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Record Premier League profits

Premier League clubs’ combined revenue increased by nearly £1bn to £4.5bn in the 2016/17 season, a new record, report Deloitte Sports Business. Collective pre-tax profit of £0.5bn was almost three times the previous record of £0.2bn in 2013/14. Clubs generated record operating profit of £1bn – double the amount reported for the 2015/16 season. Wage costs across the league rose by 9% to £2.5bn, a new record, but significantly slower growth than the 25% increase in overall revenue.

Premier League clubs generated a combined operating profit of £1bn in the 2016/17 season. Clubs collectively reported £0.5bn in pre-tax profit, also a league record, with wages increasing by 9% to £2.5bn. Dan Jones, Partner and head of the Sports Business Group at Deloitte, commented: 'As predicted last year, the Premier League’s three year broadcast deals which came into effect in the 2016/17 season helped drive revenue to record levels.'

'Despite wages increasing by 9% to £2.5bn, this increase is nowhere near the level of revenue growth noted. This relative restraint from Premier League clubs reflects both the extent of their financial advantage over other leagues and the impact of domestic and European cost control measures.'

The restraint shown by clubs to control their wages (spending only 23p of every extra £ of revenue on increased wages) has translated broadcast revenue success into healthy operating and pre-tax profits. All 20 clubs made an operating profit and 18 of 20 recorded a pre-tax profit. The collective revenue to wage ratio is down from 63 per cent to 55 per cent in the 2016/17 season, the lowest since the 1997/98 season.

The analysis reveals that Premier League clubs have collectively made a pre-tax profit in three out of the last four years and, despite clubs posting a collective pre-tax loss in 2015/16 season (due to a small number of one-off exceptional costs), it is likely that Premier League profits are here to stay.

Jones added: 'Although we anticipate wage costs will continue to rise in the coming seasons, we do not foresee increases to be at a level which can jeopardise the profitability of the Premier League as a whole. The most significant wage increases have tended to occur in the year prior to the commencement of a new broadcast cycle once a substantial revenue increase is secured.'

'Despite the lack of growth in domestic broadcast deals announced to date, we still expect to see overall revenue growth in the coming seasons, and if this is complemented with prudent cost control, we expect that pre-tax profits will be achieved for the foreseeable future.'

Tim Bridge, Senior Consultant in the Sports Business Group at Deloitte, said: 'We have already seen some clubs utilising their significant revenue increases, with a record £1.9bn spent on transfers in the 2017/18 season. We may again see similar levels of spending in the coming season, with the FIFA World Cup providing the perfect shop window for talent, but expenditure remains well within the means of clubs.'

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