EPL Players Earning Record Wages As Clubs Assume Record Debt

The Deloitte Annual Review of Football Finance shows that the EPL's 20 clubs during the '07-08 season spent a record $1.9B (all figures U.S.) combined on player wages, up 23% from the '06-07 campaign, according to Nick Harris of the London INDEPENDENT. The teams' combined income during the '07-08 season rose 26% to $3.1B , "largely as a result" of the league's combined overseas and domestic TV revenue of $1.5B. However, "realistic hopes of generating substantial profits remain as distant as ever for most clubs," as the EPL's combined debt has risen to an all-time high of $5.0B. The EPL's "big four" clubs -- Manchester United, Chelsea, Liverpool and Arsenal -- are "responsible for almost two-thirds of that sum." However, Deloitte analysts "remain largely upbeat about the English game's future, even as the recession bites," and predicts that EPL clubs "will continue to grow revenues in 2009-10, albeit at a slower pace" (London INDEPENDENT, 6/4).

TAKE THE BAD WITH THE GOOD: In London, Paul Kelso reported despite "earning more money than ever," EPL clubs "still struggle to turn a profit," as just 11 of the 20 did so during the '07-08 season. The "brake on profits was largely due to rises in operating costs other than wages," and Deloitte in the report warns that "clubs will have to work hard to keep these costs down as revenue is unlikely to grow appreciably in coming seasons because of the recession" (London TELEGRAPH, 6/4). Also in London, Nick Szczepanik noted that whether or not revenue growth can be "sustained is debatable, with clubs realising that many of their supporters are unable or unwilling to pay increased admission charges." Deloitte Sports Business Group Partner Dan Jones said, "The new economic realities may lead to flat match-day revenues. While attendances continue to hold up well, many clubs have frozen or reduced ticket prices." Meanwhile, Szczepanik noted the debt for both ManU and Liverpool "sums stemming from loans taken out by the clubs' owners to finance takeovers," while Arsenal's debt includes $404.3M in "long-term bonds taken out to finance their new stadium" (LONDON TIMES, 6/4). In Manchester, David Conn noted the finances show that "despite booming incomes," EPL clubs "increasingly rely on subsidies" from team owners. Fifteen of the 20 clubs in the EPL during the '08-09 season were "subsidised by owners." However, the EPL "defends the financial picture presented, arguing that the levels of debt are generally manageable, giving rising turnovers and the improved" TV contracts (Manchester GUARDIAN, 6/2).

Gillett (l), Hicks Negotiating To Refinance Club's Debt

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