The English Premier League has strengthened its position as the world's richest football league after clubs posted profits of £500m – almost three times the previous record of £200m in 2013-14.
According to analysis by Deloitte's Sports Business Group, the profits are a result of Premier League clubs’ combined revenue increasing by nearly £1bn – to a record-breaking £4.5bn – during the 2016-17 season.
The revenue growth was driven by the combination of increased broadcasting income and the Financial Fair Play rules, which have helped keep wage inflation under control.
While wage costs across the league rose by 9 per cent to £2.5bn, another new record, the growth was significantly slower than the 25 per cent increase in overall revenue.
Dan Jones, partner and head of the Sports Business Group at Deloitte, commented: “As predicted last year, the Premier League’s three-year broadcast deals which came into effect in the 2016-17 season helped drive revenue to record levels.
“Despite wages increasing by 9 per cent, the increase is nowhere near the level of revenue growth.
"This relative restraint from Premier League clubs reflects both the extent of their financial advantage over other leagues and the impact of domestic and European cost control measures.”
The restraint shown by clubs to control their wages – spending only 23p of every extra £1 of revenue on increased wages – has translated broadcast revenue success into healthy operating and pre-tax profits.
All 20 clubs made an operating profit and 18 of 20 recorded a pre-tax profit. The collective revenue to wage ratio is down from 63 per cent to 55 per cent in the 2016-17 season, the lowest since the 1997-98 season.
The analysis reveals that Premier League clubs have collectively made a pre-tax profit in three out of the last four years and, despite clubs posting a collective pre-tax loss in 2015-16 season, it is likely that Premier League profits are here to stay.
Jones added: “Although we anticipate wage costs will continue to rise in the coming seasons, we do not foresee increases to be at a level which can jeopardise the profitability of the Premier League as a whole.
"The most significant wage increases have tended to occur in the year prior to the commencement of a new broadcast cycle once a substantial revenue increase is secured.
“Despite the lack of growth in domestic broadcast deals announced to date, we still expect to see overall revenue growth in the coming seasons, and if this is complemented with prudent cost control, we expect that pre-tax profits will be achieved for the foreseeable future.”
