Championship Finances - Deloitte's Annual Review of Football Finance

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Deloitte's Annual Review of Football Finance has been published. Most of it is for subscribers. But the foreward and Highlights are available for general reading.

DELOITTE:

"The 16th edition of the Deloitte Annual Review of Football Finance was launched on 31 May 2007. This definitive guide to European football finance provides not only a track record up to the end of the 2005/06 season, but also includes some pointers as to how the industry has developed in 2006/07 and is likely to change in the future.

Read the Foreword (78KB, PDF)...
Our highlights (39KB, PDF) are extracted from the relevant key sections of the report. ...
Related press release - Premier league club profits are set to double

FOREWORD
"...The outlook outside the Premier League is now significantly brighter. The Football League has returned to its long term revenue growth path, and 2006/07 was the first year of a new and significantly improved broadcasting deal, providing further opportunities for growth. Championship clubs’ collective revenues have grown
strongly to a level comparable with the revenues of Premier League clubs ten years previously. There remains some work to be done for the division to deliver profitability, but the simplistic view of the ‘poor getting poorer’ in the Football League while the Premier League alone thrives is clearly wide of the mark."
Deloitte Annual Review of Football Finance - Foreword

Highlights:

"...Championship clubs’ revenues grew by 4% (£12m) to reach a new high of £318m in 2005/06, an average of £13m per club. League 1 clubs’ revenues topped £100m for the first time since 2001/02, up £6m to £102m, whilst League 2 clubs’ revenues also
increased, up £3m to £61m...."

"...Operating losses in the Championship increased from £42m to £53m in 2005/06, an average of just over £2m per club. Losses in Leagues 1 and 2 (£15m and £5m respectively) also increased slightly."

"..• Championship clubs’ pre-tax losses improved from £65m to £47m and three of the overall top ten clubs ranked by pre-tax profits were Championship clubs in 2005/06 (Cardiff City, Leicester City and Norwich City)..."

• Championship clubs’ total wage costs for 2005/06 increased by 5% to £228m with the overall wages/turnover ratio remaining relatively stable at 72%.

• In the Championship, in 2005/06 four clubs had a wages/turnover ratio in excess of 100%. However, for two of these clubs the ratio was pushed over 100% due to significant performance bonuses to players and management for securing promotion to the Premiership – Sheffield United (£2.3m) and Watford (over £3m). There continues to be significantly less correlation between total wage costs and final league

At least 11 Championship clubs have net debt of more than £10m and, in general, the prospect of a club significantly reducing that net debt in the short/medium term is dependent on either promotion to the Premiership or an injection of equity
funding from a new owner.

• Below the top two divisions, managing the clubs’ financial position remains a challenge from one season to the next. While, in general, the financial position has improved and become more stable over the past 3-4 years, legacy debt issues relating to past seasons remain at several lower division clubs. • Highlights

SEE ALSO: DELOITTE - Football Money League 2007