Football - WORLD FOOTBALL

English football, driven by the Premier League's biggest clubs, remains the highest grossing single sector of the world game, according to an annual review, published today, but renewed and rampant wage inflation has failed to turn that success into profit in most cases.
Deloitte's analysis of club accounts from the 2006-07 season, the most recent available, shows that the Premier League's 20 clubs grossed £1.53bn between them (up 11 per cent), but wages grew by 13 per cent to £1.4bn, more than twice the figure in the top flights of Spain, Germany or Italy.
"A normal business culture of maximising profitability does not appear to be happening at the Premier League clubs," said Dan Jones, a partner in Deloitte's Sports Business Group. "A shared will by all the clubs to limit wages growth would deliver increased profitability for all, but the pursuit of on-pitch success, and the intense competitive desire to gain an edge, means clubs continue to invest heavily in their playing squads and bid the market up, to the detriment of all clubs' finances and the benefit of players and their agents."
Despite Deloitte being the auditor and accountant to the Premier League as an organisation and to numerous individual clubs, the firm has long stressed its impartiality in reporting football finances. That said, its reviews have often had a "cheerleader" tone, so the note of warning in this year's report is even more resonant.
Jones notes that lack of profitability is ongoing even though there have been two developments in the game that "we thought had the potential to stem the flow of red ink". One is that the Premier League's 20 clubs now collectively gross €1bn (£780m) more than their nearest rivals, yet still can't feed much of it to the bottom line. Deloitte had also anticipated that profit-hungry foreign investors would have squeezed greater financial rewards.
In fact, Jones says: "While we are not witnessing the levels of expenditure which would raise fundamental concerns for the medium- and long-term health of the clubs, we do appear to be seeing a continuation of the tendency to spend all available revenue to 'strengthen the squad'.
"It may be the case that owners see their clubs delivering only minimal regular returns with a real return only emerging when the club changes hands."
In Germany, Bundesliga clubs are not only more profitable than their English counterparts – by a factor of three – but they also attract the biggest crowds in Europe, but Jones added: "Disappointingly for German fans, the price of Bundesliga clubs' good financial performance seems to be a struggle to reach the latter stages of European club competition in recent years."
English clubs are far from struggling in Europe, but debt remains a problem. Deloitte say the Premier League's 20 clubs had collective debts of £2.469bn in 2006-07, and this has grown. The wealth in English football is concentrated within a narrow band of clubs. Revenues across all of England's 92 clubs in the review period was more than £2bn for the first time, but £1.53bn of this came from the Premier League, and approaching £1bn of that came from just six clubs: Manchester United, Chelsea, Arsenal, Liverpool, Tottenham and Newcastle.
Cash facts
* Premier League overall revenues increased in 2006-7 by 11 per cent to £1.53bn.
* Eight Premier clubs (16 in 2005-6) had operating profits: Man Utd, Arsenal, Spurs, Liverpool, Newcastle Utd, Reading, Sheffield Utd, Watford.
* Championship aggregate operating losses grew from £53m to £75m.