Football: the UK's most recession-proof business?

The Premier League is now the richest and most profitable in the world - and the wage bill's soaring...

Last Updated: 31 Aug 2010

Here’s one UK industry that’s leading the world: English football is making and spending more money than anywhere else. The Premier League, England’s top division, reported record revenues of £1.9bn in 2007/8, up 26%, while profits jumped 95% to £185m. Lucrative TV deals were the main reason for this – which makes the clubs richer, so they can afford the best players, so they win more, so they make more money – and so on. Our top clubs are truly becoming the plutocrats of the world game...

The figures, from Deloitte’s latest Annual Review of Football Finance, show that Premier League income was a massive €1bn higher than its major rivals in Italy, France and Spain. Around half of this came from the continued largesse of BSkyB and Setanta, while sponsorship revenue accounted for another 23% and matchday revenues made up the rest. Average attendances are still around the 36,000 mark despite the recession (though that’s 7,000 less than in Germany). Even with a slight drop-off, total revenues for 2008/9 are likely to break £2bn.

And it’s easy to see where this seemingly endless flow of cash is going: into the deep pockets of over-paid footballers. Collectively the 20 Premier League clubs splashed out a whopping £1.2bn on wages, a 23% increase on the previous season. Biggest spenders were Chelsea, who managed to shell out £172m funding their players’ predilection for dining at Nobu and falling out of Whisky Mist.

All very impressive – but there is a flipside. Deloitte reckons a prudent club should be spending no more than 55% of its turnover on wages – but only six are at or below this level. The average is 70% - and England’s second-tier is even worse, with an average of 87%. Then there’s the clubs’ mounting debt pile, which currently stands at about £3.1bn (almost two-thirds of which is related to the top four clubs). And purists will argue that the oligarchy of rich clubs that’s developing is not healthy for the game, either in the UK or globally.

Time will tell whether the recession will hit revenues – it’s likely to affect matchday revenues and sponsorship, even if the TV money’s locked in. But in the longer term, a bigger problem may be preventing the league from becoming so predictable that spectators get bored and switch their attention elsewhere. On the other hand, nobody in their right mind buys a football club and expects it to run like a proper business. So maybe it’s pointless thinking about the sport in these terms...

In today's bulletin:

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Football: the UK's most recession-proof business?
Apprentice star Kemsley out as property empire goes bust
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