Premier League clubs get richer through broadcast rights

The football clubs in the English Premier League recorded a significant increase in income and profits in the 2013/14 season.

This increase was primarily due to a rise in broadcast rights revenue and the effect of UEFA’s Financial Fair Play regulations. Total income for all clubs was about ₤3.26bn, representing a 29 percent increase in revenues while the total profit before tax was ₤187m, the highest since 1999.

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According to a report by the Deloitte Sport Business Group, this marks a major turning point in the financing of professional football in England and a new era of substantial profit for the elite clubs. The report also revealed that the English Premier League’s revenues exceeded those of the German Bundesliga by over ₤1bn. Combined revenues of the elite divisions in Italy and Spain were less than those of the Premier League.

In addition, the total operating profits for England’s top division, rose to a whopping ₤614m, a massive 649 percent increase that smashed the earlier record by almost ₤430m. Analysts at Deloitte believe that the high profitability of Premier League clubs will arouse more interest from global financial investors. Investment risks have dropped drastically while the future income growth is already in place through the new deals signed for domestic broadcasting from the 2016/17 to the 2018/19 season.

Revenue from TV and other broadcast rights provided about 54 percent of the total income stream which is the highest percentage obtained from any source since the Premier League started in 1992. This increase is set to continue in the near future since revenue from the new deals, beginning from the 2016/17 season, will be 70 percent greater than the current broadcast deals. However, interest in tickets for live matches is still very high with tickets of matches involving top-flight clubs selling out at a very fast rate online. Check this page for more information about Premier League tickets.

In the meantime, Dan Jones, the head of the Deloitte Sports Business Group, thinks that there are significant signs that the new Financial Fair Play rule may be the most important milestone in football business since the famous Bosman ruling. The amazing increase in club profits in the 2013/14 season was more significant than what was earlier predicted.

Also, the wages-to-income ratio, which was usually a source of concern, dropped drastically from 71 to about 58 percent – the least since the 1998/99 season. Dan Jones believes that as the Financial Fair Play regulations are followed, and the Short Term Cost Control measures for the 2015/16 season are enforced, this ratio will stay close to 60 percent or even fall below it.

Meanwhile, although UEFA has given an indication that it will relax the Financial Fair Play regulations, Gianni Infantino, UEFA secretary, has said that this will only be done because the guidelines have provided substantial improvement in the financial health of clubs playing in Europe.

Dan Jones, however, laments that the impressive rise in revenue and profits of the entire Premier League has not made any appreciable impact on the performance of top clubs in the UEFA Champions’ League competition. Unfortunately, since Chelsea won in 2012, no other Premier League club has reached the final of the most prestigious football club competition in Europe.

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