Buyers lured as clubs post record profits

 
Frank Dalleres
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ENGLAND’S leading football clubs have become the subject of increased interest from potential buyers after entering what industry experts believe is a new era of profit-making.

Deloitte’s Sports Business Group, which advises parties looking to acquire and sell teams, said it had noticed the market warming to Premier League sides in response to unprecedented financial results.

Collective pre-tax profits among the 20 top flight clubs soared to £187m, nearly four times the previous record, in 2013-14, according to Deloitte’s Annual Review of Football Finance, which is published today. Nineteen of the teams recorded operating profits, which increased by 649 per cent to £614m.

Two key factors drove the profits: a 48 per cent rise in annual revenue from television contracts to £1.76bn; and domestic and European cost-control rules, which slashed the proportion of income clubs spent on wages from 71 to 59 per cent.

Further gains are also forecast, with the next broadcast deal starting in 2016 already guaranteed to send revenues rocketing again. Domestic rights, which comprise the bulk of that income, will grow by 70 per cent.

“In terms of general market sentiment, yes, we are seeing things like the new TV deal help,” Deloitte’s Dan Jones told City A.M.

Premier League revenue has grown consistently for two decades, but the return to a collective pre-tax profit for the first time since 1999 marked “a transformational moment” in English clubs’ appeal, he added. “From a point of view of more economic investors, they’re looking at it thinking: ‘This is a real business, it looks like businesses in other sectors; when it grows its revenue and becomes a bigger business, it’s able to make more profit’.

“There has been reluctance from some people because they have seen a 20-year track record and they are thinking: ‘Is this a blip or is it a turning point?’. Our very clear view is that it is a turning point.”

It is now four years since one of this season’s Premier League clubs was the subject of a successful takeover, when Stan Kroenke took a controlling interest in Arsenal in April 2011.

Fellow American sports mogul Shahid Khan bought Fulham in 2013, but they dropped into the second tier the following summer.

Top-flight newcomers Watford and Bournemouth were acquired in 2012 and 2013 respectively.

Crystal Palace, Aston Villa and West Brom have all attracted interest from potential buyers, while Tottenham and Everton are the biggest clubs regularly tipped as takeover targets.