Premier League clubs post all-time high losses of £445m despite generating record income of £2 billion

Sheikh Mansour

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By Wayne Veysey | Chief Correspondent

The Premier League’s 20 clubs lost close to half a billion pounds last year despite income soaring past the £2 billion barrier for the first time, according to a report by football finance experts Deloitte.

The clubs in the top division in the 2009-10 financial year generated total revenues of £2.03bn in the face of the economic downturn. This was principally due to broadcasting revenue increasing by seven per cent to £1.04bn to become the first £1bn revenue stream of any domestic league in the world.

However, pre-tax losses deepened by 62 per cent to £445m as 16 of the 20 clubs were in the red, with only Arsenal and the three promoted clubs – Birmingham City, Wolves and Burnley – generating profits.

The Premier League continues to be at the forefront of the global obsession with football as it maintained its dominance as the richest league in Europe, followed by Germany (£1.4bn), Spain and Italy (£1.3bn each) and France.

The record revenues in England’s top flight, which increased by two per cent year-on-year, were mostly used to pay ever-escalating players’ wages and transfer fees. The Premier League’s total wage bill in 2009-10 was £1.4bn, accounting for an all-time high of 68 per cent of the clubs’ collective income, an increase of five per cent compared to the previous year.

The 20th Annual Review of Football Finance from Deloitte explains that cost control remains the key test for English clubs.

“The challenge for clubs continues to be converting impressive revenue growth into sustainable profits that allow for investment in both infrastructure and talent,” noted Alex Byars, Senior Consultant in the firm’s Sports Business Group. “The record pre-tax losses are a concern, particularly as credit is likely to remain less available to football clubs than it was two or three years ago.

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The continued reliance of clubs on owners such as Sheikh Mansour at Manchester City and Roman Abramovich at Chelsea once again highlights whether they can reform in time to meet Uefa’s financial fair-play rules, which came into effect at the start of the summer window last week. Clubs will be permitted to record losses of only €45m (£40m) altogether over the three seasons from 2011-12 to 2013-14, and cannot rely on owners’ subsidies, if Uefa is to sanction their participation in European competitions.

The figures in the report illustrate the lengths that the clubs must go to comply with financial fair play and come close to breaking even. The biggest loss was at Manchester City, where Sheikh Mansour bankrolled a £121m deficit to push for a Champions League place that they narrowly failed to achieve, while Chelsea posted the next most substantial deficit, £78m.

Double winners in 2009-10, Chelsea also spent the most on wages (£174m) with Manchester City (£133m) replacing Manchester United (£132m) as the next highest spender. Although there continued to be a strong correlation in the Premier League between finishing position and a club’s ranking in terms of wages expenditure, there were exceptions.

Tottenham (£67m) came fourth despite having the seventh highest wage bill in the top flight, which was nearly half that of Liverpool (£121m), who ended up seventh in Rafael Benitez’s final season in charge.

The Premier League remained the second most profitable league in the world, increasing slightly by £4m to £83m, but still some way short of the Bundesliga, which made operating profits of £113m.