Report reveals Premier League and Championship clubs made losses of nearly £1billion last year

[ASFN Admin]

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The inherent financial fragility of England’s top two football leagues is laid bare in a new analysis today, which reports that clubs made economic losses of almost £1 billion in the most recent accounting year. With the coronavirus pandemic having placed huge new financial pressures on clubs throughout the football pyramid, financial consultants Vysyble have completed their annual report into the financial position of leading clubs in the full preceding season. Premier League clubs are found to have made economic losses of £599.54 million, despite record revenues in 2018-19 of more than £5 billion, while Championship clubs are on course for losses of £350 million. The Premier League figures are especially stark in the context of how clubs recorded an economic profit of £224.39 million in 2016-17 before slipping by more than £800 million even during what was a record-breaking television cycle. The most recent shift was particularly striking among the ‘big six’ clubs of Manchester United, Chelsea, Manchester City, Liverpool, Tottenham Hotspur and Arsenal, who collectively recorded their biggest yearly drop in economic profit/loss performance since the analysis began more than a decade ago. John Purcell, a director at Vysyble, said that this was largely explained by how clubs were “chasing lucrative Champions League money with renewed vigour”. Despite cost structures generally geared to that level of achievement, two of those ‘big six’ clubs must always miss out each season. Other clubs from outside the big six, such as Everton and Leicester City, have also been open about their Champions League ambitions and spent heavily on wages. “There are just four available places but there are many more clubs setting their sights on them and parallels with the Premier League promotion race from the EFL Championship are beginning to emerge,” said Purcell, who also highlighted a spike in the wage-to-revenue ratios. The success of Project Restart in minimising any rebates to broadcasters will clearly now be hugely significant but the prospect of playing matches next season without crowds will also have big financial implications. Vysyble have estimated the impact across the Premier League of playing behind closed doors throughout next season as well at £878.2 million. Vysyble make their financial calculations on the basis of economic rather than pre-tax profit or losses, which means also factoring in the capital injection that owners put into clubs. The Premier League and Championship’s combined pre-tax loss is still calculated at around £620 million but Vysyble believe that measuring economic loss provides better guide to a club’s true financial health. They have long warned about the vulnerability of football's financial model and, having argued that current rules overlook underlying economic performance, are advocating an independent Football Regulator with “sweeping and binding powers in terms of preserving the financial status of the game”.

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