Sub-Saharan Africa Pushes Premier League Club Revenues to £4.5bn

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Premier League clubs reported record revenues of £4.5bn in the 2016-17 season, and also returned to profit and broadcast right sales.

A major portion of that revenue has come from the £296 million SuperSport paid for exclusive broadcast rights to Nigeria and other sub-Saharan markets.

The African markets have also contributed to the enormous income of the EPL through brand affiliation deals with the likes of Nigerian Breweries, Glo, Sterling Bank, MTN, Airtel and the list goes on.

Premier League clubs collectively reported £500m in pre-tax profit, also a record, having posted a small collective pre-tax loss in 2015-16, according to Deloitte.

Wage costs rose by 9% to £2.5bn, a significantly lower growth rate than the 25% hike in revenues.

The Premier League’s three-year TV deal which came into effect in 2016-17 was the main factor in revenue growth.

A record £5.13bn was paid to the league by Sky and BT for the 2016-19 UK broadcast rights. DSTV’s SuperSport paid £296 million for exclusive broadcast rights to Nigeria and other sub-Saharan Africa markets for 2016-19 seasons.

At £96.5 million a year, DSTV is paying second to NBC network in the United States, which has agreed on a deal of £109.6 million. Hong Kong is third with a TV deal of £87.7 million. But surprisingly, mainland China with the highest population in the world has sealed a deal for just £10.7million a year.

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Latin America, presumably crazy about football like Africa, is not so crazy about English football than the Spanish La Liga. But a Brazilian network is paying £32.8 million yearly for three years.

According to a report on BBC, the latest domestic rights auction, for the 2019-22 cycle, did not reach the 2019-2019 heights, bringing in £4.464bn for the league’s 20 clubs.

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“Despite the lack of growth in domestic broadcast deals announced to date, we still expect to see overall revenue growth in the coming seasons, and if this is complemented with prudent cost control, we expect that pre-tax profits will be achieved for the foreseeable future,” Dan Jones, head of Deloitte’s Sports Business Group told BBC.

And he said that “restraint shown by clubs to control their wages has translated broadcast revenue success into healthy operating and pre-tax profits”.

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Premier League 2016-17 in numbers (2015-16 in brackets)

◾Revenues – £4.5bn (£3.6bn)

◾Wage costs – £2.5bn (£2.3bn)

◾Other operating costs – £1bn (£800m)

◾Pre-tax profit – £500m (£110m loss)

◾Operating profit – £1bn (£500m)

◾Net player trading costs – £400m (£400m)

◾Other costs – £100m (£200m)

◾All 20 clubs made an operating profit

◾18 clubs made a pre-tax profit

Source: Deloitte Analysis. Note: Figures subject to rounding

Mr. Jones added: “Although we anticipate wage costs will continue to rise in the coming seasons, we do not foresee increases to be at a level which can jeopardize the profitability of the Premier League as a whole.

“The most significant wage increases have tended to occur in the year prior to the commencement of a new broadcast cycle once a substantial revenue increase is secured.”

The collective revenue-to-wage ratio at Premier League clubs was down from 63% to 55% in the 2016-17 season, the lowest since the 1997-98 season.

The analysis reveals that Premier League clubs have collectively made a pre-tax profit in three out of the last four years.

 

 

SOURCE: Marketing Edge

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