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Why is English football thriving – and can it last?
The England national team has found its feet; the Premier League is swimming in money and paying its players lavishly, and profits are soaring. What has gone so right for English football?
This week, the national team finally re-found their feet under new boss Thomas Tuchel, thrashing Serbia 5-0 away in style. Meanwhile, the elite domestic game seems to be in the rudest of financial health. The 20 football clubs in England’s Premier League spent €3.5 billion on new players during this year’s transfer window, says Transfermarkt. That’s more than the €2.4 billion last year and more than the €3.3 billion combined spend of all the clubs in Spain’s La Liga, Italy’s Serie A, Germany’s Bundesliga and the French Ligue. Factoring in revenue-raising sales of existing players, the 20 Premier League clubs’ net spend was €1.5 billion, or €380 million more than the other four leading European leagues put together. Of the 25 top-spending clubs in Europe, 14 were from the Premier League – including all of the top eight.
Who are the biggest spenders in English football?
(Image credit: Nikki Dyer - LFC/Liverpool FC via Getty Images)
Liverpool’s signing of Swedish striker Alexander Isak for £125 million from Newcastle United – a new British record – took them into a league of their own. Overall, they spent €482 million. Behind them were Chelsea (€328 million), Arsenal, Newcastle United and Manchester United. And it’s not just the top clubs. The tenth biggest spender in Europe was newly promoted Sunderland, which spent €188 million – more than Real Madrid (€167 million). Even relative minnows Bournemouth, whose home ground has a capacity of less than 12,000, was in 17th place with an outlay of €138 million – just pipping Italian giants Juventus, who spent €137 million.
How do English football clubs make their money?
Broadcast rights, other commercial activity and match-day revenues – in that order. In 2023-2024, Premier League clubs generated £6.3 billion in revenue, a 4% rise on the previous season, according to the Deloitte annual review of football finance. That was projected to grow to £6.6 billion in 2024-2025 and £6.9 billion in 2025-2026. Of that £6.3 billion, 52% was generated by broadcasting rights (£3.3 billion); 14% came from match-day revenues (£909 million); and 34% (£2.1 billion) came from other commercial activities (including sponsorship deals, player trading, overseas tours and property development). The Premier League is the richest in the world – but it doesn’t contain the very richest club. In the 2023-2024 season, the 20 highest-earning clubs brought in a record €11 billion. Top of the table was Real Madrid, which became the first club to rake in €1 billion, up a quarter on the previous year.
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On average, almost two-thirds of revenues – some 64% – goes on wages. But it’s not the biggest clubs who have the biggest wage bills, relative to revenues. In 2023-2024, the five clubs with the biggest revenues were Man City, Man Utd, Liverpool, Arsenal and Tottenham, in that order. All of them had a wages-to-revenue ratio lower than average, ranging from 43% at Tottenham to 63% at Liverpool. That suggests an element of financial solidity that augurs well for their continued success. Man City had the biggest wage bill overall, at £413 million, but as a proportion of revenues (£719 million) that was a below-average 57%. Second-tier clubs had the highest relative wage bills: 96% at Nottingham Forest, 93% at Aston Villa, 86% at Fulham and 84% at Everton.
It can’t. All the clubs in the league are in a battle for survival, in the sense that relegation spells financial disaster, so they must achieve a difficult balance between financial sustainability and retaining Premier League status. Wages are important: of the three clubs relegated in the 2023-2024 season, two of them were also in the bottom three for wages-to-revenue – Luton Town (43%) and Sheffield United (47%). If they pay too little, they will not have the players to survive. But a high ratio indicates that a club is spending a potentially unsustainable amount on its wage bill, says football financial analyst Paul Quinn on theesk.org. A 70% ratio is a warning threshold, a benchmark that Premier League clubs have often approached and occasionally surpassed. On the other hand, increased regulatory scrutiny and sanctions for breaches at domestic and European levels “appears to have focused the minds of some clubs and, in general, encouraged a better balance between costs and revenues”, says Deloitte. Premier League clubs’ aggregate operating profit grew to more than £500 million, a rise of 36% year on year, and the highest since 2018-2019 (the last full pre-Covid year). Once factoring in non-operating costs, they reported aggregate pre-tax losses of £100 million. They have £3.5 billion of net debt.
What’s this about a new English football regulator?
A new Independent Football Regulator (IFR) will root out financial overreach and protect the “heritage” of English football. According to the government, the regulator is intended to stop owners from overspending to achieve short-term success, while risking the club’s survival if that success doesn’t happen. The IFR will oversee everything from suitability tests for owners to the distribution of broadcast revenue across the leagues. Clubs can incur a penalty of up to 10% of revenues if they breach financial guidelines.
Why’s that the state’s business?
Football has flourished, generating £4.2 billion in tax receipts a year and 90,000 jobs, with little involvement from the state. The Premier League is a global phenomenon and a magnet for foreign investment. Governments create regulators to prevent behaviours that are damaging to businesses, consumers and markets in the long run. So it’s not clear why football qualifies for special treatment of this kind. And it remains unclear how the new regulator will operate in practice and how much power it will have to limit the thriving market. Some are worried about its potential effects. James Palmer, partner at the law firm Herbert Smith Freehills Kramer, said the government was “taking for granted that English football has the right to be number one in the world. We risk undermining a sector by thinking it’s the golden goose.”
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