The Bundesliga remained Europe’s most profitable league with operating profits of £154m, followed by the Premier League, with operating profits of £98m;
The top 92 English clubs invested £188m in stadia and facilities in 2011/12, exceeding £150m annual spend for the fifteenth successive year. In the 20 seasons to 2011/12, English professional football clubs have made in excess of £3.3 billion in capital investments, with 29 club stadia built over this period;
Average league capacity utilisation at Premier League clubs of 95% in 2012/13 was the highest level recorded in Premier League history and the 16th consecutive season above 90%;
Net debt in respect of Premier League clubs was £2.4 billion, consistent with 2011;
The Government’s tax take from the top 92 professional football clubs was around £1.3 billion in 2011/12.

Of the £2.4 billion net debt in the Premier League, 59% (£1.4 billion) is in the form of non-interest bearing ‘soft loans’ of which around 90% related to three clubs - Chelsea (£895m), Newcastle United (£267m) and Queens Park Rangers (£93m). On the positive side of the balance sheet, Premier League clubs recorded a carrying value of tangible fixed assets of almost £1.9 billion. This reflects the huge investment in facilities seen over the past two decades, and, in addition, a carrying value of player registrations of around £1.1 billion.

End

www.deloitte.com/view/en_GB/uk/industries/sportsbusinessgroup/481299d1c331f310VgnVCM2000003356f70aRCRD.htm

[Macmoish]

To read the 16 page "Highlights"

www.deloitte.com/assets/Dcom-UnitedKingdom/Local%20Assets/Documents/Industries/Sports%20Business%20Group/deloitte-uk-sbg-arff-2013-highlights-download.pdf

[Macmoish]

(and as I bumped last week: Last year's report can be read here:
qprreport.proboards.com/thread/31755/last-deloitte-football-finances-spent

[Macmoish]

GUARDIAN

Revenue made by English football clubs tops £3bn for the first time

• Premier League clubs contribute £2.4bn of the total generated
• Championship remains Europe's most succesful second tier


James Riach
guardian.co.uk, Wednesday 5 June 2013 19.05 EDT

Manchester City
Manchester City paid out more than £200m in player salaries on their way to winning the Premier League title in 2011-12. Photograph: Peter Byrne/PA

The combined annual revenue of the 92 clubs in the top four divisions has eclipsed £3bn for the first time, with earnings in the Premier League once again dwarfing those in the Bundesliga, La Liga and Serie A.

The latest football finance review by Deloitte for 2011-12 shows that revenue from the Premier League's 20 clubs increased by 4% to almost £2.4bn following another impressive year of commercial growth. The equivalent figure was £1.58bn in Germany, £1.4bn in Spain and £1.3bn in Italy.

Operating profits increased by £25m to £98m in the English top flight, though this figure was surpassed in the Bundesliga where £161m was made. Significantly, the revenue-to-wages ratio average in Germany's top league fell to an impressive 51%, some way below the Premier League's 70%, during a year when Manchester City spent more than £200m on players' salaries.

Total revenue for Championship clubs increased by £53m to £476m and, although the combined operating losses for all 24 teams in the division rose to a record £147m, with a worrying total £0.9bn net debt, it remains the strongest second-tier across Europe by some distance. Despite the impressive revenue growth, though, operating losses in the Football League grew to record levels.

Dan Jones, a senior partner at Deloitte, said: "The £3bn is a big stat. Likewise is the growth in the Championship itself – sometimes the Championship gets overshadowed by the Premier League. The reality is they're both great successes. It's just the Premier League is the bigger success.

"The Championship performance is extremely strong again. It's the biggest second-tier league in Europe by a street. No one else has a second-tier league that comes anywhere close. People are pushing very hard to get in the Premier League. What is imperative is that clubs do that in a way that is sustainable. The Football League is bringing in its financial fair play rules precisely to address that."

The Deloitte report, which does not cover the most recent season, states that total player costs across all four divisions fell 5% to £1.8bn in the first year-on-year decrease since 2005, although this is not expected to be a permanent trend due to the significantly larger amount of TV revenue that will be available to Premier League clubs as of 2013-14.

Jones admits there is uncertainty at what effect the broadcast revenue, which is more than £5bn spread over three seasons, will have.

"The big test will be what happens to the new TV money, how much of that finds its way into the wage bill. It will also be interesting to see how the new financial regulations will affect clubs' behaviour," he said.

