The German Bundesliga has overtaken the English Premier League as the most profitable league for the 2008-2009 season, reports euFootball.BIZ. The information is based on the Annual Review of Football Finance that is put together by the accountancy company Deloitte.
The Premier League had revenues of USD 2.87 billion in 2008/09; however, operating profits have dropped dramatically from USD 266.77 million in 2007-2008 to USD 114.6 million in 2008-2009.
In comparison, the Bundesliga operating profits of USD 205.4 million is very impressive.
The biggest reason for the drop in operating profits in the Premier League is the rising wage bill and increased transfer spending.
Deloitte's Sports Business Group's director Alan Switzer said, "The record wages to revenue ratio of 67 per cent in the Premier League in 2008/09 is a concern and we expect wages growth to outstrip revenue increases again in 2009/10. This will further reduce operating profitability, a decline that cannot continue indefinitely.
"However clubs have the opportunity, via the revenue uplift from the new broadcast deals from 2010/11, to get wage levels down to a more sustainable share of revenue. It's not the first such opportunity. It remains to be seen whether they grasp it."
There is hope that the new overseas television rights deals that the Premier League has signed for 2010-2011, which will bring additional money to the clubs' coffers, will help the league improve its financial position.
UEFA has also now officially introduced its 'Financial Fair Play' and expects clubs to break even and not spend beyond their means.
In a foreword to the report, the analysts said, "The key driver of wages inflation is domestic rather than cross border competition. It is potentially within a dozen or so Premier League club cheque signatories' gift to be game changers in a financial sense.
"Nevertheless we fear history will repeat itself and once again the vast majority of those revenues will quickly flow into the hands of players and their agents. We hope football can prove us wrong."