The truth about being a Premier League CEO

Football fans think it’s the dream job. But life is far from easy for the bosses of Chelsea, Arsenal, Spurs et al. As the Premier League season gets in full swing, sports industry expert Matt Rogan explains what’s top of the CEOs’ in-trays this season.

Every year around this time, I have the same conversation with my mates in the pub. “How hard can it really be to run a Premier League club?’ they ask me. “Those clubs are licenses to print money.”

I understand why they might think that. Hardly an hour goes by without a new deal of some sort in the news, in particular at this time of year with Transfer Deadline Day fast approaching. Yet despite the revenues pouring in, running a football club is hugely challenging, this year of all years.

Let’s start with the good news. The printing money bit. Some 15 million fans passed through Premier League club turnstiles last year. The league now receives 44 per cent of all money spent globally by overseas broadcasters on football from outside their home market. According to football business blogger Swiss Ramble @swissramble, the top 40 clubs in the Premier League and Championship generated a massive £41bn in revenue in the 10 years up to 2020.

So what’s the catch? That’ll be the enormous to-do list. Turns out being a Premier League CEO is tougher than it sounds.

1. Sign big names (on small salaries)

Despite that £41bn revenue, in the same 10-year period teams in the top two English leagues actually lost a cumulative £3.1bn pre-tax. Principally that’s because of the costs of the very top players. Swiss Ramble shows Chelsea spent £959m on players last season, Arsenal £586m and Tottenham £481m.

And there’s the rub. This is a talent economy. Every summer the big teams strengthen their sides – fail to invest and you risk falling behind. UEFA now mandates that player costs can ‘only’ equate to a maximum of 70 per cent of revenue… and in truth, many clubs are on a knife edge as they chase the new big signing whose name the fans want printed on their new shirts.

There are few industries where fixed, human labour equates to 70 per cent of total revenue – it leaves very little room to run a sensible, profit-making business. Premier League clubs are leaky buckets – the more money comes into the club, the greater the pressure to deliver on the promise through new players.

2. Find new revenue (from fewer places)

So what to do if you need those star players to stay in the league, or you’re skirting the 70 per cent figure? You need more revenue. But that’s not easy.

Firstly, you’re actually not in control of TV rights, which is the biggest cheque you receive. The Premier League looks after that.

Sponsorship? That market is tightening for all but the biggest clubs. Most shirt sponsors would not pay enough to sign a single player each year. Some of the biggest spending categories are also disappearing. Cigarettes and alcohol have long gone, betting will likely be next, with cryptocurrency not long afterwards.

Ticket prices are sensitive, too, not least on the back of increasing lobbying from fan groups and the stern eye of the government’s Fan Led review.

Even those new shirt sales are proving more challenging than usual, given that many teams’ stock is stuck on a boat somewhere between here and China. No wonder those European Super League rumours won’t quite go away…

3. Expand your business (but avoid borrowing)

If you can’t increase prices, why not just follow the example of Arsenal and Spurs and increase the size of the stadium?

That’s increasingly challenging with many Premier League clubs heavily indebted (due to poor management or aggressive private equity ownership). We’ve been through a period of low interest rates, but they’re already ticking upwards.

Chelsea’s owners are believed to have committed to spending £1-£2bn to develop Stamford Bridge. Not everyone can be as lucky as West Ham and walk into a brand-new stadium. It also can’t happen overnight – you thought planning a house extension in London was tricky, try a stadium development.

Then there’s further investment in the women’s game. That’s a no-brainer but you have to be realistic about the timeline for that to pay back, even with England as newly minted European champions.

4. Perform on the pitch (but only until November)

This season sees the first FIFA Men’s World Cup in Qatar to take part in the British winter, starting November 20. Just to keep you on your toes, the weekend of November 11 and 12 sees the final Premier League games before an enforced break until Boxing Day.

As a jaded nation with diminished spending power rolls into Christmas, our eyes will be firmly focused on the football – but not the Premier League teams with books to balance. At least the new away shirts will have hopefully been delivered by then.