Israel Saria
The Bundesliga overtook the Premier League as the world’s most profitable league in 2008/09 despite English football enjoying record revenues, according to a new report released.
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The Annual Review of Football Finance compiled by accountancy firm Deloitte said the sport had proved remarkably resilient to the economic downturn but faced a major challenge in keeping a lid on player wages and transfers.
While Premier League clubs saw record revenues of £1.98 billion in 2008/09, operating profits more than halved from £185m in 2007/08 to £79m year later.
The Bundesliga’s operating profits were put at 172 million euros (£142m).
The £49m rise in Premier League revenue was less than half the £132m increase in wage costs which reached more than £1.3 billion.
Gross transfer spending by Premier League clubs also increased from £664m to a record £713m.
“The record wages to revenue ratio of 67 per cent in the Premier League in 2008/09 is a concern and we expect wages growth to outstrip revenue increases again in 2009/10,” said Alan Switzer, director in Deloitte’s Sports Business Group.
“This will further reduce operating profitability, a decline that cannot continue indefinitely.
“However clubs have the opportunity, via the revenue uplift from the new broadcast deals from 2010/11, to get wage levels down to a more sustainable share of revenue,” added Switzer.
“It’s not the first such opportunity. It remains to be seen whether they grasp it.”
The report said new overseas broadcast deals would result in an additional seven million pounds per season for each Premier League club in 2010/11 and presented another chance for them to improve their financial positions.
UEFA last month approved ‘Financial Fair Play’ rules aimed at forcing clubs to live within their means, with a break-even requirement to be phased in over the next three years.
“The key driver of wages inflation is domestic rather than cross border competition,” the authors said in a foreword to the report.
“It is potentially within a dozen or so Premier League club cheque signatories’ gift to be game changers in a financial sense.
“Nevertheless we fear history will repeat itself and once again the vast majority of those revenues will quickly flow into the hands of players and their agents. We hope football can prove us wrong.”
The review said the total European football market grew to a record £13.4 billion in 2008/09, with the Premier League generating the most revenue.
The Bundesliga showed revenue growth of 137 million euros to 1,575 million, with a 99 million (16 per cent) increase in commercial revenues.
Reuters
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