According to a highly anticipated annual review of football finances by Deloitte’s Sports Business Group, Premier League clubs saw a 16% increase in combined losses during the 2022-23 season, despite a record-breaking revenue of £6bn. Manchester City emerged as the champions of the season, but the league as a whole reported pre-tax losses of £685m. The report cited high wages and costs associated with player transfers as the main reasons for the negative financial performance.
The English Football League (EFL) Championship also faced similar concerns for sustainability, as operating losses of £316m were recorded despite a 10% rise in revenue to £749m. Deloitte pointed out that the £200m in parachute payments received by Premier League clubs contributed to this figure. The report comes at a time when football finances are under intense scrutiny, with several disputes between Premier League clubs and league officials over financial fair play rules.
The study focused on the financial state of league clubs during the 2022-23 season, a period in which Everton and Nottingham Forest were docked a combined 12 points for breaches of Premier League profitability and sustainability rules (PSR). Manchester City is also facing charges related to the historic reporting of revenue, which the club has strongly denied and intends to contest. In response, the club has filed a lawsuit against the Premier League.
Next season, the PSR will remain in place while new financial regulations are being trialled in shadow form. These regulations include the squad cost rules (SCR), which limit spending on items such as wages, agents, and transfer amortisation fees to 85% of revenue, and top-to-bottom anchoring (TBA), which caps the amount any club can spend on squad-related costs at five times the forecast lowest central payment to a club in that season. Additionally, clubs in the top five tiers of the English game will be subject to licensing conditions imposed by an independent regulator.
The issue of financial sustainability in the English professional game has also become a political talking point, with all three major parties in the UK – Conservatives, Labour, and Liberal Democrats – including a commitment to creating a statutory body to protect the game in their election manifestos. This comes after the failure to reach an agreement on a proposed “New Deal” for the EFL, which would have seen over £900m distributed to lower professional divisions by the Premier League over a six-year period.
Deloitte’s report also highlighted rising revenues for the top leagues across Europe and progress in reducing the wages-to-revenue ratio in the so-called “big five” leagues – Premier League, La Liga, Bundesliga, Serie A, and Ligue 1. Tim Bridge, lead partner in Deloitte’s Sports Business Group, commented on the findings, saying: “The 2022 FIFA World Cup, the lifting of final COVID-19 restrictions, and the fervour of fans engaging with football has led to strong growth in the European football market in 2022/23. As plans and conversations continue across leagues in terms of further regulation and investment, European football is sitting at an inflection point. Football is growing into an ever more globally connected game, and this brings new challenges to maintaining competitive balance, strong governance and regulation. Leaders across the industry must provide a united front in following good governance principles to build a future for European football that fans, players, and partners across leagues can be excited for.”