Article published 22 March 2012

Analysis by reveals the increased ticket price that clubs would need to charge if they were to manage on a 'break-even' basis and if the ticket prices were increased to account for the shortfall.  The study of Premier League finances reveals that fans receive match-day ticket subsidies averaging at £25 per ticket.  Although Man City's place at the top of the subsidy table will surprise few, the level of loss per ticket sold (£161) is somewhat shocking.  Perhaps more surprising are the unsustainable subsidies provided to Aston Villa and Bolton fans (£63 and £49 respectively).

The analysis is based on Profit Before Tax for Premiership clubs over the past 3 seasons - any loss is apportioned to the number of tickets sold over that period (based on home attendances over the period).  Few clubs have consistently made a profit during the last three years.  Arsenal stand out as a profit-making club, but we need to remember that these figures represent profit before tax; after tax and amortisation of player contracts, the club barely broke even in the 2010/11 season (making £2.2m profit).

TeamProfit /Loss  (£m) 2008/9Profit /Loss  (£m) 2009/10Profit /Loss  (£m) 2010/11Total Profit/ Loss (£m)Average Profit/ Loss (£m)Average AttendanceProfit/Loss per home gameProfit/Loss per ticket soldProfit/Loss per season ticket
Man City-£92.6-£121.3-£197.5-£411.4-£137.144,764-£7,217,544-£161-£3,063
Aston Villa-£46.2-£37.6-£54.0-£137.8-£45.938,526-£2,417,544-£63-£1,192
QPR*-£18.8-£13.7   *-£32.5-£16.314,358-£706,522-£49-£935
Sunderland*-£26.5-£27.9   *-£54.4-£27.240,178-£1,431,579-£36-£677
Liverpool*-£16.1-£19.9   *-£36.0-£18.043,098-£947,368-£22-£418
West Brom-£12.3£0.5£9.0-£2.8-£0.924,236-£45,902-£2-£36
Wolves-£5.0£9.1£2.2£6.3£2.126,738£103,279 £4£73
Tottenham£33.4-£6.5£0.4£27.3£9.136,119£478,947  £13£252
Man Utd£48.2-£15.0£29.7£62.9£21.075,092£1,103,509 £15£279
Arsenal£36.7£45.5£14.8£97.0£32.359,997£1,701,754 £28£539
*2010/11 figures not available -  Average loss calculated over two seasons
Profit/Loss figures shown are Profit Before Tax (or on a consistent basis)

At current levels of club expenditure, the ticket price-rise required by most clubs to reach break-even would obviously be unrealistic - current Premier League tickets are amongst the most expensive in Europe and fans are generally oppose to further real-term price increases.   

Clubs are searching for a competitive advantage through their overspend; they seek the riches of the Champions League and fight to avoid the financial wasteland of relegation.  Football fans are also fairly quick to encourage club owners to increase spending.  Antonov (the disgraced former owner of Portsmouth) pointed to the pressure from fans as key reason for the club's overspend - he explained that ‘it was "simply impossible" for Portsmouth to stay within its means and "satisfy supporters' expectations. Even at Arsenal, Wenger has frequently been urged to 'spend some money' (despite the club's recent profits being fairly modest). However, it is clearly the responsibility of the club management to ensure they resist excessive expenditure and run their clubs in a prudent manner.

It is important to consider the source of the funds for the 'ticket-subsidy'.  At Man City, Sheikh Mansour routinely injects cash to convert losses into equity - consequently the club has debts of £43m.  At Aston Villa, Randy Lerner has similarly converted £133m into shares - however the club also has long-term debts of around £130m owed to Lerner's family trust and has to service £6m in interest payments annually (the equivalent of around 12,000 Season Tickets). Relegation-threatened Bolton Wanders probably look even more precarious - they are £110m in debt, financed by £100m owed to Eddie Davies plus an overdraft facility with Barclays.  The club paid over £5m in interest payments last season (equating to around 10,000 Season tickets).

Ticket sales & Match Day Income) represents just one of the three main income streams for the club (the other two being Media/TV and Commercial income). Of the three, Media/TV income is the most important to all Premier League clubs -  again using Aston Villa as an example, the breakdown of these income stream elements in 2010/11 was, £21m Match Day, £54m Media/TV, £17m Commercial income.   It could therefore be argued that rather than a loss-making club effectively subsidising fans' Match Day tickets, it is, in part, the TV audiences who are benefiting from being able to watch a dazzling array of highly paid talent, whilst paying significantly below the market rate. As a counter-argument, it should be remembered that Sky are very astute and regularly test the market to ensure their packages are priced to maximise income without increasing cancellations. TV Football subscriptions are currently fairly expensive in the UK compared to other leagues -  for example Sky Deutschland offers a package showing every single Bundesliga game live, plus premium movies, for around £28pm (i.e. a lower price than the UK equivalent).

If revenues cannot easily be increased, the clubs will need to address the thorny problem of excessive player wages.  Currently, if a club doesn't play-ball and spend heavily on wages, it will find it hard to compete with those that do -  it is probably no coincidence that the Wolves, the only 'mid-size' club currently breaking even, are facing relegation.

Under the FFP rules, the owners of a loss making club are required to convert any annual losses in excess of E5m into equity. This should add some stability to club finances and ensure clubs aren't saddled with growing debt levels.  For some time, there has been an expectation that FFP will influence market forces to help drive down player wages and restore club finances to something approaching sanity. However, like a journeyman centre-half, the situation has been slow to turn.  As a consequence of the Bosman rule, clubs will often lock their top players into 4 and 5 year contracts - this makes it very difficult for clubs to introduce lower wage contracts into their squad.  The other issue delaying the reduction of player wages is the operation of the free market.  With the likes of Man City, Chelsea and even new boys QPR injecting cash into football via wealthy owners, it is hard for clubs to retain and acquire players without paying premium prices (as demonstrated when Arsenal lost Nasri to high wage-paying Man City).

Although Premier League clubs have changed behaviour as a result of FFP (activity in the January Transfer Window was 70% down on the previous year), clubs generally haven't made the changes quickly or deep enough. The 'sugar daddy' clubs continue to record huge losses, and the rest keep spending to try to keep up.   UEFA has tried to phase-in the changes so that clubs slowly adapt to the new environment.  However, irrespective of the new rules and Platini's frequent pronouncements, there is still a persistent view that UEFA will not follow-through with their ultimate sanction of 'exclusion' and that clubs will instead receive the proverbial smack on the wrist.   There remains a real risk that UEFA will ultimately be forced to exclude teams  'pour encourager les autres'.  If this happens and clubs suddenly take UEFA's stance seriously, the results could be disastrous; transfer fees would fall through the floor (leaving many clubs unable to clear existing debt); and clubs would find themselves locked-into unaffordable long-term player-contracts.