Gap widens between football’s rich and poor
RUNNING a professional football team without losing money is becoming increasingly difficult for all but a handful of clubs in the Premier League, a major survey has found.
The financial disparity between the Premier League and the rest of the football industry is growing wider, according to the eleventh annual survey of football club finance directors published by accountants and business advisers PKF.
‘Leagues Apart’ surveyed 62 teams from the English Premier League, Football League Championship, Football Leagues One and Two, and the Scottish Premier League.
It reveals that, with the exception of the top Premier League sides, it is becoming increasingly difficult to run a football club without losing money.
Two-thirds of clubs were expecting not to make a profit before player trading and amortisation in their next accounting period compared with 42% in last year’s survey, while 89% of Premier League clubs expect to make a profit, compared to 12% of Championship teams and one-third of League 1 sides.
More than half (58%) of those surveyed were dependent on a principal shareholder, or shareholders, to finance annual revenue shortfalls or operating losses.
Almost a quarter (22%) of Premier League clubs thought that the challenging economic environment will reduce ticket sales this season, compared with 56% of Championship clubs and 46% of League 1 teams.
Similarly only 11% of Premier League teams expected sponsorship to fall as a result of the economy, compared with 32% of Championship clubs and 54% of League 1 sides.
As a result, 56% of Premier League respondents rate their current financial position as ‘very healthy’, compared to 25% in the Championship, 20% in League 1, 38% in League 2 and just 17% in the Scottish Premier League.
Billy Cairns, partner and member of PKF’s football industry group, said: “The divide between the rich and the poor in football is growing wider. You simply need to contrast the fortunes of Premier League giants such as Manchester United, which recently tapped Wall Street for additional funding, with lower league sides such as Port Vale and Portsmouth, which are both in administration, to get a good idea of what is happening in football club boardrooms across the country.
“With match day revenues continuing to decline, operating costs still rising and a growing reliance on the generosity of major shareholders, many clubs outside of the Premier League elite are balanced precariously on the knife edge between survival and insolvency.”
“This tension is particularly evident in the Championship, where many clubs gamble with their very survival for a shot at entry to the Promised Land of the Premier League. The dilemma is there for all to see – find a generous benefactor, spend more than you earn, gain promotion and pay the fines; or play by the rules and settle for mediocrity.
However, the survey also found that clubs are showing some signs of financial restraint and are at least trying to curb some of the excesses seen in previous years as UEFA’s financial fair play rules come into effect.