Toon 'Soft Loan' Is £277m

By Footy Mad - Editor
Last updated : 31 May 2012

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The Bundesliga remained Europe's most profitable league with operating profits of £154m, a 24% increase. In the Premier League, overall operating profits decreased by £16m to £68m.

Net debt in Premier League clubs fell by £351m (13%) to £2.4billion, the lowest level since 2006. Of that, 62% (£1.5billion) is in non-interest bearing 'soft loans', most which relates to three clubs Chelsea (£819m), Newcastle (£277m) and Fulham (£200m).

The latest annual review of football finance by analyst Deloitte show the increase in wages outstripped the growth in revenues.

It has resulted in a wages/revenue ratio of 70% in the Premier League - a record figure having crept up from the low-to-mid 60s five years ago.

Wages went up by £201million in 2010-11 to almost £1.6billion, a 14% rise, and overall revenues rose by 12% to £2.27billion. This was mostly driven by a rise in income from the new TV deals, especially from overseas rights.

Alan Switzer, director in the sports business group at Deloitte, said wage control was paramount for good business.

He said: "If the wages to revenue ratio is 70% or higher it's very difficult to make an operating profit.

"In our view it is too high as a league and the clubs need to be edging back to the low 60s. Every 1% that it drops should increase operating profits by £20m to £25m."

Switzer said Manchester City and Chelsea faced the greatest challenges in conforming to the FFP rules.

"Chelsea and Manchester City are the clubs which have recorded the biggest losses so they are the two which have the most to do, and to be fair to them they have been pretty public about needing to take action.

"A significant number of clubs around Europe have some distance to travel on the road towards compliance."

The report also shows almost half of top-flight clubs had a reduction in matchday revenue reflecting the fact that many have been cautious about raising ticket prices during the current economic climate.

Combined pre-tax losses among Premier League clubs were £380m, while transfer spending increased by £210m (38%), to a record level of £769m.

 

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