Manchester United tops Deloitte’s football review

FOOTBALL clubs in the North West generated £840m in the 2008/09 season – which is 34% of the total income of £2.5bn recorded by all English professional teams.

According to the latest Annual Review of Football Finance from the sport business group at Deloitte, Manchester United topped the list with revenue of £278m for the season – up 8% on last time.

In total, four clubs from this region featured in the top ten Premier League clubs by revenue in 2008/09 with Liverpool coming in fourth position with its income reaching £184.8m – up 13% on last time; Manchester City was in sixth place (£87m: +6%); while Everton was in 10th place (£79.7m: +5%).

Manchester United’s operating profit of £82m was the highest in the Premier League. 

Liverpool’s operating profit of £32m was third highest while Everton had an operating profit of £6m which placed it in eighth position.

Manchester City’s ongoing heavy investment in its squad resulted in gross transfer fee expenditure of £138m, whilst Manchester United’s sale of Ronaldo for a reported £80m meant it generated net player transfer receipts.

During the 2008/09 season, Deloitte’s research also shows that more than 8.8m fans attended matches in the North West.

Other North West clubs which performed well included: Bolton Wanderers which had flat revenue of £59.3m; while Blackburn Rovers had revenue of £50.9m up 10% on 2007/08.

Wigan Athletic saw its income rise 8% to £46.9m while Burnley saw an increase of 30% to achieve revenue of £11.5m.

Preston North End made £8.5m – up 1% on last time, while Blackpool – which was promoted to the Premiership last month – saw its revenue rise 4% to £7m.

Of the £2.5bn generated by all English professional clubs, Premiership teams were responsible for generating a record £1,981m in 2008/09 – which is expected to have passed £2bn for the 2009/10 season.

The new broadcast contracts will drive a further increase in revenues to £2.2bn in 2010/11. 

Dan Jones, partner in the sports business group at Deloitte, said: “Despite the sharp economic contraction, Premier League clubs were able to increase revenues by 3% in 2008/09. 

“Whilst commercial income fell marginally by 1%, both match day and broadcasting revenues increased. 

“For the 2009/10 season just ended, combined attendances for the Premier League and Football League exceeded 30 million – a level not seen since well before the introduction of all seated stadia. 

“When you factor in the recently negotiated Premier League overseas broadcast deals, which come into effect from 2010/11, football has shown remarkable recession resistance during these difficult economic times.

“However, Premier League clubs’ operating profits more than halved from £185m in 2007/08 to £79m in 2008/09. 

“The challenge for clubs continues to be converting their impressive year on year revenue growth into sustainable levels of profits that allow for continued investment in infrastructure and talent.  This is particularly the case as credit is likely to remain less available to football clubs than it was two or three years ago.”
 
The £49m increase in Premier League clubs’ revenue was less than half the £132m increase in wage costs, driving total wages up to more than £1.3 billion resulting in a record wages to revenue ratio of 67%.   

“Gross transfer spending by Premier League clubs also increased from £664m in 2007/08 to a record £713m in 2008/09.”

Debt in the Premier League has risen slightly to £3.3bn, around 40% of this (£1.4bn) is in the form of non-interest bearing ‘soft loans’. 

On the positive side of the balance sheet, Premier League clubs had £1.9bn carrying value of tangible fixed assets, reflecting the huge investment in facilities seen over the past two decades, and the carrying value of player registrations which exceeded £1bn for the first time.

Alan Switzer, director in the sports business group at Deloitte, said: “The record wages to revenue ratio of 67% in the Premier League in 2008/09 is a concern, and we expect wages growth to outstrip revenue increases again in 2009/10. 

“This will further reduce operating profitability, a decline that cannot continue indefinitely. 

“However, clubs have the opportunity, via the revenue uplift from the new broadcast deals from 2010/11, to get wage levels down to a more sustainable share of revenue. 

“It’s not the first such opportunity.  It remains to be seen whether they grasp it.” 

The Football League Championship clubs continued to grow their revenues, by 12% to £375m, in 2008/09. 

Paul Rawnsley, director in the sports business group at Deloitte, said:  “The Football League’s achievement in growing revenues, with the value of new broadcast deals’ still to come when the clubs’ 2009/10 accounts are released, coupled with the Championship being the third best attended League in Europe, is remarkable. 

“However, a wages/revenue ratio of 90% across the Championship is a cause for serious concern and will need to be addressed.”