Author: Josh Kay
Research published last week by Deloitte’s Sport Business Group shows that the total revenue of the 20 Premier League clubs grew to a record high of £4.8bn in 2017-2018, a six percent increase from the previous season. In spite of these increased revenues, the collective operating profits of Premier League clubs dropped from £1bn to £900m and the collective profits before tax fell from £500m to £400m.
Pressure on profit margins is nothing new for Premier League clubs. In 2013-2014, the clubs in the Premier League recorded pre-tax profits for the first time since the division’s inception in 1992. However, this recent trend appears to be the result of the £2.9bn paid by Premier League clubs to their players, which represents a 15 percent rise from the previous season.
These trends will of course ring truer for some clubs than others. Despite markedly higher wage bills than the rest of the division, the so-called “Big Six” clubs (Manchester United, Manchester City, Liverpool, Chelsea, Arsenal and Tottenham Hotspur) are increasingly operating in a league of their own when compared to the division’s other 14 clubs.
According to figures released by Vysable, the Big Six accounted for 89% of the Premier League’s pre-tax profits in 2017-18, a 53% increase from 2016-2017. Between them, the Big Six recorded earnings of more than £53.4m a week, compared to £39.4m contributed by the remaining 14 teams. Indeed, the gap from highest revenue to lowest revenue (Manchester United to West Bromwich Albion) was £465m, the largest it has ever been in the Premier League’s history.
Of the £400m pre-tax profit recorded by the 20 clubs, approximately three quarters was contributed solely by Liverpool, Arsenal and Tottenham. Liverpool and Tottenham’s regular participation in recent Champions League campaigns, Europe’s most lucrative tournament, has brought increased commercial and broadcasting revenue and has led to both clubs recording pre-tax profits of more than £100m each last season. This is in stark contrast to clubs towards the bottom end of the division who risk losing up to £100m should they be relegated from England’s top tier.
As the race for qualification for next season’s Champions League reaches its finale over the next month, it appears that qualification has never been so important for England’s elite clubs.