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Rising wage costs eat into profits of top English clubs

By Reuters   April 15, 2016 | 12:40 am PT
Rising wage costs eat into profits of top English clubs
The aggregate pre-tax profits of English Premier League clubs fell nearly 37 percent last season due to a spike in wages, according to Deloitte.

Pre-tax profits for the 2014-15 season went down to around 120 million pounds ($169.82 million) from 190 million pounds in 2013-14, Deloitte said, as wage costs rose six percent to a record two billion pounds. Despite the dip, this is the first time since 1999 that the top-flight clubs have recorded an aggregate pre-tax profit in two consecutive seasons, driven mainly by a rise in broadcast revenue.

Combined revenue went up three percent to a record 3.4 billion pounds. The results point to a period of sustained profitability for clubs ahead of next season's record television deal, Dan Jones, a partner in Deloitte's Sports Business Group, said in a statement.

The league's new TV deal with broadcasters Sky Sports and BT Sport for 2016-19 is worth an eye-watering 5.2 billion pounds, a 70 percent jump on the current 3.018 billion contract.

The clubs also recorded combined operating profits of more than 500 million pounds, with 17 of the 20 teams in the black last season.

Operating profits exclude player trading, net interest charges and the amortisation of player contracts. "Clubs now enjoy a significant revenue advantage over all but a handful of the biggest clubs from elsewhere in Europe," said Adam Bull, senior consultant at Deloitte's Sports Business Group.

"The security of world-leading revenues, now augmented with sustained profitability, aided by cost-control measures in place for both domestic and European competitions, makes clubs playing in the Premier League, and those with aspirations to get there, particularly attractive to investors from around the globe."

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