If the Premier League was decided by reference to gross profitability, then according to the latest Final Table analysis in the The Times, based on each club’s TV game fee; place money and share of TV income and their estimated wage bills (in £ million), the final 2017/2018 table might look something like this:
If you are a micro or small business supplying goods or services to football clubs these figures are really only a starting point in helping you decide whether you offer 30; 60 or 90 day-credit terms to such clubs. For example, the table does not take into account income from other sources (such as the Champions League and merchandising revenue) nor other expenditure that you would expect in any trading company. For that you should ideally see three years of audited accounts, including draft accounts for the current financial year and projected accounts for the following accounting period.
The recent Carillion experience shows how difficult this can be, particularly if the ultimate client is the governmen. In reality, micro and small businesses, in such circumstances, tend to proceed rather lemming like on the basis that if their mate X or business Y is providing goods or services to a client, then they must have done their due diligence and it must be alright. Nonetheless, it is important for proprietors of micro and small businesses not to be mesmerised by the glamour of working for prestigious clients: what’s the point if you’re not going to get paid and if you have incurred credit from your suppliers remember the old legal insolvency tests:
Commercial solvency: does your company have the cash flow to meet its bills as they fall due?
Balance sheet solvency: is the value of your company’s assets more than its liabilities including contingent and prospective liabilities.
This is particularly true of course, in a World Cup year where there is the potential for further income for clubs that have released players during the qualifying tournaments and the finals.
If England wins the World Cup each individual player will receive a bonus of £215,000, but the overall sums involved in FIFA’s flagship tournament are truly staggering. FIFA turned over $4.8 billion during the 2014 World Cup, with expenses of $2.7 billion resulting in a $2.1 billion profit, which was reinvested in football around the world, subject to FIFA retaining a profit of $338 million.
The total prize money this year is $791 million (up from $564 million in 2014) and the prize money for the winners will be $38 million with the clubs that have players at the tournament sharing $209 million, of which the Premier League clubs will be expecting a sizeable proportion, no doubt
Hopefully, at the end of the World Cup The Times will provide an updated Final Premier League Table taking into account all these additional financial factors particularly with an indication of those clubs that might be adversely affected by the withdrawal of their “magic money pots” from overseas investors if the government does follow through with its tightening of the “Fit and Proper” business visa reforms as it seems to be threatening.
The best advice is to remember the old adage “how to make a small fortune out of football: start by putting in a large one.”
If you are an SME supplier to the world of football just make sure that it’s not your fortune, so you can really enjoy the beautiful game.