As was discussed earlier in the week, the veracity of surveys to do with football is somewhat dubious due to various factors but, they’re talking points that can be used to stimulate debates and that is the point of this post.
Yesterday, Deloitte, who to be fair to them have one of the best names in the business for accurate reporting of these kinds of issues, published their latest annual review of European football finance and the results are pretty predictable; everything is going up, most notably of all, player wages which have reached record levels in the Premier League.
Despite the threat of financial fair play regulations from UEFA, the report states that in the 2010/11 season, the wages/revenue ratio in the Premier League is at a new high of 70% with wages rising by £201million to £1.6billion with overall revenues up to £2.27billion, mostly driven by new TV deals, particularly from overseas.
The significance of the season that this report highlights (2012/11) is that this is the final season where financial figures will not be taken into account by UEFA for its financial fair play rules, meaning that clubs such as Manchester City and Chelsea, who had spent lavishly on both players and wages in the 2010/11 season, will, rather obviously, be most at risk of falling foul of the new regulations.
This problem is compounded by the introduction of the 50% tax band into UK tax law with the tax paid by the 92 league clubs up by 20% in 2010/11 from 2009/10, up to a total of £1.2billion. Further troubling club’s incomes is a reflection in the report that matchday revenues have fell as a result of club’s possible unwillingness to raise ticket prices in the current economic climate.
Whilst the Premier League’s wages/revenue ratio reached a new height, the problem is even worse in the Championship with the figure being a staggering 90% making operating profit almost impossible to achieve at the vast majority of clubs at that level.
Finally, in ‘football-is-a-strange-business’ news, whilst combined pre-tax losses among Premier League clubs were £380million, combined transfer spending rose by £210million to a record £769million which really only prompts the response of “Eh?”.
I’ll sign off with a quote from Alan Swizer, a director in the sports business group at Deloitte, who said; “A significant number of clubs around Europe have some distance to travel on the road towards compliance.”