"Once the new TV deal kicks in I think you'll find the total spent on players will be up at a record level. There's no intrinsic problem with that but it's all about spending being balanced and not being excessive to the point that it endangers the club.

"It is a pretty spectacular deal. Another £500m a season is a very significant uplift and a great opportunity for the clubs to say we're already ahead. If we're a little bit prudent with the revenue, we can be sustainable and not have big losses."

Deloitte's report also states that £1.3bn was contributed by English professional football to the government during 2011‑12 through tax and national insurance costs.

www.guardian.co.uk/football/2013/jun/06/english-football-three-billion-revenue



BBC


Premier League revenues to rise by 25%, says Deloitte
By Bill Wilson
Business reporter, BBC News

The rise in Premier League revenues was mainly down to sponsorship deals signed by the two Manchester clubs

Premier League clubs' revenue reached a record £2.36bn in 2011-12, according to football finance experts at Deloitte.

It estimates revenue grew to £2.5bn in 2012-13, and will grow by a further £600m, or 25%, in 2013-14, when the league's new broadcast deal kicks in.

Deloitte says this should take the projected revenue of Premier League clubs above £3bn for the first time.

It says this cash, plus new spending rules, "could provide huge benefits to the long-term development" of football.

"Despite operating in a challenging economic environment, English club football's profile, exposure and increasingly global interest have continued to drive revenue growth for the top clubs," said Dan Jones, partner in the Sports Business Group at Deloitte.

Continue reading the main story
“
Start Quote

The total wage bill, across all employees, of Premier League clubs in 2011-12 was £1,658m (up 4%), ranging from £202m (Manchester City) down to £35m (Swansea City)”

Deloitte Annual Review of Football Finance 2013
Across English football, the revenue of the top 92 clubs exceeded £3bn for the first time in 2011-12.

However, worries remain about the proportion of revenues being spent on player wages.

Almost 75% of the Premier League clubs' revenue increase in 2011-12 was spent on wages, which increased by £64m, or 4%, to £1.7bn. It meant the overall Premier League wages-to-revenue ratio remained at 70%.

"It is the age-old picture; revenues continue to be healthy and wage levels continue to be a concern," said Mr Jones.

In the second tier of English Football - the Championship - spending on wages increased by £53m (13%) to £476m in 2011-12. Deloitte says this was driven in part by the number of clubs being in receipt of parachute payments from the Premier League and the change in the mix of clubs.

"Championship clubs continue to overstretch off the field as they seek playing success to reach the Premier League," Mr Jones said.

In the summer of 2012, the Premier League clubs had a total debt of £2.4bn.

Of that, some £1.4bn was in interest-free soft loans from owners (2011: £1.5bn), of which around 90% related to three clubs: Chelsea (£895m), Newcastle United (£267m) and Queens Park Rangers (£93m).

The remaining £1bn interest-bearing debt was equivalent to about 40% of total annual revenues.

Mr Jones said that debt in the Premier League was much less of a concern than it was four or five years ago, adding, "when you look at how much of that is in soft loans, the interest-paying debt that is left is not that much".

Deloitte also said that a number of financial fair play rules, including those introduced by the Premier League and Championship (independently of those also drawn up by European governing body Uefa) should focus the minds of clubs in respect to overall spending.

Continue reading the main story
The business of European football

League Revenue 2011-12 Wages 2011-12
SOURCE: DELOITTE

Premier League, England
2.9bn euros
2bn euros (70% of revenue)

Bundesliga, Germany
1.9bn euros
1bn euros (51% of revenue)

La Liga, Spain
1.8bn euros
1.1bn euros (60% of revenue)

Serie A, Italy
1.6bn euros
1.2bn euros (75% of revenue)

Ligue 1, France
1.1bn euros
0.8bn euros (74% of revenue)
Continue reading the main story
Uefa's own break-even requirement, the cornerstone of its Financial Fair Play Regulations, will apply to clubs in its competitions for the first time in the 2013-14 season, and covers the clubs' financial results for the 2011-12 and 2012-13 seasons.

"The new era of cost constraints aims to help clubs across Europe to achieve a more sustainable balance between their costs and revenues and encourages investment for the longer-term benefit of football," said Deloitte.

