English Soccer Money Pit May Revive Super League Idea, Report Says

England’s top two soccer divisions, the Premier League and the Championship, are so unprofitable for owners that it is likely keeping alive the prospect of a Super League project, according to a new report out today.

U.K. consulting firm Vysyble released its annual report on the profitability of English soccer, saying that in 2019-20, the top 44 teams lost the equivalent of $2.6 billion. The poorest performer, from an economic standpoint, was Manchester City, which posted a loss of about $256 million in Vysyble’s methodology. Sheffield United, currently mid-table in the Championship, beat all teams with about a $21 million economic profit in the 2019-20 season, the latest Vysyble has analyzed.

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“We do not see any significant rise in football’s fortunes despite the lifting of COVID-related restrictions,” said Vysyble principal John Purcell in an email. “We do expect to see further losses in the coming years with the increasing prospect of a Super League return, propelled by a poorly performing financial environment and the fiscal threat of a resurgent Newcastle United.” Newcastle United, one of the more successful squads in English competitive history, is being purchased by a Saudi-led consortium.

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Vysyble measures economic profit as net operating profit after tax, which takes into account the cost of capital to better reflect how team owners view their investments. Essentially, the more commonly used metric of net income doesn’t reflect the fact that team owners invested hundreds of millions of dollars up-front to purchase clubs and may not be making a return on their money. Vysyble assigns a cost-of-capital charge to teams to reflect teams’ public disclosures of expenses as well as going rates for team financing activities. “We can take a much more precise view of the performance of the business, and we get as close as possible to the owner’s perspective,” explained Purcell.

Since 2010, Premier League clubs have achieved economic losses of £3.5 billion on revenue of £34.25 billion (about $47 billion), with just 35% of Premier League club balance sheets achieving an annual economic profit, according to Vysyble. This means that despite the widespread anger at the Super League proposal, the idea will likely surface again as owners seek to recoup the costs sunk into putting teams on the pitch.

Across the U.K., soccer has been in dire enough straits that a few Premier League clubs proposed Project Big Picture, to distribute more money to the teams in divisions below the Premier League to help sustain soccer across England. There are some 5,300 clubs playing among 11 divisions that, theoretically, can win promotion to the game’s highest levels over time.

“Our data clearly demonstrates that football’s financial and economic model is in disarray, yet those running the game are seemingly oblivious and refuse to acknowledge our findings,” said Vysyble co-founder Roger Bell in a press release announcing the report. “We do fear for the game if it continues to ignore the fundamental economic situation. In other industries, where there are similar levels of economic losses, major structural reform is often the result along with bankruptcies, mergers and acquisitions.”

This is the sixth edition of the report Vysyble has produced, with the first coming in 2016. Titled “We’re So Rich, It’s Unbelievable: The Illusion of Wealth Within English Football,” it is in part a play on a Bronx cheer heard in English stadiums.

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