Premier League clubs’ operating profits drop 16 per cent

Premier League clubs’ operating profits drop 16 per cent
Clubs in English soccer’s Premier League generated record combined revenue of UK£4.8 billion (US$6.2 billion) during the 2017/18 season, according to professional services firm Deloitte.

Despite the revenue climb, a 15 per cent wage bill rise to UK£2.9 billion (US$3.7 billion) meant operating profit fell 16 per cent from UK£1 billion to UK£900 million (US$1.2 billion), while profit before tax dropped from UK£500 million to UK£400 million (US$515 million). This saw the wage-to-revenue ratio for the league rise from 55 per cent to 59 per cent.

Deloitte said that the six per cent – or UK£200 million – revenue increase is ‘in part attributable’ to England’s top flight having five teams reach the last 16 of last season’s UEFA Champions League, European club soccer’s premier competition, resulting in an increase of UK£71 million in Champions League distributions to Premier League clubs.

According to financial data firm Vysyble, the Premier League’s ‘big six’ – Arsenal, Chelsea, Liverpool, Manchester City, Manchester United and Tottenham Hotspur – accounted for 89 per cent of the division’s pre-tax profits, up 36 per cent to UK£401 million (US$517 million) from UK£179 million in 2016/17.

The latest financial figures show that the financial disparity between the Premier League’s top and bottom clubs is widening, with the gap between the sixth and seventh clubs ranked by turnover – Spurs to Everton – leaping from UK£77 million to UK£192 million (US$247 million).

Meanwhile, the revenue gap from Premier League champions Manchester City to West Bromwich Albion, the division’s bottom side last season, was the biggest it has ever been at UK£465 million (US$599 million).

The gap between the big six and the rest of the Premier League is likely to increase next season, when English soccer’s top flight plans to distribute any increase in international rights revenue based on each team’s final position in the table.

Clubs’ operating profits could also be hit once again when the Premier League’s new three-year domestic rights deal kicks in at the start of the 2019/20 campaign, with the new agreement falling short of the UK£5.136 billion secured last time around.

However, UK newspaper The Times reported in February that the league was on course to break the UK£9 billion (US$11.6 billion) threshold for its TV rights over the next three years, with an increase in international rights fees making up for a drop in income from its domestic rights sale.

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