22nd July 2018

22nd July 2018 – We’re So Rich It’s Unbelievable! 3rd Edition

ENGLAND’S FOOTBALL PREMIER LEAGUE DIVISION’S DEMISE ‘HAS ALREADY STARTED’

London 22nd July 2018

vysyble announces the release of the 3rd edition of its annual football finance report entitled ‘We’re So Rich It’s Unbelievable! – The Illusion of Wealth Within Football.’ The 82-page report covers the economic performance of the participant clubs in the English Premier League from 2008-9 to 2016-17 (the latest accounting period) ie 34 clubs. Over 280 individual club balance sheets were analysed as part of the research process.

‘We believe that this is the most comprehensive financial analysis of English football to date, surpassing the previous edition. Our goal is to determine the economic performance of Premier League clubs over the most recent 9-year period by the calculation of economic profit (where all the costs of doing business including tax, interest and capital charges are considered) for each club and for each statement of accounts. The resulting data has enabled us to identify continuing areas of risk to the current financial model,’ said Roger Bell.

The report uncovers a growing financial gap between last season’s top six – Manchester City, Manchester United, Tottenham Hotspur, Liverpool, Chelsea and Arsenal – and the rest of the English Premier League (EPL). It shows that, despite record revenues, the top six clubs as a group are still spending beyond their means on transfer fees and wages with no sign of this slowing in the face of a significantly reduced 2019-2022 EPL domestic TV deal. This is what has motivated the top 6 clubs to seek additional revenue streams including a greater share of international TV rights.

Added to an increasing interest and influence from US investors and US media interests – where sports teams play as franchises and cannot be relegated – vysyble believes that a breakaway European Super League will happen sooner rather than later. It is a claim echoed by former Arsenal manager Arsene Wenger who suggested in May 2018 that a European League is “inevitable”.

Roger Bell said: “The EPL retains the gambler’s main enemy – risk. The top six clubs are dominating proceedings in a way that points towards a desire to further reduce their risk, to the point of dispensing with the current EPL altogether. Clubs hope they will be able to recover the shortfall in domestic TV money from international media revenues and it is the top six clubs, who have not made a collective economic profit in years, that just negotiated to receive a bigger share. It is the increasing ambition of the Top 6 and their different fiscal approach that leads us to believe that the EPL is already on the road towards an end-game that will result in its ultimate demise and replacement by an NFL-style European Super League.”

“In any other industry, such consistent economic losses would result in structural change, mergers and acquisitions. In English football, the process as we see it has already started,’ 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 £26.1billion over the past nine years. However, they still managed to achieve economic losses of £1.9billion.

The division’s collective economic profit in the latest available accounts from 2016-17 of £222.27m – the first in nine years – has barely dented the overall poor economic returns achieved by the clubs.

Bell said: “By looking at revenue and pre-tax numbers alone, the EPL appears in reasonable health. However, it is not until the underlying economic profit and loss numbers are examined that we then get to see the remarkable financial trends and behaviours exhibited by EPL clubs. We can clearly see a two-tier division with obvious implications regarding a potential breakaway group comprising of the top six clubs. The current EPL structure as we know it is, in our view, unsustainable given the operating practices deployed by the clubs.”

The report also includes the vysyble Football Profitability Index® which measures the financial efficiency of clubs in the achievement of economic profit. The report highlights for the first time the direct link between club economic efficiency and relegation as revealed by the index.

vysyble has gained international recognition in the calculation and examination of companies and market sectors in generating Economic Profit and shareholder value. vysyble provides sector-level reports on a paid-for basis alongside consultancy services.

Detailed information about the report’s content can be found here.

Twitter discussion thread – #wsriu3rd

ENDS.