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Ihar Mahaniok
Premiership Pulling Away From Rest Of Europe
07/31/2003. The Premiership is the richest and best attended league in world
football _ and the gap between it and the rest of Europe is getting wider.
The twelfth Deloitte & Touche annual review of football finance shows that the
20 clubs in the Premier League accounted for a quarter of the income generated
in Europe's top divisions during 2001-02 - the biggest individual share of
football's biggest market.
Deloitte estimates the aggregated income of all clubs in the top divisions in
Europe to be _7.1 billion for 2001/02, rising from _6.6 billion in 2000/01.
The 'big five' leagues (England, Italy, Spain, Germany and France) dominate
with an 80% share. The English Premiership has the largest individual share at
25%.
Turnover of English football's top division clubs has increased seven-fold in
ten years to ?1,132 million in 2001/02. Deloitte estimates Premiership revenues
will have exceeded ?1.25 billion in 2002/03. Meanwhile, the Football League
clubs have grown their income to ?467 million.
English football's top 92 clubs posted an overall operating profit of ?39
million (a ?97 million improvement on 2000/01). Premier League clubs' aggregate
operating profits (at ?84 million) were the highest since 1997/98. Operating
profits were reported by 83% of the clubs in the Premier League, and the number
of clubs reporting operating profits in the Football League almost trebled
compared to 2000/01.
Dan Jones, Director of Deloitte & Touche Sport, the Sports Business
Consultancy, said, "The past year has been a difficult one for football
finances. Our report clearly shows grounds for optimism, but not complacency.
"The game has never had more money and England's clubs lead the world in all
areas of income generation and also in stadium investment. English football
should be proud of that.
"What is needed now is strong management and leadership to control costs and
improve the bottom line. Again, England's clubs are the best placed in Europe
to achieve that."
Jones also believes the European clubs have one key area where they should be
learning from their English counterparts. "England's matchday incomes are now
almost three times those of other big leagues. The transformation of English
stadia through spending of almost ?1.5 billion in 11 seasons is fantastic.
"German, Italian and Spanish clubs need to address revenue generation and
commercial issues at their stadia urgently or they will fall further behind."
In terms of cost control, the Premier League clubs reported a wages/turnover
ratio of 62% (2000/01 : 60%). The Football League brought its ratio down to 73%
- the lowest level since 1996/97. These ratios relate to all wages and
salaries, not just players.
Paul Rawnsley, a Senior Sports Business Consultant at Deloitte & Touche Sport
believes the balance of power in wage negotiations is swinging decisively back
towards the clubs, saying: "The broadcasting revenue uncertainty across Europe,
a spate of club Administrations in England and potential rule changes by the
Football League all change the environment.
"The future for the majority of players is one of short-term contracts linked
to the division in which they are playing; an in-built adjustment of salary on
promotion or relegation; more sophisticated (financial and football)
performance-related pay; and signings for clubs as an unattached free agent or
on one-season loan deals. These are sensible measures to ensure the continued
resilience and survival of all the 92 clubs who pay the players."
On the topic of transfer spending, serious financial difficulties hit UK clubs
and overseas leagues after most of the ?407 million of transfer spending in the
2001/02 season covered by the review had taken place. But Deloitte estimates
that transfer spending fell to around ?150 million for the 2002/03 season. The
January 2003 transfer window spending by English clubs was estimated at only
?20-25 million.
"The evidence suggests that the 2001/02 season will prove a watershed for the
transfer market_and we will never see again the level of transfer spending seen
over the last five years," said Jones.
"The player transfer market has peaked in terms of overall value, but not in
terms of values for the true stars. The rising graphs of annual transfer
spending that we have steadily plotted over the years will fall in 2002/03 and
never climb back past the 2000/01 level."
But with a nod in the direction of Chelsea, Jones added: "Of course, the
emergence of a few more billionaire owners could change that!"
The Football League clubs performed well financially in 2001/02, but face a
difficult adjustment to reduced broadcasting incomes in 2002/03 and beyond.
"Clearly, many Football League clubs need to reassess their goals and purpose,"
said Rawnsley.
"For all clubs, an annual balanced cash budget of income and outgoings is
essential. For most, that means setting realistic ambitions to ensure clubs are
preserved for the community and future generations. In many cases, Supporters
Trusts may have a key role to play, particularly in rescuing clubs from trouble
and ensuring financial problems do not recur."
Jones meanwhile is cautiously optimistic about English football's financial
future. He said: "As the market settles, the Premier League clubs should be the
biggest financial winners as they have the best television product, compete
directly with financially weakened overseas leagues for playing talent and have
a stronger, more balanced income base than those overseas competitors."
He adds: "We hope we have seen both a peak in player wages and the bottom of
the trough in club losses. In reality, we expect wages to nudge up at the top
level, but hope that wages/turnover ratios _ a concern Deloitte has voiced
since 1993 - will fall at all levels of English football.
"It has taken nine years and a spate of Administrations and financial pressures
to force this issue to a resolution. We expect losses in the Football League to
increase temporarily in 2002/03 but never again to exceed 2000/01 levels."
Graham Lister
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