Premier League break £1bn barrier

[milkman]

Premier League break £1bn barrier

Record level of debt also recorded

The Premier League's annual total wage bill has smashed through the £1bn barrier for the first time ,while there is also a record level of debt owed by Premier League clubs.

Deloitte's annual review of football finance has revealed the total debt among the 20 Premier League clubs hit £3.1billion in 2007/8 while wage costs also showed a record rise of £227million - 23% - to reach £1.2billion.

The overall debt figure includes 'soft debt' such as the £701million made available as an interest-free loan to Chelsea by owner Roman Abramovich - he was since reduced that to £339.8million with the rest becoming his equity in the club.

Other clubs however are potentially more vulnerable to servicing their debts if they fail to achieve their targets on the pitch.

Alan Switzer, director in the Sports Business Group at Deloitte, said: "Debt can be sustainable but football should not be complacent. They should make sure the business model works for them to make sure the level of debt is sustainable.

Vulnerable

"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.


"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."

According to Deloitte, Manchester United's debt stands at £649million and Liverpool's at £299million, both sums stemming from loans taken out by the owners to finance takeovers. Arsenal's £318million includes £250million in long-term bonds taken out to finance their new stadium.

The increase in wage levels may also cause raised eyebrows but they do not appear a major problem as they are slightly less than the rise in income from Premier League TV rights. As a result, the wages to revenue ratio improved slightly to 62% from 63% the year before.

Manchester United and Arsenal both paid out less than 50% of income in wages, and Liverpool 55%, but Chelsea's ratio was 81%.

The wages-to-revenue ratio is more of a concern in the Championship where the average was 87%, with Hull City - who won promotion to the top flight - on 124% and Coventry on 121%.

Switzer added: "Despite the increase in wages, the Premier League clubs improved their wages to revenue ratio to 62% and generated record operating profits of £185million.

"However lower revenue growth in forthcoming seasons means clubs will have to focus on improving cost control - both wages and other operating costs - if profits are to be maintained."

Positive

Dan Jones, a partner in the Sports Business Group at Deloitte, is confident the Premier League will continue to grow in the future after English clubs regained their status from the Bundesliga as the most profitable in the world.


"The domestic and international popularity of the Premier League continues to generate remarkable revenue growth. Between 1992 and 2008, revenues for the top 20 clubs grew at a compound annual rate of 16 per cent, compared with 5.4 per cent for the UK economy as a whole," said Jones.

"Revenue increased by 26 per cent in 2007-08 and Premier League clubs generated £800m more revenue than their nearest rivals from the other 'big five' leagues. It will, of course, be hard to maintain this pace in the immediate future."

http://www.skysports.com/story/0,19528,11661_5362922,00.html


A pretty good read on the Premier League finances, don't we have the best finances/profits in the country?