England's Premier League Teams Have Never Been So Profitable

(Bloomberg) -- England’s Premier League soccer teams made a collective pretax profit of half a billion pounds in the 2016-17 season, more than doubling the previous record set three years earlier, according to Deloitte’s Sports Business Group.

Revenue was boosted by a broadcast deal that poured in 5.1 billion pounds ($7.3 billion) over three years. That was up from a previous, 3 billion-pound arrangement, a rate of growth that outpaced even soccer stars’ escalating pay.

With wages increasing by 9 percent, to 2.5 billion pounds, in 2016-17, “this increase is nowhere near the level of revenue growth noted,” said Dan Jones, partner and head of Deloitte’s Sports Business Group.

Deloitte says clubs have recorded a collective pretax profit in three of the last four years, making them more attractive to investors. Eighteen of the 20 clubs were profitable at a pretax level in 2016-17, the firm said.

Even clubs like West Ham, in the middle of the Premier League standings, are delivering solid earnings; it registered a profit of 43 million pounds with the U.K.’s Companies House.

Another Premier League team, Southampton, was bought by Chinese owners last year. Newcastle United, owned by Sports Direct International Plc Chief Executive Officer Mike Ashley, was put up for sale in the autumn, but the process was aborted when the club appeared to be in danger of relegation to England’s second-tier league.

Broadcast revenue, which amounted to nearly 100 million pounds in 2016-17 for the lowest Premier League club, drops to about 6 million in the lower league, called the Championship. Under the relegation system, the three lowest-ranked teams are demoted every season, with three others advancing to the Premier League.

While club owners are looking at a possible reduction in domestic television income as a result of a new three-year rights arrangement that runs through 2022, they make a growing amount of revenue from overseas deals.

©2018 Bloomberg L.P.

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