As the season kicks off tonight, BDO’s annual survey of football club financial directors shows 86% of clubs believe their current financial position to be ‘very healthy’ or at least ‘not bad’, with only a handful of financial directors suggesting their clubs’ finances are in need of attention
While the English Premier League dominates in terms of player transfers and profitability, BDO says a shift in club and investor behaviours has seen 40% of those outside the top tier receiving formal or informal approaches from potential equity investors in the last 12 months.
BDO questioned 50 clubs in the English Premier League, English Football League Championship, Football Leagues One and Two and the Scottish Premiership.
Threequarters of clubs in the Premier League say they are in a very healthy financial position and 93% expect to make a profit before player trading in their next accounting period. However, despite continued high investor activity, Premier League club shareholders are now largely taking a ‘hold’ position despite exit values having never been higher.
In contrast, 73% of clubs League One revealed that they had received an informal or formal approach from potential equity investors over the last 12 months.
Increased investor interest is predominantly coming from international parties, although there is still interest from domestic fans and funds at the lower levels. BDO says this suggests a more medium to long-term strategy from investors, recognising potential for future value growth in Football League clubs – something that may not be available in Premier League clubs where the impact of enhanced broadcasting rights may already be factored into valuations.
Ian Clayden, head of professional sports at BDO, said: ‘On the investor side, increased appetite and international diversity of ownership appears to be a natural reflection of the global appeal of English football.
‘Increased wealth from enhanced media rights and equity investment often leads to the perception that football is “all about the money”, and in fact we may start to see smaller but more expensive first team squads as clubs sacrifice quantity for quality.
‘However, in response and with a need to attract top talent as well as exploit a lucrative profit stream, clubs appear to have a financial justification for further investment into youth development.’
BDO found that just 14% of respondents across all the divisions believe that the enhanced Premier League broadcasting revenues have had a negative impact on their club. While this is causing some wage and transfer fee inflation, the firm predicts that market forces and FFP regulation are likely to correct this if necessary.
Clayden said: ‘Football clubs are dynamic organisations and will continue to adapt to their environment with unwavering commitment to balancing the interests of all of their stakeholders. As the new season kicks off, we should not lose sight of the fact that on the whole the sector remains both healthy and exciting.’