As the 2008/09 football season approaches and the credit crunch apparently deepens, it seems an opportune moment to look at the finances of Britain’s top football teams. A recent report from Standard & Poor’s highlighted the vulnerability of English football clubs to a potential economic downturn. This was in spite of revenues of English clubs—particularly those in the Premier League—being the strongest in Europe.
The reason for this is made clear by an earlier report, this year’s analysis by Deloittes, of the finances of the League clubs. The 20 Premier League clubs had total income in 2006-07 of £1,515m, but recorded a combined loss of £278m. Indeed, only five clubs managed to record an operating profit: Arsenal, Reading, Sheffield United, Spurs and Watford, making £48m between them.
At the other end of the scale, Manchester United lost £62.5m (30 per cent of revenue); Chelsea £76m (40 per cent) and Liverpool £22m (16 per cent).
Ironically, perhaps, Man Utd finished top of the League, Chelsea came second and Liverpool third.
There is a clear link between revenue raised and league position. The top five spots were filled by the clubs with the biggest income—and the bottom five by those with the least coming in. None of the ten clubs in between showed a great divergence between their league position and their rank order in revenue. Overall, the correlation between money generated and success was a striking 0.74.