Premier League clubs made a collective loss last season for the first time in three years despite generating more money than ever before, according to analysis published today by Deloitte.
England’s leading 20 teams recorded an aggregate pre-tax loss of £110m in 2015-16, ending two consecutive years of profit that had appeared to herald a new era of sustainability.
Top-flight sides posted record revenues of £3.6bn, a nine per cent increase on income of £3.4bn the previous year, while operating profits remained broadly stable at £500m.
Clubs collectively returned to the red, however, due to a 12 per cent hike in wage bills to £2.3bn, rising amortisation charges and substantial one-off costs.
Premier League teams appeared to have left their loss-making days behind when they recorded record profits of £190m in 2012-13 and followed that with another £120m profit 12 months later, although analysts believe last season’s figures merely represent a blip.
“Our analysis reveals a return to pre-tax losses, following two consecutive years of pre-tax profits,” said Dan Jones, head of Deloitte’s Sport Business Group.
“However, it is worth noting that this is due to a small number of one-off ‘exceptional’ costs, and we fully expect that the Premier League’s new three-year broadcast rights deal will see a return to record levels of profitability in the 2016-17 season.”
Television contracts worth £8bn for the 2016-19 cycle have already emboldened clubs to swell transfer spending further but are expected to bring teams back into the black.
“We have already seen to some extent the impact of the current broadcast rights deal, with clubs’ combined transfer expenditure over the course of the 2016-17 season reaching almost £1.4bn – eclipsing the previous record set in 2015-16 by one third and far exceeding any other league in world football,” added Deloitte senior consultant Andy Bull.
Manchester clubs fuel revenue rise
Last season’s revenue growth was driven by local rivals Manchester United and Manchester City, who jointly contributed 50 per cent of the increase in income across the division.
United grew earnings by 30 per cent to £515m thanks in part to a return to the Champions League and the success of their lucrative commercial operations.
That feat saw them overtake Real Madrid as the world’s richest football club for the first time since 2004.
Neighbours City also benefited from their European campaign as their run to the semi-finals of the Champions League helped boost income to £392m.