Premier League clubs are "living beyond their means, and are squandering the vast TV revenue they receive," according to John Brewin of ESPN.com. Those are the findings of financial analysis expert Vysyble, which estimated that, between them, clubs lose an average of £876,000 ($1.13M) every single day, and "are failing to meet the ever-increasing costs of wages and transfers." Using the accounting principle of "economic profit," where all the costs of doing business are accounted for, Vysyble said that it has the "most transparent view possible of clubs' financial health." Vysyble analyst Roger Bell said, "Financially, football is failing. Britain's biggest football clubs are spending much, much more than they are making. The Premier League, and [Exec Chair] Richard Scudamore, should be very worried." Should TV companies like Sky and BT, and the Premier League's worldwide global broadcasters, which pay £3.2B ($4.1B), offer less next time, "that could threaten the future of English football's top division." Each TV deal since the Premier League formed has seen an increase of around 70%, but "with viewing figures falling, as consumers' habits change, and the threat of pirate illegal streams, there may soon come a point when broadcasters can no longer afford such increases." Vysyble's John Purcell said that the acceleration in spending has been "fired by the heavy investment of billionaire benefactor clubs" like Chelsea and Man City. He said, "They went on an enormous spending spree. And you have got to compete as a club. City are slapping down £200 ($258) in the poker game where before clubs were playing with a tenner and it puts a huge financial stress on other clubs." Vysyble calculated that with transfer fees and salaries "spiralling," clubs increased economic losses by 5,555% year-on-year from £5.66M in '13-14 to £320.08M in '15-16. ManU made £515M in revenue in '16, while Man City made £391M, Arsenal made £353M, Liverpool made £301M and Chelsea made £298M (ESPN.com, 7/9).
BREAKAWAY LEAGUE?: In London, Matt Slater wrote the report also claimed the "long-term implications of those losses could be a breakaway by the league's biggest clubs and the creation of a European Super League." The document is based on the accounts of all Premier League clubs between '08-09 and '15-16. This "stark warning runs counter to most recent analyses of the Premier League's financial health." Purcell said that only five clubs made an economic profit in '15-16, the "worst performance" since '12-13, with Chelsea and Man City accounting for more than half of the league's total losses over the report's eight-year period. The report will "raise eyebrows among many fans," as it ranks relegated Norwich City ahead of champion Leicester City in its "Profitability Index" for '15-16. Purcell: "We're getting to the point where the cycle of ever bigger domestic TV deals is unsustainable. I think we've had seven renewals since 1991 and they work to a formula -- if we follow the trend, the next deal will have to clear £8 billion ($10.3B). I don't think there is any way BT or Sky can commit to that kind of money. ... I suspect we are heading towards a European Super League where the new breed of owners, many of them from North America, can organize the type of league they know and understand: fixed squads, salary caps, big TV events" (INDEPENDENT, 7/10).
