Is the Premier League bubble about to burst?

A Guardian report says England's top clubs lost a fortune last year, despite record income. How long can it continue?

by James Taylor
Last Updated: 19 Aug 2013
England's football Premier League is, at least in terms of popularity, a huge success story: according to some estimates, it's now watched by some 3bn people worldwide. But there's an ever-growing sense that as an 'industry', it seems to work to a completely different set of rules to everyone else: according to the Guardian, the clubs lost a combined £0.5bn in 2009/10, despite record income. That's bad news in terms of the new UEFA rules on Financial Fair Play, designed to stop megabucks owners buying trophies. And it's also bad news if they end up alienating the fans who provide the bedrock of their support...

The Guardian's David Conn has done his latest analysis of the Premier League clubs' finances, and the figures don't make for pretty reading. Total revenues soared to £2.1bn, thanks to lucrative TV deals and ticket prices that are now higher than for any other league in the world. But because of higher costs - notably servicing buyout loans, and the continued growth in players' wages - they recorded a combined loss of half a billion pounds. Of the top clubs, only Arsenal recorded a profit - and that was only because of property-related gains. Manchester City lost a whopping £121m, while Man United and Chelsea lost £79m and £78m respectively.

With numbers like these, it's not easy to see how the big clubs will be able to comply with UEFA's Financial Fair Play rules, which decree that clubs will only be allowed to make a loss of about £40m between 2011 and 2014, and can’t rely on being bailed out by wealthy owners (otherwise they won't be allowed to compete in UEFA sanctioned competitions). And there's also a chance that clubs will try and make up the shortfall by hiking ticket prices still further, which will hurt their die-hard fans at a time when incomes are already being squeezed.

It's not all bad news: as MT's recent feature showed, our top clubs are getting savvier about how to exploit the commercial potential of their 'brands' overseas. And given the backlash at Manchester United and Liverpool over heavily leveraged buyouts, we're likely to see fewer of these in the future, which should mean lower debt servicing costs.

But the clubs need to learn these lessons fast. And the danger is that those slightly lower down the food chain may over-reach themselves in a desperate bid to keep up...

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