New figures have demonstrated just why owning a Premier League football club is such a valuable asset.
While the Glazer family looks set to relinquish their majority shareholding in Manchester United in the coming weeks, there has been much noise around the prospect of them maintaining a minority position in the Red Devils as they seek to continue to have a hand in the continued success of the world’s most successful football league.
In the case of Liverpool, while owners Fenway Sports Group formalised a search for investment at the back end of last year, seeking to sell a minority stake in the Reds, the intention was to keep hold of the club that they have owned since 2010 while finding ways to secure the capital required for future growth and to ensure that they remained part of the elite group that has dominated the Premier League and European landscape for some time.
That investment search hasn’t ended and the club’s owners continue to assess their options when it comes to bringing on board fresh capital, but the latest figures published by the Deloitte sports group show why FSG have little appetite to part ways with the Reds, and why there is so much interest in acquiring Premier League football clubs by individuals, groups and sovereign wealth funds from around the world. The Premier League continued to outpace the competition and retain its position as the clear market leader, with member clubs reporting a 12 per cent rise in overall revenues in the 2021/22 season, culminating in a record aggregate revenue of €6.4bn (£5.5bn). That was a figure greater than both Spain’s La Liga and the German Bundesliga combined.
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La Liga revenues remain at approximately half that of the Premier League, despite La Liga clubs’ total revenue increasing by 11 per cent to €3.3bn (£2.83bn) in the 2021/22 season. The relaxation of COVID-19 restrictions towards the end of 2021 helped Spanish top-tier clubs generate total matchday revenues of €409m (£350m) in 2021/22, a €353m £300m increase on the prior season and the main growth driver of clubs’ combined revenue. Second to La Liga, total revenue generated by Bundesliga clubs grew five per cent to €3.1bn (£2.66bn) in 2021/22, as a result of improved matchday revenues (€254m increase) and commercial revenues (€169m increase).
Following a fall in value of domestic and international broadcast deals, Serie A was the only ‘big five’ league to record a decrease in aggregate revenues in 2021/22, as total revenue fell seven per cent (€171m) to €2.4bn. In contrast, France’s Ligue 1 clubs experienced the greatest percentage growth in aggregate revenues of the ‘big five’ leagues in 2021/22, increasing 26 per cent (€412m) to a record high of €2bn. This growth was predominantly driven by new commercial deals and a post-pandemic uplift to matchday revenues.
Overall aggregate revenue growth 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, causing operating profits to decline by €1.8bn since 2018/19. ‘Big five’ clubs reported a loss of €324m in the 2021/22 season, although this was a slight improvement on the 2020/21 season (a loss of €400m).
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 across the football system, and the introduction of new regulations across European football are appropriately timed to support this. Record growth in the Premier League continues to increase revenue polarisation between and within European football leagues, and every league faces new challenges brought by increased competition, regulation and the strain of a challenging macroeconomic climate.
“With the gradual introduction of UEFA’s Financial Sustainability Regulations from 2022/23, European clubs and leagues are set between the crossroads of some of the most pivotal regulatory changes that the game has ever seen, and a wave of investment into global football in an attempt to challenge the established system. And with emerging leagues looking to grow their offering and secure the best in on-pitch talent, European clubs’ future may be dependent on how sound their financial foundation will be and whether they can use that to remain competitive and relevant.”
The 12% rise in Premier League clubs’ revenue in the 2021/22 season is largely attributable to record matchday revenue as fans returned to stadia, alongside commercial revenue also reaching an all-time high.
Matchday revenue for the Premier League increased to £763m in 2021/22, a rise of £732m on the 2020/21 season, which was played behind closed doors. This also surpassed pre-pandemic levels of £684m in the 2018/19 season, with average league attendance at an all-time high (39,950). Commercial revenue also benefited from fans’ heightened appetite for the game after enforced time away, 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 six per cent to £3.6bn. Seven of the 17 consistent clubs reported a reduction in wages. This wage growth (£192m) was outpaced by the increase in revenue (£586m), resulting in the league’s wages/revenue ratio falling for the second-consecutive season (67per cent, down from 71 per cent). Despite this, Premier League clubs’ average wages/revenue ratio remains above pre-pandemic levels (2016/17 to 2018/19 average: 58 per cent).
Clubs’ operating profits (excluding player trading) totalled £459m in 2021/22, down £1m on the previous season which had seen an increase for the first time in four years. Despite aggregate revenue growth (£586m) outpacing wage increases (£192m), a rise in operating expenses (£395m) contributed to a net reduction in operating profits. Cumulative losses of Premier League clubs were £607m in 2021/22, a significant fall from the 2017/18 season where pre-tax profits stood at £427m.
Premier League clubs’ net debt decreased by 34 per cent to £2.7bn (20/2021: £4.1bn) at the end of 2021/22, with the acquisitions of Chelsea and Newcastle United by new owners a reason for this reduction.
Bridge added: “Growing international interest and the commercial prowess of playing in the English top-flight continues to drive revenue growth. As new owners join the top-tier and cost regulations continue to evolve, sustainable operating, funding models and acting with integrity as the custodians of a football club should continue to be top of mind for all stakeholders to ensure the longevity and ultimate success of the Premier League and its member clubs.”
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