Premier League revenues soar again - but realism in short supply?

England's top clubs made more than £2bn in 2009/10 - but spent a (surely unsustainable) 68% of turnover on wages...

by James Taylor
Last Updated: 19 Aug 2013

Football may be a funny old game, but the business of football is even weirder. The latest figures from Deloitte reveal that Premier League clubs chalked up over £2bn in revenue for the first time last year, thanks to higher income from TV deals and commercial activity. But wages continue to rise faster than revenues: clubs are now shelling out a record 68% of their turnover on paying players, as a result of which many are still making a loss. At a time when banks are a lot more jumpy than they once were, this surely can't go on forever, can it?

The main reason for the Premier League's burgeoning top line is the huge amount of money it rakes in from TV deals - £1.04bn in 2009/10, the first time any domestic league has made a ten figure sum from broadcast revenue. Since the Premier League is now the most popular in the world - according to some estimates, more than 2.5bn people worldwide now watch it - that's not surprising. But commercial revenues also grew by 6%, as our top clubs get savvier about how they exploit their brand, particularly overseas. And although overall match-day revenues dipped slightly (thanks largely to Newcastle United, who have a very big stadium, spending the year out of the top flight) attendances were about the same as the year before. So home fans are not being driven away by this relentless commercialism, even if lots of them probably don't like it much.

Spiralling costs are the big worry, though. Total wages for the 20 top clubs hit £1.4bn last year; even if you accept that players are the clubs' main assets, that's a staggering amount. As a percentage of turnover, it's a new record. And there's not much sign of any discipline creeping in: the rise in wages this year was more than the rise in turnover. The highest payers, Dubai-backed Manchester City, are now shelling out a frankly ridiculous 107% of turnover on wages. What kind of business could get away with that outside the football world? It’s no wonder the clubs made a combined pre-tax loss of £445m, despite those soaring revenues.

And the danger is that while the big clubs can probably afford to pay these hefty wage bills, as long as they can boost their commercial revenues sufficiently (cf. Liverpool, for example, which has the fourth highest wage bill in the league), the clubs in the second tier run the risk of over-stretching themselves in their desire to catch up. And of course the system is further skewed by the arrival of moneybags foreign owners who treat the clubs as trophy assets, and aren't too worried about losing the odd £100m or so.

European governing body UEFA hopes to level the playing field with its new financial fair play rules, but it remains to be seen how effective they'll be. Still, the only alternative appears to be to accept that normal economic logic just doesn't apply in the business of football...

Find this article useful?

Get more great articles like this in your inbox every lunchtime

The art of leadership: From Marcus Aurelius to Martin Luther King

Transformational, visionary, servant… enough is enough.

Lockdown stress: 12 leaders share practical coping tips

In hard times, it's far too easy for the boss to forget to look after...

Don’t just complain about uncertainty, find the tools to navigate it

Traditional in-person research methods won’t work right now, but that’s no excuse for a wait-and-see...

How well have CEOs performed during the coronavirus pandemic?

A new survey offers a glimpse into what their staff think.

Why women leaders are excelling during the coronavirus pandemic

There is a link between female leaders and successful responses to COVID-19.

Why your employees don’t speak up

Research: Half of workers don’t feel comfortable to express concerns - and it’s usually because...