New figures have shown why owning a Premier League football club is such a valuable asset.
While the Glazers look set to shed their majority stake in Manchester United in the coming weeks, there has been much buzz surrounding the prospect of them retaining a minority position in the Red Devils as they look to continue to have a hand in the continued success of football’s top flight league in the world.
In the case of Liverpool, while owners Fenway Sports Group formalized their search for investment late last year, trying to sell a minority stake in the Reds, the intention was to keep the club they have owned since 2010 finding ways to secure the capital. necessary for future growth and to ensure they remain part of the elite group that has dominated the Premier League and European landscape for some time.
That search for investment isn’t over and the club’s owners are still assessing their options when it comes to bringing in fresh capital, but the latest figures released by sports group Deloitte show why FSG have little appetite to part ways with the Reds and why there so much interest in acquiring Premier League football clubs from individuals, groups and sovereign wealth funds from around the world. The Premier League continued to outpace the competition and maintain its position as the clear market leader, with member clubs reporting a 12 per cent increase in total revenue in the 2021/22 season, culminating in a record total revenue of €6.4 billion (£5, 5 bn). That was a figure greater than Spain’s La Liga and Germany’s Bundesliga combined.
La Liga revenue remains roughly half that of the Premier League, although La Liga clubs’ total revenue increased by 11 percent to €3.3bn (£2.83bn) in the 2021/22 season. The easing of COVID-19 restrictions towards the end of 2021 helped Spain’s top-tier clubs generate total match revenue of €409m (£350m) in 2021/22, an increase of €353m and £300 million on the previous season and the main driver of growth in total club revenue. Second only to La Liga, the total revenue generated by Bundesliga clubs rose by five per cent to €3.1bn (£2.66bn) in 2021/22 as a result of improved match revenue (€254m increase) and trading income (€169 million increase).
Following the decline in the value of domestic and international broadcast deals, Serie A was the only league of the ‘big five’ to record a reduction in total revenue in 2021/22 as total revenue fell by seven per cent (€171m) to 2.4 billion euros. In contrast, France’s Ligue 1 clubs experienced the biggest percentage growth in total revenue of the ‘big five’ leagues in 2021/22, increasing by 26 per cent (€412m) to a record €2bn . This growth was mainly due to new commercial deals and a post-pandemic increase in match revenue.
Overall growth in total revenue across the ‘big five’ was outpaced by a 15 per cent rise in wage costs from 2018/19 to €12.3bn in the 2021/22 season, leading to a €1.8bn drop in operating profits from 2018/19. The big five clubs reported a loss of €324 million in the 2021/22 season, although this was a slight improvement on the 2020/21 season (a loss of €400 million).
Tim Bridge, lead partner in Deloitte’s Sports Business Group, said: “The focus for all clubs must now shift to ensure long-term financial sustainability in the football system, and the introduction of new regulations in European football is well timed to support this. . Record growth in the Premier League continues to increase income polarization between and within European football leagues, and each league faces new challenges posed by increased competition, regulations and the pressures of a challenging macroeconomic climate.
“With UEFA’s financial sustainability regulations phasing in from 2022/23, European clubs and leagues are placed at the crossroads of some of the most significant regulatory changes the game has ever seen and a wave of investment in global football in a bid to the established system. And with emerging leagues looking to expand their supply and secure the best talent on the pitch, the future of European clubs may depend on how stable their financial footing is and whether they can use it to remain competitive and relevant .”
The 12% increase in revenue for Premier League clubs in the 2021/22 season was largely driven by record matchday revenue as fans returned to stadiums, alongside commercial revenue also hitting an all-time high.
Premier League match revenue increased to £763m in 2021/22, a £732m increase on the 2020/21 season, which was played behind closed doors. This also surpassed pre-pandemic levels of £684m in 2018/19, with the league’s highest average attendance ever (39,950). Commercial revenue also benefited from fans’ increased appetite for the game following the enforced absence, increasing by £245m (16 per cent) to reach a new high of £1.7bn.
Total wage costs increased for the second consecutive year in 2021/22, rising by six per cent to £3.6bn. Seven of the 17 permanent clubs reported wage cuts. This rise in wages (£192m) was outpaced by an increase in revenue (£586m), which saw the league’s wage-to-revenue ratio fall for the second successive season (67 per cent, down from 71 per cent). However, the average wage/income ratio of Premier League clubs remains above pre-pandemic levels (2016/17 to 2018/19 average: 58 per cent).
Clubs’ operating profits (excluding player trading) totaled £459m in 2021/22, £1m less than the previous season, which saw an increase for the first time in four years. Despite overall revenue growth (£586m) outpacing wage growth (£192m), an increase in operating costs (£395m) contributed to the net decline in operating profits. Cumulative losses for Premier League clubs were £607m in 2021/22, a significant drop from the 2017/18 season when pre-tax profits were £427m.
The net debt of Premier League clubs fell by 34 per cent to £2.7bn (20/2021: £4.1bn) at the end of 2021/22, with the acquisition of Chelsea and Newcastle United by new owners driving the reduction .
Bridge added: “The growing international interest and commercial power of playing in the English league continues to drive revenue growth. As new owners join the top tier and spending regulations continue to evolve, sustainable operations, funding models and ethical stewardship of a football club must continue to be paramount for all stakeholders to ensure the longevity and ultimate success of the Premier League and its member clubs.
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