Football is the most popular sport in the world. English Premier League (EPL) is one of the most popular leagues in the world. Clubs such as Manchester United, Arsenal, Liverpool, and others have millions of fans across the world. One of the best players in the world play in the league and many players have reached the superstardom level by joining one of the clubs in the league. The clubs have been owned by the various dignitaries across the world and many investors are taking keen interest in investment in the clubs. The clubs have been making headlines during the transfer season by spending millions on buying players. The transfer budget for every club is different, but top teams are spending more than £200 million in the transfer market. Moreover, they offer attractive and huge pays and perks for players. From lavish houses to bonuses for each goal, owners do not hold themselves back from loading players with money to get results. The question remains, whether owners and investors are earning profitability after spending millions in transfer markets, paying salaries of players and staff, and gaining sponsorships.
Deloitte’s Sports Business Group researched on the profitability of English clubs to determine how fruitful it is to invest in EPL. According to the finding, EPL teams made a collective pretax profit of nearly half a billion pounds in the 2016–17 season. Though this profit broke the record set three years ago, it does not meet expectations of owners. Most of the revenue came from the broadcast deal of £5.1 billion for past three years. The previous deal was of £3 billion. The rise in the broadcast deal also resulted in rise in salaries of players. The wages of players increased by 9 percent in the 2016–17 season. “This increase is nowhere near the level of revenue growth noted,” said Dan Jones, partner and head of Deloitte’s Sports Business Group.
The research from Deloitte stated that clubs gained a collective pretax profit in past three out of four years. 18 out of 20 clubs were profitable in pretax level in the season, 2016–2017. Clubs including West Ham United, which is in the middle of points table recorded profit of £43 million pounds. Some of the clubs did not earn enough, so they were sold or put up for sale to international buyers. Southampton was purchased by Chinese owners last year. Newcastle United was put up for sale by Sports Direct International PLC in the autumn. But the sale was stopped, as the club was in danger of relegation to England’s second-tier league.
England is full of passion for football and stadiums are fully occupied with spectators during the matches. However, there is less revenue generated at the domestic level and more at the international level. The overseas deals are bringing in more revenue than domestic ones. The league matches are broadcasted live in several countries. There is an immense craze and popularity of English clubs. This has attracted the interest of investors, advertisers, brands, and sponsorships. Clubs and sponsors are making profits from jersey sale of star players. But the profitability and popularity equation does not live up to expectations of owners. Half a billion in profit does not match the intended profit level based on the spending and popularity. It is interesting to see what off-pitch strategies football clubs will adopt to gain profitability.