Why are Premier League clubs still losing money?

Even with their massive new TV deal...

Why are Premier League clubs still losing money?

Martin Rickett/PA Wire/PA Images

Premier League clubs made a combined loss for the first time in three years last season - despite the introduction of its new €6.95bn domestic TV deal with Sky Sports and BT.

According to the latest review by Deloitte, clubs in the top tier of English football did record a 9% increase in combined revenues to £3.6bn for the 2015/16 season - but that money is being spent as fast as it is coming in.

Paul Pogba became the world's most expensive football transfer when Manchester United re-signed him for over €100m

Higher transfer spending on players and an average 12% hike in wage costs outpaced revenue growth and led to combined pre-tax losses of £110m for clubs across the league.

Teams in the English top-flight had a combined wage bill of over £2.3bn.

The current TV deal works out as £10m per game, £111,111 per minute, and £1,852 for each second of live televised top-flight English football aired between 2016 and 2019 - but club's gains across the league have been pumped into sourcing and retaining talent.

The report notes that Manchester City and Manchester United generated half of the league's overall revenue increase.

Dan Jones, partner and head of the Sports Business Group at Deloitte, commented: "Manchester United’s participation in the 2015/16 UEFA Champions League, coupled with continued strong commercial revenue growth, resulted in a 30% increase in revenue to £515m. This saw them top the Deloitte Football Money League for the first time since 2003/04, as the world’s highest revenue-generating club."

He added that their cross-town rivals reaching the semi-finals of the Champion's League boosted City's coffers. It benefitted from, "increased distributions to clubs competing in Europe, under the new UEFA broadcast rights cycle."

It seems that clubs are using the TV windfall to futureproof their squads as they try to keep pace with their rivals.

"Our analysis reveals a return to pre-tax losses, following two consecutive years of pre-tax profits. However, it is worth noting that this is due to a small number of one-off “exceptional” costs, and we fully expect that the Premier League’s new three-year broadcast rights deal will see a return to record levels of profitability in the 2016/17 season," Mr Jones stated.

Eight of the 20 richest clubs in the World last year were English:

1. Manchester United £515.3m

2. Barcelona £463.8m

3. Real Madrid £463.8m

4. Bayern Munich £442.7m

5. Manchester City £392.6m

6. Paris St-Germain £389.6m

7. Arsenal £350.4m

8. Chelsea £334.6m

9. Liverpool £302m

10. Juventus £255.1m

11. Borussia Dortmund £212.3m

12. Tottenham £209.2m

13. Atletico Madrid £171m

14. Schalke £167.9m

15. AS Roma £163.2m

16. AC Milan £160.6m

17. Zenit St Petersburg

18. West Ham £143.8m

19. Inter Milan £134m

20. Leicester £128.7m

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