Premier League at a loss despite record £2.2bn revenue
The Premier League enjoyed record revenues in 2009-10 but also suffered record losses. It remains the world’s most lucrative division, according to the latest annual report into football finance by accountants Deloitte.
Here City correspondent ROB DAVIES analyses the facts behind the figures.
England’s elite league boasted record revenues of £2.2billion in 2009-10, leaving Germany’s Bundesliga trailing a distant second by more than £700million. Unfortunately, that is only half the story – Premier League clubs also made record losses of £445m due to another huge rise in wages.
According to Deloitte, the clubs spent £1.4bn on salaries in 2009-10, up five per cent on the previous year, and there is no sign of a slowdown. A record 68 per cent of money coming into the clubs goes straight into the players’ wallets.
Chelsea splashed out £174m on wages, while Manchester City (£133m) overtook Manchester United (£132m). But the trio also lost more money than the rest of the division put together, with combined losses of £307m before tax.
All that may be about to change
UEFA’s financial fair play rules start coming into force this month, aimed at controlling the spiralling wages and transfer spending that leaves smaller clubs struggling to compete.
The rules are laid out in a 85-page handbook, but essentially clubs must break even, with income matching or exceeding expenditure. The idea is to stop billionaire owners like Chelsea’s Roman Abramovich from picking up the tab if the club make huge losses.
Investment in facilities and youth development will not be counted as expenditure, largely because UEFA see these as positive for the game.
Furthermore, club owners will be allowed to cover £40m of losses over the first three years and £27m in the next few years to phase the new rules in gradually.
But the big spenders still have work to do
For the 2009-10 season, every Premier League club lost money except Arsenal and the promoted clubs, Burnley, Wolves and Birmingham. That means free-spending clubs such as Manchester City and Chelsea will have to chase ever more lucrative sponsorships or face reining in wages and transfer spending.
That is one of the reasons behind huge transfers such as the £50m move of Fernando Torres from Liverpool to Chelsea. The London club were trying to get their spending done before the rules take effect.
But critics say that, without the ability to call on super-wealthy benefactors, clubs will instead squeeze more money out of their fans.
Will it be fair?
Spending power will be determined by turnover and the world’s top 20 earning clubs show little signs of budging from their perch.
Real Madrid sit at the top, followed by European champions Barcelona and beaten finalists Manchester United. Seven of the top 20 are English clubs.
Financial fair play or not, money will continue to talk louder in football than even the most furious dressing-room rant.