An interesting piece in the FT about how the financial fortunes of Premier League clubs has turned around with revenues increasing rapidly (primarily the bumper TV deals) and costs being controlled better than ever before. A few snippets, but it's worth reading the whole piece:
“A corner has been turned,” says Dan Jones, head of sport at Deloitte. “After two decades of being very successful at generating revenue, football clubs are now finally able to retain some of that revenue. It’s quite hard now not to make money in the Premier League.”
The financial gains from entering the Premier League provide a stark indication of its pull. During 2013/14, Crystal Palace’s first season back in the Premier League, players’ wages at the south London club more than doubled. But revenue, mostly television rights, prize money and sponsorship, was up more than 500 per cent. In the past, wages and transfer fees have risen faster than revenue, leaving smaller clubs with little option but to borrow to compete.
Some of those that did, such as Leeds United and Portsmouth, spent heavily in an effort to join Europe’s elite, gambles that resulted in crippling debt and financial collapse. Leeds entered administration in 2007 and Portsmouth followed two years later. Both have languished in England’s lower leagues since.
A new TV deal, agreed earlier in February and set to come into effect next season, will provide a further boost to top-flight clubs. Under the new terms, the prize money for finishing last, at more than £100m, will eclipse that currently earned by being crowned champions.
He estimates that a typical Premier League club, aside from the top four, is now worth £120m-£150m, compared with the £62m that Aston Villa’s owner Randy Lerner paid for the club in 2006, or the £100m valuation put on West Ham when it was bought in 2010.
“A corner has been turned,” says Dan Jones, head of sport at Deloitte. “After two decades of being very successful at generating revenue, football clubs are now finally able to retain some of that revenue. It’s quite hard now not to make money in the Premier League.”
The financial gains from entering the Premier League provide a stark indication of its pull. During 2013/14, Crystal Palace’s first season back in the Premier League, players’ wages at the south London club more than doubled. But revenue, mostly television rights, prize money and sponsorship, was up more than 500 per cent. In the past, wages and transfer fees have risen faster than revenue, leaving smaller clubs with little option but to borrow to compete.
Some of those that did, such as Leeds United and Portsmouth, spent heavily in an effort to join Europe’s elite, gambles that resulted in crippling debt and financial collapse. Leeds entered administration in 2007 and Portsmouth followed two years later. Both have languished in England’s lower leagues since.
A new TV deal, agreed earlier in February and set to come into effect next season, will provide a further boost to top-flight clubs. Under the new terms, the prize money for finishing last, at more than £100m, will eclipse that currently earned by being crowned champions.
He estimates that a typical Premier League club, aside from the top four, is now worth £120m-£150m, compared with the £62m that Aston Villa’s owner Randy Lerner paid for the club in 2006, or the £100m valuation put on West Ham when it was bought in 2010.