Premier League clubs are gearing up for a potentially record-breaking summer of spending after collectively recording consecutive pre-tax profits for the first time this century.
Top-flight teams made a pre-tax profit of around £120m and an operating profit of approximately £550m for last season, data published today by Deloitte reveals.
Both figures were slightly down on the 2013-14 campaign but still represent the second highest of all time and complete the league’s first successive years of collective profit since 1999.
England’s 20 leading sides, buoyed by ever-increasing broadcast revenue, spent a record £870m on transfers last summer. Manchester City alone splashed out more than £140m, including £55m on Kevin de Bruyne.
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Deloitte’s Adam Bull expects another splurge on the stars of this year’s European Championships as Premier League clubs take advantage of another increase in television income from next term.
“I think it’s going to be a big spending summer again, especially with a major tournament taking place as well – people’s values often increase if they perform well,” Bull told City A.M.
“For Premier League clubs, knowing that from next season they’ve got a new and improved broadcast contract, they’ll feel even more confident that they’ll be able to spend the money on the playing talent.”
A new era of profitability
New broadcast contracts for 2016-19 are set to guarantee each top-flight team between £100m and £160m a year, up from £60m-£100m currently.
That lucrative market, allied to European and domestic so-called financial fair play rules that restrict spending, mean that a new era of profitability is expect to last for the rest of the decade at least.
“We would expect this profitability to continue certainly over the next broadcast deal,” added Bull, a senior consultant in Deloitte’s Sport Business Group.
“Currently the Premier League clubs’ spending power is so far ahead of the vast majority of other clubs in Europe that the need to increase the spending isn’t there like perhaps it used to be.
“Looking forward we don’t see any reason why this profitability wouldn’t continue. It makes Premier League clubs and those looking to get into the PL more attractive to potential investors.”
Premier League teams’ revenue reached a new record level of £3.4bn in 2014-15, a three per cent increase on the previous year.
However a six per cent rise in wage costs to a record £2m – 60 per cent of income – trimmed operating profit by around £70m.