Continue reading the main story
PREMIER LEAGUE FINANCES 2011-12

Revenues of £2.4bn, £900m ahead of second highest revenue earning league, the German Bundesliga
Total revenues up by 4%
Total operating profits of £98m, second behind the Bundesliga's £154m
Premier League clubs' revenues ranged from £320m (Manchester United) to £53m (Wigan Athletic)
Commercial revenue was the main area of growth (up 15%)
Majority of increase in commercial revenues was down to new sponsor deals at Manchester United and Manchester City
Broadcast revenue (up 1%) and matchday revenue (down 1%) changed only marginally
Pre-tax losses of £245m, compared to £280m a year earlier
Only eight Premier League clubs made a net profit
At summer 2012 Premier League net debt was £2.4bn, 'consistent with 2011'
Source: Deloitte

On the broadcasting landscape, Deloitte says the "step change" in the UK pay-TV market has been the emergence of BT Sport as a broadcaster of live 38 Premier League football from next season.

Mr Jones said BT was the "biggest beast" broadcaster Sky had yet faced and that "the scale and pace of the channel's success may have a huge impact on football's longer-term financial fortunes".

Outside of England, Deloitte said SPL clubs in Scotland had average revenues of about £12.7m each in 2011-12, with wages accounting for 68% of turnover. It said the revenue total of the top Scottish clubs would have been hit last season by Rangers' absence, but that a "creditable performance by Celtic in reaching the Champions League knock-out phase will soften this impact".

Deloitte also looked at the finances of the other leagues in the "Big Five" group with England - Germany, Spain, Italy and France.

In 2011-12, for the fifth successive year, the German Bundesliga joined the Premier League in being the only ones in the quintet to generate an operating profit.

And the relative strength of Germany's corporate sector and economy was reflected in the fact that money from commercial deals and sponsorship contributed almost half of the clubs' total revenues in 2011-12.

In Spain the combined wages to revenue ratios for Real Madrid and Barcelona fell to 47%, but rose to a worrying 77% for the other 18 La Liga clubs, many of whom have suffered recent financial difficulties.

Italy's Serie A clubs had the highest wages to revenue ratio (of 75%) amongst the five leagues, and suffered the highest operating losses (160m euros).

In France, the Ligue 1 clubs' operating loss of 67m euros was an improvement compared with the previous season.


www.bbc.co.uk/news/business-22766638

[ingham]

Curious to see whether Clubs are obliged to match spending with earnings throughout the English game, and not just in UEFA competitions where only a minority compete. Supporters are sold a promise of success. If the Clubs could deliver the success, they would do it. But they can't. Mid-table or above in the Premiership (which no more than 4-5 small or medium-sized Clubs can achieve, even if 40-50 of them THINK they can) isn't a big enough target to aim at, whether they spend big or not

Spending only what a Club earns will wipe owners out. They serve no useful purpose from the Club's point of view, do they? If they knew how to make the Clubs profitable or successful, they would do so.

But they don't. But they do know how to make the Club's earnings useful to THEM. And that is by spending the Club's money BEFORE it has earned it. They don't need to create the money first, by making a profit, but no talent of any kind is required to lose it.

Once they have done so, the Club is committed to the idea of finding another owner. And this is exactly what has happened at QPR. The Club has bounced from one useless owner to another. If it was dependent only on its own earnings, there would be no reason to have any useless owner at all, let alone REPLACE one with another.

Debt, in short, is what the owners can provide. It is a sign, not that they know how to find talent and exploit it in the game, but a guarantee that they can't.

Everyone knows this. Because it is unheard of in the modern game for a side to become successful without, effectively, 'buying the title'. The idea that a clever chairman and a clever manager could achieve success through brilliant tactics, signing cheap players and developing them into quality is possible, but only at one or two Clubs at the very outside, and only in the most unusual and unlikely circumstances.

Because success would be achieved by CUTTING wages and holding them down. Or at the very least, DESPITE cutting wages and holding them down.

And even if one or two Clubs could do it, the only way THEY could then create an impression of success would be by winning. By demonstrating that they WERE successful. And, generally speaking, none of them could do it.

So each owner at each Club tells each group of supporters the same story as all the others. THIS Club will be the shining exception. But there must be something to show, as supporters won't wait.

But if there is no big spending, there will be nothing to show. Even more to the point perhaps, there will be nothing for the Chairman to do, other than to ensure that outgoings don't exceed earnings. And certainly no 'potential' for him to sell on to another 'investor'.