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SBD Global/June 7, 2013/Finance

Deloitte Study Shows Premier League Revenue Will Top £3B For First Time Next Season

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Football revenue in the EPL is predicted to hit a record next year.
A study released by Deloitte showed the combined revenue of Premier League teams "will leap to more than" £3B ($4.6B) for the first time next season, according to Alex Duff of BLOOMBERG. In its Annual Review of Football Finance, Deloitte said that revenue will increase by about £600M ($935M), or almost 25%, from the '12-13 season "as income is boosted by the first year of new broadcasting deals." The report, which focuses on the '11-12 season, said that revenue rose 4% to a record of almost £2.4B in that year, "boosted by sponsorship deals" for ManU and Man City with Deutsche Post AG’s DHL and Etihad Airways. The league’s revenue "is estimated to have risen" a further 5% in the season just ended (BLOOMBERG, 6/5). The BBC reported the report said the cash, plus new spending rules, "could provide huge benefits to the long-term development" of football. Deloitte Sports Business Group Partner Dan Jones said, "Despite operating in a challenging economic environment, English club football's profile, exposure and increasingly global interest have continued to drive revenue growth for the top clubs" (BBC, 6/5). In London, James Riach reported total revenue for Championship clubs increased by £53M ($82M) to £476M ($742M). Although the combined operating losses for all 24 teams in the division rose to a record £147M ($229M), with a worrying total £900M ($1.4M) net debt, it "remains the strongest second-tier across Europe by some distance." Despite the impressive revenue growth, though, "operating losses in the Football League grew to record levels" (GUARDIAN, 6/5).

BUNDESLIGA'S BANKROLL: In London, Ashling O'Connor reported although there were two German clubs in the Champions League final, the Premier League "can still boast" a €1B ($1.3B) revenue lead on the Bundesliga, which is "the second biggest income generator" in the £15.7B ($24.5B) European football market. This gap "will only grow next season after the Premier League’s sale of its media rights" for a record £5.5B ($8.6B). The entrance of BT Sport to compete with BSkyB in the domestic market resulted in a 70% "surge in the value of the UK rights alone" (LONDON TIMES, 6/6). Also in London, Rebecca Clancy noted while the Premier League has the highest revenue of any in European football, Germany "remained Europe’s most profitable league as stricter licensing rules curbed clubs’ spending on player wages." Bundesliga clubs "had a combined equivalent" of £154M ($240M) of operating profit in '11-12, compared with £98M ($152M) for the Premier League. Deloitte added that the Bundesliga "will also enjoy a significant increase in revenue next season," due to their domestic broadcast deals, which are up roughly 50% (TELEGRAPH, 6/6).

RISING WAGES: In London, Roger Blitz reported Premier League wages "are projected to have risen" by 9% over the past season to a total of £1.8B ($2.8B), and will soon reach a level more than €1B ($1.3B) higher than the next highest-spending European league. The history of the Premier League "has seen clubs throw increased income at players’ wages in order to stay competitive in football’s biggest revenue-raising club competition." The coming season "is unlikely to be any different." Deloitte said it would take “unprecedented restraint” to reduce the ratio in the coming season (FINANCIAL TIMES, 6/6).

 The Deloitte study also found:
  • The lower revenue growth for La Liga and Serie A clubs is reflective of the challenging economic conditions in these countries. La Liga remains highly polarized, with €1B of '11-12 revenues relating to Real Madrid and Barcelona, exacerbated by their ability to sell their own broadcast rights.
  • Italian clubs continue to be most heavily reliant on broadcast revenue, which contributes 59% of their total revenues. Already relatively weak matchday revenues declined further and contribute just 12% of Serie A clubs' overall revenues. Juventus bucked this trend.
  • Russia has the next highest revenue generating top tier league followed by Turkey and the Netherlands (Deloitte).
SINGING THE BLUES: The MANCHESTER EVENING NEWS reported Man City "made the biggest loss" of the Premier League clubs in the '11/12 season, but still "dramatically improved their financial performance." The Blues made revenue of £231M ($361M), but recorded losses of £97.9M ($153M), "down significantly" from the £197.5M of the previous 12 months (MANCHESTER EVENING NEWS, 6/6). The London TELEGRAPH reported Swansea City's players "give the best value for money of any Premier League team." Swansea "had the smallest wage bill in the division," yet still managed to finish in 11th in the standings (TELEGRAPH, 6/6).
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