THE PREMIER League returns tomorrow. Although most of us will be interested in the quality of the football on offer, the amounts of money involved are no less significant. It’s Europe’s highest revenue-generating league by a margin of over €1bn (£850m), with combined club revenue of over £2.3bn in 2011-12. But while players continue to be the main beneficiaries, with total Premier League annual wages at over £1.6bn, we’d be wrong to categorise this financial muscle as solely at the service of well-paid footballers.
First, the development of England’s top flight has translated into significant job opportunities off the pitch. In 2011-12, English professional football supported 18,000 full time jobs. The Premier League supplemented this with around 9,000 part-time roles, and supports an increasing network of football-related businesses.
The government has been another big winner. With wage costs for League clubs rising at an annual rate of 17 per cent since 1991-92, the contribution football makes to HMRC has also risen. The 92 English professional clubs contributed £1.3bn in tax in 2011-12, and the total tax contribution of professional English football has more than doubled over 10 years. The majority has been generated through PAYE and National Insurance, allowing HMRC to gain from the oft-maligned upwards pressure on player wages.
Third, while rising spending power can be seen in the quality of talent the Premier League attracts, infrastructure has also benefited. The League boasts some of the finest stadia in Europe, with consistently high levels of utilisation (95.3 per cent in 2012-13). Over 20 years, cumulative infrastructure expenditure has exceeded £3.3bn. In total, 29 club stadia have been built, with fans across the divisions enjoying much improved matchday facilities.
Fourth, investment in infrastructure delivers benefits far beyond football. Several stadia were key elements in the London Olympics and Paralympics, as well as the forthcoming Rugby World Cups. And the growth of the League has enabled development at the grassroots. Since 2000, Premier League investment of over £200m into the Football Foundation has allowed it to direct £30m into grassroots sports annually, providing over 1,600 schools with new football facilities.
Rising revenues are sometimes seen as indicative of clubs moving away from their local communities but, in fact, greater resources have enabled many to play a larger role locally. The Premier League’s Creating Chances programme, supported by more than £10m of central funding in 2012-13, works with clubs to deliver a range of programmes, engaging over 540,000 people during the 2012-13 season.
The rate of wage increases, however, has still outstripped revenue growth. This has seen many English clubs struggle to maintain profitable or even sustainable business models. But new broadcast deals look set to push Premier League clubs’ revenues to over £3bn in 2013-14. This, coupled with financial regulation at a league and continental level, will give the chance for more clubs to add sustained profitability to their long list of achievements.
Alex Thorpe is a consultant in Deloitte’s Sports Business group.