Big 6 Financial Dominance ‘Destroying Premier League’
Clear link between improving Big 6 economic performance and increasing points tally
The increasing financial dominance of the so-called ‘Big 6’ clubs ie Arsenal, Chelsea, Liverpool, Manchester City, Manchester United and Tottenham Hotspur, is contributing to the demise of the English Premier League, according to the latest edition of ‘We’re So Rich It’s Unbelievable!’ from financial analysts Vysyble.
The annual report, now in its fourth year, is based on the accounts of all English Premier League clubs between 2008-09 and 2017-18, the last season for which data is available.
The report shows that the Big 6 clubs have collectively increased annual revenues in 2017-18 by £247m to £2.77billion which is a 57.52% divisional revenue share, up from 55.02% in 2016-17.
The remaining group of 14 clubs endured a reduction in collective annual revenues of £10.13m to £2.05billion (42.84% revenue share) despite a record divisional annual revenue of £4.83billion.
The increase in Big 6 revenue is partly attributable to increased European competition prize money and matchday revenues.
‘Last year we highlighted the Big 6 clubs’ desire to reduce risk which they are now successfully doing with increasing amounts of European prize money and what will be a greater share of the Premier League’s international broadcast rights revenue,’ said Roger Bell, one of the report’s authors and a director of Vysyble.
‘For the first time on our watch from 2009, the Big 6 have collectively achieved an annual economic profit of £105.45m for 2017-18, due mainly to the record economic profit performances of Liverpool and Tottenham Hotspur. The remaining 14 clubs collectively achieved annual economic losses of £73.87m. This is the first time since 2009 that the Big 6 clubs have performed ahead of the remaining clubs in achieving economic profit,’ said Bell.
Based on the “economic profit” concept – a much more demanding metric of performance that includes all of the costs of doing business – the report found EPL clubs generated a collective revenue of £30.95billion over the past ten years.
However, they still managed to achieve economic losses of £2.10billion – a total equivalent to 74,233 teachers being paid the average teaching salary of £28,289 pa.
The Big 6 clubs have occupied the top 6 positions at the end of four of the last five seasons (2014-15 to 2018-19) with the exception of 2015-16 when Leicester City won the Premier League title.
Since Leicester City’s title win, the Big 6 clubs have collectively improved their end of season points tally by 91 points from 383 in 2015-16 to a total of 474 points at the end of the 2018-19 season. The Big 6 also improved their economic profit performance by a staggering £347.24m between 2015-16 (economic loss of -£241.79m) and 2017-18 (economic profit of £105.45m).
The remaining 14 clubs as a group has reduced its seasonal points haul from 700 in 2015-16 to 595 by the end of 2018-19 and improved economic profit performance by just £80.23m between 2015-16 (economic loss of -£154.10m) and 2017-18 (economic loss of -£73.87m).
The division’s collective economic profit in the latest available accounts for 2017-18 is just £31.58m, down from the previous year’s economic profit of £224.39m, which was the first in nine years.
The disparity between the Big 6 and the remaining clubs is significant. For example, the revenue gap between 6th biggest club (Tottenham Hotspur) and 7th biggest club (Everton) in 2017-18 is a record £191m. In 2009-09, the gap between the 6th and 7th highest revenue earning clubs was just £1.88m.
The average staff cost to revenue ratio in 2017-18 for the Big 6 is 52.23%. For the remaining group of 14 clubs the ratio is 67.41% with 8 clubs paying out more than 70% of revenue in staff costs.
On a pre-tax basis, the Big 6 clubs achieved 89% of the division’s total profit for 2017-18.
‘The Big 6 group is comfortably in the driving seat as higher profits are pointing towards greater points totals. The points gap between the title winner and the bottom club is a Premier League record 82 points for the 2018-19 season with two of the three longest unbeaten runs from the start of the season taking place in the last two seasons. With on-pitch team possession statistics from some of the Big 6 clubs increasingly reaching 70% and more, is this the game that fans really want?’ said Bell.