Premier League clubs posted record revenues of 3.6bn in 2015-16, but still struggled to make a profit.
The 20 top-flight English teams made a pre-tax loss of 110m, after two consecutive seasons in the black, according to figures from Deloitte.
Clubs saw increased player expenditure, operating costs and one-off charges.
The two Manchester clubs’ revenues increased by a total of 160m – roughly half of the total revenue growth recorded by the Premier League clubs.
“The 2015-16 season saw Premier League clubs grow revenues by almost 10% … with the two Manchester clubs alone responsible for more than 50% of the increase,” said Dan Jones, head of the Sports Business Group at Deloitte.
Mr Jones said Manchester United’s participation in the 2015-16 Uefa Champions League, along with continued strong commercial revenue growth, resulted in a 30% increase in revenue to 515m, making them the world’s highest revenue-generating club.
“Increased distributions to clubs competing in Europe, under the new Uefa broadcast rights cycle – notably Manchester City, who reached the semi-finals of the Uefa Champions League – also contributed to Premier League clubs’ revenue growth,” Mr Jones added.
Premier League 2015-16 in numbers (2014-15 in brackets)
- Revenues – 3.6bn (3.4bn in 2014-15)
- Wage costs – 2.3bn (2bn)
- Other operating costs – 900m (800m)
- Operating profit – 500m (500m)
- Net player trading – 400m (300m)
- Other costs – 200m (100m)
- 18 clubs made an operating profit
- 12 clubs made a pre-tax profit
Source: Deloitte Analysis. Note: Figures subject to rounding
Looking at the combined losses, the first since the 2012-13 season, he said it was “worth noting that this is due to a small number of one-off ‘exceptional’ costs”.
He said an example of these one-off items was Chelsea making a big financial provision against the early cancellation of their kit supply deal with Adidas.
Overall league revenues are set to be even higher in this season, thanks to the effects of the new television deal with Sky and BT, which kicked off last August and is worth a record 5.136bn for live Premier League TV rights over three seasons.
“We continue to see television deals go up, and there is no reason to believe that will end any time soon,” said Mr Jones.
He said that as well as TV, there were other long-term revenue earners in the pipeline, principally the move by a number of clubs – including West Ham, Chelsea, Spurs, Liverpool, Everton and Manchester City – to expand their existing stadiums or move into bigger ones.
“It means that clubs will enjoy a growth in that most traditional of revenue streams, namely matchday income,” said Mr Jones.
Another highly touted source of future income for clubs has been digital, but Mr Jones said that rather than bringing in huge sums in its own right, digital could be used to enhance the clubs’ existing commercial connections with fans and sponsors.
And he said that at the top of the Premier League, clubs would constantly look to add to their global rosters of sponsors.
However, one potential worrying sign for clubs is that player and wage costs were on the rise again in 2015-16, with gross transfer spending in 2015-16 at a record and salaries up by 12% to 2.3bn,
In addition, gross transfer spend in 2015-16 was a record, although this has since been surpassed by player spending in the 2016-17 season reaching almost 1.4bn – eclipsing the previous high by one-third.
But Mr Jones said that whereas in the past, the ratio of player wages to income rose steeply when a new TV deal was signed, this time, “it is reassuring to see that there is more balance.”
In 2015-16 wages accounted for 64% of income, compared with 71% in 2012-13 and 69% in 2009-10.
Meanwhile, combined operating profits for 2015-16 – which strip out the effects of player trading, net interest charges and the changing value of player contracts – remained stable at 500m, the same as in the previous 2014-15 season.
Read more: http://www.bbc.co.uk/news/business-39641423