Annual Deloitte report reveals fiscal health of the Prem
Yesterday, the number crunchers at Deloitte released their annual report regarding the games’ finances in the 2006/07 season. The reams of data tell us that Premier League wages have now topped the £1billion mark, with each Premiership side dishing out an average of £48.5m to their staff (with Watford’s £17.7m at the bottom of the scale, and Chelsea’s staggering £132m at the top).
While revenues have never been higher (The Premier League brought in €2273million in 2006/07, almost twice as much as the closest financial competitor, The Bundesliga), many clubs are spending far more than they are generating. Of all the teams in the top two flights, Derby’s situation was most troubling, as their wages/turnover ratio stood at 125 per cent. That means for every £100million that came into the club (and that’s just turnover, not profit), they were spending £125million on keeping the team in place. Of course, this figure is skewed by the performance-related bonuses given to Rams players for winning promotion, but it represents part of a trend that Deloitte partner Dan Jones believes will ‘lead to a continuing flow of insolvency cases’.
The financial housekeeping in Derbyshire leads a lot to be desired, but bank mangers in north London are considerably less aggravated. The famed wage structure at Arsenal puts them in a healthy third place in the league of wages/ turnover ratios (with 50 per cent), but based on this criteria, Spurs’ 42 per makes their structure the most economically sustainable in the top two flights.
As the graph above shows, the English top flight is by far the biggest money-maker in Europe, and revenues rose 11 per cent on the previous year. However, wage bills rose 13 per cent, and Mr Jones of Deloitte is concerned that ‘there is limited evidence the clubs are translating this revenue boost into improved profits’.
Overall, just eight Premier League clubs showed profit in 2006/07 – Arsenal, Manchester Utd, Tottenham, Liverpool, Newcastle, Reading, Sheffield Utd and Watford.
So, with the financial stakes so high, it seems that a board who dare to take a significant financial risk will suffer dire consequences if things don’t work out on the pitch. But who will be the first to go? And when will the Premier League’s cash rich bubble finally burst? And where are the figures on the issues that really matter – the Jermain Defoe Chinawhites visit/ shameless WAG defiling ratio? The Berbatov moaning index? The Cristiano Ronaldo wages to prostitute use coefficient…