A critical financial analysis of Premier League football club accounts
Cardiff Metropolitan University
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"Modern commercialised sport has become a 'multi million' dollar industry," (Home et al,1999,p.259), to which football in the UK has been at the forefront since the formation of the Premier League in 1992. Football has undergone a transformation period, which has seen a huge boom in popularity, commercialisation and an increasing emphasis on advertising. Football is strongly considered to be a wealtþ industry, accentuated by the huge transfer fees for and wages paid to players. Recent financial reports suggest that this prosperity has become a mirage and a restructuring of the industry is required. This claim is questioned through the financial analysis of six Premier League accounts, using the application of accounting principles. The findings of this analysis served as the basis for two interviews with financial advisors to Premier League clubs. From both sets of data collected it is indicated that the survival of clubs is dependent on a restructuring of the football club business model, increasing the diversification of turnover. Clubs have secured large loans through the selling of future ticket sales and commercial income, with which several are struggling to meet repayments, prompting financial advisors to call for sensible control to be exercised. Recent developments have seen shorter contracts, with in built adjustments for relegation, while in the future ground sharing, performance related pay and salary caps could all be viable and necessary options.
BSc (Hons) Sport, PE and Recreation
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