Well, for one thing, there is a tremendous amount of money involved in Premier League football. This project analyzes data from only two teams in the Premier League; Liverpool FC and Manchester City FC. From the 2007-2008 season until the end of the 2017-2018 season, these two teams accounted for £5.7 Billion in declared revenues. At today’s exchange rate, that equates to $7.3 Billion US.
What we can also learned is the significant rate of increase for annual revenues. The plot below shows the revenue for each club on a yearly basis.
On the transfer front, Liverpool FC have spent almost a £1 Billion acquiring players through the transfer market, while Manchester City have spent just under £1.4 Billion.
Another important aspect of financial resourcefulness is the ability to offer competitive wages. In addition to paying vast sums for player transfers, it is also necessary to fund the contracts associated with the players in question.
Similarly, a successful club will also employ an array of professional support teams such as sports medicine, counselling and analytics. These would typically be complemented by competitive and capable business teams across marketing, management and many other departments.
Conventional wisdom would imply that more expensive players will require higher wages and more talent across support and business functions would also require adequate compensation.
Data may exist which enables detailed analysis of wages, however, we have not yet found this. Filings with Company’s House detail aggregate wages only. Below is an illustration of Liverpool and Manchester wage bills over time and we operate on the assumption that all staff contribute to success whether on the pitch, in the backroom or indeed in the front office.
This makes for some interesting viewing. Manchester City pulled away from Liverpool significantly from 2009 season to 2014 season where there is convergence. The rising trend continues thereafter. Perhaps the overall change in salary expense is most intriguing. From 2006/2007 season to 2017/2019 (12 years) the salary expenses have risen from 32.4M and 67.6M for Manchester City and Liverpool respectively, to 225.9M and 232.7M.
This represents a 597% increase for Manchester City and 244% for Liverpool in just 12 years. Now that’s inflation!
There are people that enjoy reading balance sheets and income statements. We are not those people. However, we did manage to download account filings from Companies House and have started to examine some of the information contained therein.
Below you can see a plot of total profit/loss for Liverpool and Manchester City. This covers 2006/2007 season to 2017/2018. Some eye-opening numbers involved here.
Manchester City operated at a significant loss around the time of acquisition by Abu Dhabi United. It has taken some time to emerge from annual losses. From 2010 onwards, Manchester City shows a clear trend toward profitability.
Liverpool demonstrates a similar overall trend moving towards annual profits rather than losses.
The profit and loss numbers presented here include consideration of player sales and taxes. These are total profit/loss rather than operating profit/loss.
