Premier league soccer clubs announce record $700 million in profits

Ali Al Habsi of Wigan Athletic fouls to save a goal during the Barclays Premier League match between Norwich City and Wigan Athletic at Carrow Road on March 11, 2012 in Norwich, England.

According to data compiled by Deloitte’s Sports Business Group, they generated a combined operating profit of £1.0 billion ($1.4 billion) in the 2016/17 season.

It showed clubs collectively reported a pre-tax profit of £0.5 billion, a record for the league, with wages increasing by 9 percent to £2.5 billion.

That collective pre-tax profit of was almost three times the previous record in 2013/14.

Deloitte’s Dan Jones, commented: “As predicted last year, the Premier League’s three-year broadcast deals which came into effect in the 2016/17 season helped drive revenue to record levels.”

“Despite wages increasing by 9 percent, this increase is nowhere near the level of revenue growth noted. This relative restraint from Premier League clubs reflects both the extent of their financial advantage over other leagues and the impact of domestic and European cost control measures.”

Furthermore, the effort shown by clubs to control their wages, has translated broadcast revenue success into healthy operating and pre-tax profits.

Every top-flight club made an operating profit and 18 of 20 recorded a pre-tax profit. The collective revenue to wage ratio is down from 63 percent to 55 percent in the 2016/17 season, the lowest since the 1997/98 season.

The analysis also reveals that Premier League clubs have collectively made a pre-tax profit in three out of the last four years and, despite clubs posting a collective pre-tax loss at the end of the 2016 season (due to a small number of one-off exceptional costs), it is likely that Premier League profits are here to stay.

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Deloitte added: “Although we anticipate wage costs will continue to rise in the coming seasons, we do not foresee increases to be at a level which can jeopardize the profitability of the Premier League as a whole. The most significant wage increases have tended to occur in the year prior to the commencement of a new broadcast cycle once a substantial revenue increase is secured.”

Five of the seven domestic Premier League packages for the next round of broadcasting rights have already been allocated in the U.K., with ever-present partner Sky Sports taking five of them and BT continuing their commitment with the other.

However, both paid less than the combined value of the previous deal, which is so far worth more than $6.3 billion, down from the previous total payment of almost $7.3 billion in 2015.

Two packages are still to be sold for the right to show matches from the start of the 2019 season, with new players such as Amazon, Netflix and YouTube rumored to still be considering bids.