Thursday, 9 June 2011

Realities In The Premier League


A report published today by Deloitte tells us — as if we didn't know — that the wage bill in the English Football Premier League continues ever upwards. Everything we know about the super-rich in football as elsewhere in our economy, shows us how little they have been affected by the supposed credit crunch. This current report explains that everything about the Premier League is expensive. It generates more cash than any other of the football leagues in Germany, Spain, France or Italy and inevitably all that cash comes from the punters - via gate money, TV rights and sponsorship. The revenue generated now stands at £2,479 million per annum and the country that comes closest to that tidy sum is Germany on £1,664 million. The income from gate money is much higher than in any other country but this may be a combination of more fans as well as higher gate prices. Certainly ticket prices here are much higher than in Germany for example. Income from TV is also higher but the new deal next season will drop this by 25%. The business models of the whole of the football league is crackers. The Premier League generates a trading profit of 4% before tax but overall the Football League loses over £600 million per year. Apart from a few top clubs - by no means all of them - most clubs inside and outside the Premier League have significant debts. Chelsea still has the biggest wages bill but Manchester City is fast catching up. But what makes Manchester City unique is that its wages bill is equal to 107% of its annual income. It is Manchester City, of course, that pays the ridiculous Carlos Tevez a reported £286,000 per week - nearly £15 million per year. He hates Manchester, he tells us, and has no reasons ever to go near the place ever again. Errrrr! Doesn't his incredible pay packet create some kind of reason to go to Manchester? The owners, who are, I think, getting a bit fed up with Mr Tevez's whining have told him to sod off and go play for somebody else. Perhaps he will find somewhere on this Earth where he can buy a house for less than £8 million, which, he further tells us, is impossible in Manchester. Now, I am no expert on Manchester house prices but I am prepared to suggest that at that price he could even buy several houses in Alderley Edge, where all the footballers live. Mind you at £8 million he would be spending only just over half his annual income - ignoring any extra he gets for advertising, etc., of course. It's equivalent to an ordinary Joe Public buyer having to cope with getting a house for about £15,000. Still, I know it's hard for some footballers to face reality.
There are lots of other bits of data in the Deloitte report, all tending to suggest that the Football League is really bankrupt. To be losing £600 million per year when accumulated debts stand at £3,500 million suggests an unsustainable business model that George Osborne may be able to help them with. Although no football league club has gone out of business since Maidstone in 1992, there have been many near misses and I would not feel very enthusiastic about investing any of my money in a football team. All the top clubs have become no more than the play things of over-rich billionaires.
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