England’s top-flight clubs will buck the global economic downturn by continuing to increase revenues next season, but rising levels of debt could signal trouble ahead, according to the annual review of soccer finances from accountancy group Deloitte.
Dan Jones, one of the authors of the report, said the Premier League’s global popularity would keep revenues rising but predicted that revenue growth would slow.
“The new economic realities may lead to flat matchday revenues,” Jones said. “While attendances continue to hold up well, many clubs have frozen or reduced ticket prices. However, the stepped increases in the current domestic broadcast deal and the new UEFA Champions League TV deal make it likely overall revenues will edge up.”
The accountancy group’s report — based on figures from the 2007-2008 season — reveals that total debt among the 20 Premier League clubs hit £3.1 billion (US$5 billion) in 2007-2008 while wage costs surged 23 percent to £1.2 billion.
Deloitte’s Alan Switzer said clubs could not afford to be complacent about the long-term sustainability of their debt levels given the possibility of failure on the pitch, an issue highlighted by Newcastle’s recent relegation.
“The more debt you have, the more vulnerable you can be if you suffer a revenue knock-off such as failing to qualify for the Champions League or in the worst scenario relegation,” Switzer said. “Having a higher debt is not helpful in those situations and you have to make sure you have some flexibility, and that places an onus on having flexibility around player wages.”
Although wage costs have increased, increased television money ensured that the average wages-to-turnover ratio for Premier League clubs declined slightly from 63 percent to 62 percent.
Manchester United and Arsenal both paid out less than 50 percent of their income in wages, but Chelsea’s ratio was 81 percent.
Deloitte’s report also highlights the success of the Championship, which enjoyed the third highest average attendances of any league in Europe behind the Premier League and Germany’s Bundesliga.
Deloitte’s report found that English top-flight clubs are more profitable than their rivals overseas, having been briefly eclipsed on that score by Germany’s elite.
It also identifies Italy’s Serie A as the fastest-growing league in financial terms, with total revenues increasing by 34 percent.
The Premier League said Deloitte’s report was an indication of the rude health of English soccer.
“Clearly debt has risen, but it is a more complex issue that many commentators assume,” spokesman Dan Johnson said. “Clubs use different models of debt — investment, benefactor and acquisition — but ultimately it is for individual clubs to decide what levels they carry and whether it is sustainable.”
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