The financial impact of Covid-19 on Premier League clubs
Deloitte has released the 2021 edition of its ‘Annual Review of Football Finance’ report, one of the year’s most anticipated studies in the world of football that sheds light on the industry’s financials and how national competitions fare. A round-up of the key findings for the Premier League in five charts.
Total revenue of Premier League clubs dropped by well over half a billion pounds in the 2019/20 season (-13%) to £4.5 billion as the average revenue per Premier League club reduced by £33 million to £225 million. This was the first drop in total revenue in Premier League history and the lowest total revenue level since 2015/16, with the financial impact of Covid-19 felt by all clubs.
Matchday revenue – which accounts for 13% of total revenue – decreased by £84 million (12%) to £599 million. As expected, matchday revenue was significantly impacted by Covid-19 as stadia closed to fans from gameweek 30 in March 2020 and remained closed once matches resumed to conclude the season in the summer of 2020 after many clubs’ financial year ends.
It should be considered that this edition of Deloitte’s report only represents the financial impact of the first three to four months of Covid-19 with clubs generating matchday revenue for the majority of the season. The report’s next edition will reveal the full impact of Covid-19 on financials, having incorporated the impact of empty stadia throughout the vast majority of the 2020/21 season and the re-evaluation of commercial partnerships.
The next edition of Deloitte’s ‘Annual Review of Football Finance’ report will be launched months before the 2022 FIFA World Cup in Qatar.
Looking ahead to the next edition, with the 2020/21 Premier League and domestic competitions played almost entirely behind closed doors (with the exception of some matches in late 2020, the last two rounds of Premier League matches, one FA Cup semi-final and both domestic cup finals), matchday revenue will be close to nil for Premier League clubs in 2020/21, causing a hole in club finances.
Broadcast revenue was significantly impacted by Covid-19 in the 2019/20 season, falling by 23% to £2.3 billion, accounting for 52% of total revenue (compared to 59% in the prior year).
The third major component of revenues, commercial revenue, increased by £145 million (10%) overall, with 13 clubs reporting an increase. The fastest commercial revenue growth among the consistent Premier League clubs was at Everton (104%), driven by a significant stadium naming rights agreement. In contrast, Leicester City (21%) and Wolverhampton Wanderers (15%) suffered the heaviest declines.
Wage costs
Despite the relatively large drop in income, Premier League clubs’ wage costs actually increased by 4% to £3.3 billion, the smallest rate of increase since 2004/05. Only six of the 17 consistent Premier League clubs (AFC Bournemouth, Arsenal, Chelsea, Manchester United, Southampton and West Ham United) managed to realise a reduction in wages.
Overall, the wages to revenue ratio worsened to its highest level in Premier League history (73%).
Profits slashed
The financial impact of Covid-19 is especially evident in profitability, almost wiping out the collective operating profit of £837 million recorded by Premier League clubs in 2018/19. A reduction of £782 million saw combined operating profits of £55 million reported for 2019/20, with over half of the Premier League’s clubs (11) reporting an operating loss, up from four in 2018/19.
Everton (£140 million) reported the largest pre-tax loss among 2019/20 Premier League clubs, with pre-tax losses of over £100 million for the second successive season. Manchester City (£125 million) was the only other club to report pre-tax losses of over £100 million, although 12 teams reported pre-tax losses of more than £50 million compared to only two in 2018/19.
Only four clubs (Burnley, Chelsea, Norwich City and Sheffield United) reported pre-tax profits compared to 11 in 2018/19. Chelsea recorded the highest pre-tax profit of £43 million, driven by the sale of Eden Hazard to Real Madrid which contributed significantly to the club’s profit on player sales of £143 million.
European competitions
Deloitte’s research further shows that the Premier League’s was no exception in its performance. Across Europe’s professional top flight football landscape, aggregate revenue contracted by 13% in the Covid-19-hit 2019/20 season, as overall revenues fell by €3.7 billion to €25.2 billion.
Germany’s Bundesliga saw its revenues decline by ‘only’ 4% to €3.2 billion (the Bundesliga was the first major European sports league to resume matches following the pandemic). In Spain, the aggregate revenues of the twenty La Liga clubs fell 8% to €3.1 billion, while the Serie A clubs saw their combined revenues fall 18% to €2.1 billion.
