Premier League clubs turn loss into profit as fair play rules kick in

  

2013-14 figures show income booming and slight wage increases 
• Collective £198m profit follows £291m loss the previous year 
• Premier League finances: the full club-by-club breakdown and verdict 
• 2012-13 report: Premier League clubs pay £1.8bn in wages

Premier League clubs made an overall profit for the first time in 16 years after financial fair play rules were introduced in 2013, the Guardian’s annual review of all the clubs’ financial statements can reveal. The regulations, which restricted to £4m the extra money from the hugely increased TV deals the clubs could spend on wages, led to players’ pay increasing by only around 5.5% while overall income boomed by 22%.

In 2013-14, the year for which the 20 clubs have most recently published accounts, 15 made a profit and the Premier League recorded a profit collectively of £198m. That was a dramatic transformation from 2012-13, the last year of the previous three-year, £3.7bn TV deals when 12 of the 20 clubs made losses. Five lost £50m or more and overall the world’s richest league made a total loss of £291m.

In February 2013, on the threshold of the new £5.5bn TV deals from 2013-16, anarrow majority of clubs agreed financial regulations aimed at preventing the new money leaking straight into enhanced deals for players.

The rules restrict the wage increase from greater TV money to £4m in 2013-14, then to £8m this year and £12m in 2015-16. Wage increases can be made from clubs’ own commercial income growing and several clubs did announce improved sponsorships in 2013-14.

All the clubs in 2013-14 did restrain wage increases to less than the boom in their TV income except the three promoted clubs, Cardiff City, Crystal Palace and Hull City, who were permitted to do so. Manchester United paid £34m more in wages during the first turbulent year after Sir Alex Ferguson retired but United’s income rose £70m overall, to £433m, so their £215m wage bill, the league’s highest, was just less than 50% of their income.

Manchester City, the 2014 Premier League champions, saw their commercial income greatly increase due to the club’s sponsorship by several Abu Dhabi companies. They were the second highest-earning club in 2013-14 but fully £86m behind United.

Several clubs increased their wage bills by £6m or less but Aston Villa actually reduced theirs by £3m from £72m as the American owner, Randy Lerner, sought to wrestle their finances into shape ready for a sale of the club.

Peter Coates, the Stoke City owner who argued forcefully for the clubs to adopt the financial regulations, said he was pleased they had had the desired effect.

“In previous years every time the money came in, before you could blink it had all gone in players’ wages,” he said. “We couldn’t have that happen this time. “It is a difficult balancing act and we will now be criticised for making too much money and not investing it, but I didn’t believe we could continue being the world’s richest league while all losing money.”

The wage restraint required by the financial regulations, as well as Uefa’s financial fair play rules limiting losses for clubs in European competition, led to clubs overall being around £500m better off. Several, including Arsenal, Everton, Newcastle United and Crystal Palace, put significant cash in the bank as did Tottenham Hotspur, whose £80m profit was the biggest recorded by a Premier League club.

The Premier League welcomed the turnaround in profitability of the clubs while the accountant Deloitte said it was the first time an overall profit had been made since 1997-98.

The league said in a statement: “Two years ago Premier League clubs agreed to introduce financial regulations that encourage sustainable investment and limit the amount of centrally distributed revenue that can be spent on player costs. That decision, combined with increased income, has contributed significantly to the strong set of club financial results.”

The wage restraint, consequent profits made and cash reserves built up by clubs, coupled with the new 2016-19 TV deals which are expected to total £8bn, may lead to a new round of clubs being bought as investments and current owners selling at a profit.

Clive Efford, campaigning to be Labour’s sports minister if the party forms the next government, said the figures also strengthen his argument for 5% or more of the TV money to be invested in grassroot facilities and programmes, and for elected supporters on the boards of clubs. “The Premier League have even more of a moral obligation to invest,” Efford said.

Overall the Premier League clubs spent 57.5% of their £3.3bn income on wages, a reduction of almost 10% from the 67% spent in 2012-13.

Mourinho on the transition of players, experience, and leadership

We don't refer to the past when showing what we've done; our generation gap means the war is never won; the past is in your head, the future's in our hands!

Barring major catastrophe, Chelsea are about to wrap up the Premier League title.  It will be the club's fifth top flight success.  Three of those will have come under Jose Mourinho, separated by almost a full decade.  Almost a full generation of players have come and gone, save for a few stalwarts.

"It's nice to belong to two different generations. The same as me. It's nice to belong to the history of a club in different moments. If you manage to be champions, it's very nice for these older guys."

-Jose Mourinho; source: Sky

Who are these older guys?  Terry, Cech, and Drogba, of course.  But also Mikel, who's been around seemingly forever yet still just turned 28 (last week, in fact).  Drogba left and came back and may leave again -- "I think it belongs to him: what he feels, what he thinks," says Mourinho.  Frank Lampard, "one of the five most important players in the history of Chelsea," has gone.  So has Ashley Cole who didn't quite warrant a specific mention.

Back when Andre Villas-Boas was around, one of the major themes we kept coming back to was the Old Guard vs. the New Guard.  AVB failed rather spectacularly to manage that transition, Mourinho has not.  Of course, he basically made the Old Guard into what they were, so it's only fitting that he now does the same for the New Guard.

"[We lose players] .... but life goes on. You have to think about the future and to build."

"(Branislav) Ivanovic is experienced. (Cesar) Azpilicueta gets experience. (Eden) Hazard is here for three years.  (Nemanja) Matic gets experience. The years are for everyone, not just for them. Ruben Loftus-Cheek is 18 and he just arrived. In five years' time he will be 23, so I see this as a natural process."

-Jose Mourinho; source: Sky

As long as we have The Special One to lead us, we're probably in good hands.

"Chelsea leadership is my leadership. For good and for bad. It's not the players' leadership."

-Jose Mourinho; source: Mirror

Azpilicueta.  Hazard.  Matic.  Loftus-Cheek even?  Throw in an obvious name like Courtois as well.  There's your budding New Guard right there.