Very interesting story about English soccer revenues

[pk500]

From the Times News Service, London
SPORT: (FOOTBALL) SPENDING IN DECLINE AS TRANSFER MARKET SLOWS DOWN
By Ashling O'Connor
750 words
FOR the first time since the formation of the Premier League in 1992,
English clubs have reported a fall in total spending
on players, according to a report published today (Thursday). The
Deloitte Annual Review of Football Finance, based on
accounts from the 2002-03 season, found that clubs' outlay on transfer
fees and players' wages fell 5 per cent to pounds
852million. It is the first recorded year-on-year decrease since the
accountancy firm started collecting data 12 years
ago.
The figures are clear evidence of the bursting of the inflationary
bubble in the football market, which peaked during the
2001-02 season when domestic transfer spending reached pounds
407million. Total transfer fees committed by English
clubs halved to pounds 203million. In the Premier League, the sum fell
42 per cent year-on-year to pounds 187million,
with nearly half as much money spent on buying players from foreign
clubs.
In the Football League, the drop measured 81 per cent, from pounds
84million to pounds 16million. A net sum of pounds
32million passed between the Premier League and the Football League.
Furthermore, there was the lowest rate of wages growth since the top 20
clubs broke away from the old first division to
form the Premiership with the financial backing of BSkyB, the satellite
television operator owned by News Corporation,
parent company of The Times.
The average wage bill in the Premiership grew 8 per cent to pounds
38million per club, compared with an average annual
inflation rate of 25 per cent over the past decade. "The fastest thing
on which to put the brake is transfer spending, but
wages take time to catch up because contracts run on for a few years,"
Dan Jones, a partner in Deloitte's sports business
group, said. "We can see spending turning a corner. It is a monumental
change."
The new mood of restraint in football has been coupled by a resurgence
of support for the Football League's 72 clubs.
Although their combined revenues fell 12 per cent to pounds 412million
because of the loss of ITV Digital money, rising
attendances last season and optimism about this season are expected to
fuel match-day income to balance the picture. Paul
Rawnsley, a Deloitte consultant, said: "Having overcome the challenges
of the past couple of years, the majority of
professional clubs below the Premier League can now look forward to a
more secure financial future."
However, there was a warning sign that the Premier League is becoming
ever more set apart in financial strength from
the rest of English football. The average Premiership club has revenue
nearly six times greater than a counterpart in the
top division of the Football League.
The Premier League is Europe's "financial champion", with pounds
1.2billion of annual income, a 10 per cent year-on-
year increase. This is equivalent to an average of pounds 62million per
club, compared with pounds 45million per club in
Serie A. Last season, Premiership clubs were estimated to generate
revenues of pounds 1.33billion. Deloitte is forecasting
a 2.3 per cent rise to pounds 1.36billion this season.
The continued robust growth of top-division football has defied the
doom-mongers who expected the market to crash after
the dot-com boom. European clubs and federations now generate more than
pounds 7billion of revenue each season. More
than half (pounds 3.9billion) comes from the clubs in the "Big Five"
divisions in England, Italy, Germany, Spain and
France.
Their biggest source of revenue is still broadcast contracts, with
Serie A the most reliant on the television companies and
the Bundesliga the least. The estimated annual broadcast income from
the Big Five's domestic deals was pounds 1.3billion.
Deloitte's report precedes the arrival in English football of Roman
Abramovich, the Russian oil billionaire who bought
Chelsea last summer and has since spent pounds 210million in the
transfer market. The anomaly of Abramovich's
personal wealth is expected to have pushed total transfer spending in
the Premiership last season to about pounds
260million. However, his real effect is predicted to be limited by
being an exception to the rule.
"I do not think that Chelsea is inflating a bubble," Jones said. "The
situation could have been dangerous if other clubs had
run off and tried to match Chelsea. They haven't and in fact it has
been quite helpful to some clubs who have been able to
sell players and sort out their finances with the proceeds. Even with
Chelsea, I do not expect that we will ever see a
number above the pounds 407million recorded in 2001-02."

Take care,
PK