Rising wage bills curb Premier League profits despite record revenues

Source:AFP Published: 2019/4/25 18:43:43

England's 20 Premier League clubs amassed record combined revenues of 4.8 billion pounds ($6.2 billion) for the 2017-18 season, but saw profitability hit by rising wage bills, according to a report by soccer finance experts Deloitte.

Total revenues were up 6 percent from 4.6 billion pounds in 2016-17 but operating profits were just 0.9 billion pounds due to a 15 percent increase in wages to 2.9 billion pounds.

Tottenham posted a world-record 113 million pound net profit earlier this month thanks to increased matchday revenue from playing at temporary home Wembley last season, reaching the Champions League last 16 and improved commercial income. Liverpool had briefly held the world record for their 106 million pound profit based on reaching last season's Champions League final and the 142 million pound sale of Philippe Coutinho to Barcelona.

The participation of five English clubs in the Champions League for the first time last season helped boost revenues.

However, the number of clubs posting a pre-tax loss rose as Arsenal, Liverpool and Tottenham combined for more than 75 percent of total profits.

That is partly because player wages rose well in excess of revenue growth.

"Almost half of Premier League clubs recorded a wages/revenue ratio of 70 percent or greater, with overall wage spend increasing 15 percent to 2.9 billion pounds," said the report.

"This had a direct impact on clubs' collective operating profitability, falling to 0.9 billion pounds, albeit still the second highest in Premier League history."

The rise in wages came on the back of record transfer windows for spending by Premier League clubs in the summer of 2017 and January 2018. Yet, with the rapid growth in TV rights deals slowing for the 2019-22 cycle, Deloitte expect that spending on transfers and wages may decline in coming seasons.

"Increases in wage and transfer expenditure may be expected to slow in the medium term, as already signaled by the reduced estimated 1.4 billion pounds gross transfer spend in the current season," said Tim Bridge, director in the Sports Business Group at Deloitte.



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