Investor interest in English football remains strong despite growing club losses

  • 59% of clubs surveyed from top four leagues received investment enquiries in the last year
  • Only three Premier League clubs and one Championship club reported profits before tax in 22/23
  • Premier League players not overpaid in context of club revenues but Championship players are
  • Half of Big 6 clubs among the worst for points earned per £m spent in wages

Over half (59%) of professional English football clubs report that they received formal or informal investment enquiries in the last year, despite 90% of clubs in the top two leagues reporting financial losses for the 22/23 season, according to BDO’s latest Football Investment Survey.

BDO's analysis found that only three Premier League clubs and one Championship club reported a profit before tax in the 22/23 season, a decline versus the prior year. However, when asked in a survey about the state of their club's finances, half (50%) of respondents from Premier League clubs and a third (33%) from Championship clubs said their finances were 'very healthy'.

The report's authors concluded that club owners in the top four English leagues are favouring financial sustainability over profitability, and prioritising player spend in order to gain a competitive edge. This is encouraged, in part, by the Profitability and Sustainability (P&S) rules which allow significant operating losses.

The report also identified that the business models operated by clubs tend to reflect their position in the football hierarchy. While the richest clubs seek to maximise spending on players within the allowable loss parameters, clubs with fewer available resources will seek to balance player trading for financial reasons with remaining competitive.

Despite many clubs being loss-making, institutional investors, particularly from the US, are seeing opportunities to achieve a return on their investment via two main routes. The first is to invest in a lower league club with a view to exiting once the club achieves promotion to higher leagues. The second is to take a stake in an established Premier League club and optimise commercial opportunities. Either way, institutional investors are highly likely to be entering into football club ownership with a clear exit strategy.

One of the report's more surprising findings is that Premier League players are not over-paid in the context of their club’s revenues. While three clubs (Leicester City, Nottingham Forest and Everton) did pay a relatively high level of wages in proportion to revenues in the 22/23 season (all over 80%), many Premier League clubs spent much more modestly with Arsenal, Manchester United and Tottenham Hotspur all among those with the lowest wage to revenue ratios of below 50%. In contrast, the report found that Championship players are taking home a disproportionate percentage of their club’s revenues, with a staggering 55% of clubs paying more in wages than they receive in revenue.

BDO also undertook an analysis of the points earned in the Premier League for every £1m pound spent on wages in the 22/23 season. This found that Brentford spent the least in wages per point (£1.5m) while Chelsea spent the most (£8.0m). Three of the Big 6 clubs – Chelsea, Manchester City and Liverpool - were among the five clubs that spent the most on wages per point, while Brentford, Brighton and Bournemouth achieved the best league result based on their wage spend.

The survey also sought to understand investment appetite by clubs in women's football. While only 25% of football club respondents across all leagues said that investment in women's football was a top three priority, it is clear that it is more of a focus for clubs than in prior years, particularly in the top two divisions. The women’s game is also gaining new financial resources from improved sponsorship and commercial deals.

Ian Clayden, Head of Professional Sports at BDO said:

"It's clear that football clubs are not run for profit like typical businesses. For perfectly rational reasons, owners seem to accept that football club finance is more about sustainability than profitability and that investment in players is of paramount importance if you want to be competitive.

"The high wages in the Premier League often dominate the headlines, but we found that Premiership players are demonstrably not overpaid when compared to their club revenues. However, the same can’t be said for players in the Championship where high wages can place a huge strain on club finances.

"Despite the lack of profitability, investors are still queueing up to invest in English football clubs, lured in part by the promise of the exit opportunities that come from promotion to the Premier League.

"While there remains a gulf between the Big 6 clubs and the rest, our analysis suggests that clubs that make smart investment decisions have the potential to eventually trade places with the super-rich clubs which can sometimes make decisions that don’t always give the desired levels of return on investment."

ENDS

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