Premier League clubs could become viable investment option
The days of English football teams being "playthings for billionaires" could be ending, according to FT
- The league has always had huge revenues but struggled to make profits
- Leicester City's shock win and new regulations could pave the way
Football has shown a consistent ability to generate huge amounts of revenue, in comparison with other entertainment industries, but the English Premier League has failed to turn a regular profit in recent times.
According to the Financial Times, English football could be just about to get a hell of a lot more investable.
"The problem lies in the supply chain. Quality footballers are rare and since a court ruling in 1995 stopped clubs from restricting their movement, the players have had the bargaining power," said FT's Lex team.
English football could be just about to get a hell of a lot more investable
While fans are always willing to spend on tickets, television and merchandise, this revenue is counteracted by the sky-high prices of financing players' weekly wages. Figures from Deloitte show revenues of 3.3 billion for 2014/15, trebling in 12 years.
The league has an international appeal without attracting a lot of competition from other areas, many people in Thailand would rather watch Manchester United than their local team for example.
Apart from the major surprise packet champions of 2015/16, Leicester City, the winners of the Premier League have always heavily correlated with wage expenditure.
"After a season in which 17 of the 20 Premier League clubs made a profit, Deloitte expects more of this bounty to flow into profits," said FT, referring to the three-year 5.1 billion television rights deal agreed last year.
In 2013 regulations were brought in to try to curb the wage bills of certain clubs
In 2013 regulations were brought in to try to curb the wage bills of certain clubs, and it has gained a mesaure of success, with "only 30% of revenue growth" reaching players' pockets.
If Leicester City's well deserved title triumph this season is anything to go by, investors may be willing to take more of a chance with less wages and possibly more profit, transforming clubs from money-sapping hobbies into sound investments.