The new domestic broadcasting deal that came into play in 2016/17, combined with wage restraint
due to the Premier League’s Short Term Cost Control rules, has boosted club income and
profitability.
As a result the total value of EPL clubs has risen over 30% to £15.8 billion.
The clubs have been valued using the Markham Multivariate Model (MMM) devised by Dr Tom
Markham, a graduate of the University of Liverpool’s Football Industries MBA programme, and now
head of Strategic Business Development at Sports Interactive, the producers of Football
Manager.
The average value of a club in the EPL is now £791 million, up from £607 million the
previous season.
This helps explain why there are so many investors, speculators and charlatans keen to get involved
in the division.
This is the formula that is used to calculate club values (Revenue + Net Assets) x (Revenue
+ Cleaned Net Profit + average gain on player sales over last three years)/ Revenue x stadium
utilisiation % / wage control %)
The formula assumes that the club will continue to be in the EPL for at least five years.
If the club was relegated then values in the Championship are probably only 15-20% of the
Premier League’s figures, so for Swansea, Stoke and West Brom, the figures featured
in this video will no longer be accurate.
Their position in the following list was calculated on the basis of their remaining in the league.
Bear in mind, value is based on the most recent set of club accounts, which were filed regarding
the 2016/17 season, not the one just finished.
For that reason, the clubs that were relegated last season appear in this list.
10: West Brom £381 million (2016 £165 million)
If something looks too good to be true, it’s probably not true, and the Baggies valuation
is a classic example of this.
The club had underinvested in players for a few years up to 2017 & survived until then.
Whilst good for profits (£32m in 2017) it meant that it was a high risk for relegation
if any new recruits failed to deliver, as the club found out in 2018.
9: Everton £440 million (2016 £107 million)
Farhad Moshiri wiping off the club’s debt, a reversal from being loss to profit making,
better wage control & the sale of John Stones were the major drivers of Everton’s quadrupling
of value this year
8: Southampton £508 million ( 2016 £299 million)
For a club that was sold for £260 million little over a year ago this looks impressive.
Gains on player sales of £112 million in three years is a driving force, and the sale
of VVD in 2018 is likely to keep the figure high this season.
7: Leicester £955 million (2016 £339 million)
Leicester’s value nearly trebled due to participation in the Champions League & earning
more from the competition than winners Real Madrid due to the formula used to award prize
money.
Expect to see a big fall in 2018 though.
6: Liverpool £1,129 million (2016 £626 million)
It might upset Reds’ fans to see their club sixth, but remember the owners only paid £300
million for the club a few years ago.
The club’s value increased by over £500 million in 2017 & expect to see another big
jump in 2018 due to the Coutinho sale and CL success.
5: Spurs £1,445 million (2016 £1,169 million)
Champions League income & tight control over wages which are £80-£140 m less than the
other ‘Big Six’ clubs mean Spurs value is higher than you would expect from a club
that has not won the league for nearly 60 years.
4: Arsenal £1,822 million (2016 £1,269 million)
Arsenal’s ability to extract money from fans is very impressive, their matchday income
is second only to Manchester United.
That they have lower wages than Liverpool, the Manchester clubs & Chelsea also helps.
Also contributing was a rise in profits from £2m to £35m, but a lack of CL exposure in
2018 will restrict value growth.
3: Manchester City £1,979 million (2016 £2,139 million)
A bit of a slide for City, as the investment in new players and wages under Pep meant profits
fell from £20m to £1m despite income being up 20%.
Wage control percentage also rose from 50% to 56%.
Profitability is an irrelevance to the owners, but an increase is on the cards for 2018.
2: Chelsea £ 2,062 million (2016 £1,837 million)
Chelsea’s ability to continually sell players at a profit, bonuses for winning the EPL & new
kit deals pushed them into second position.
Biggest constraint is matchday income, only £65m compared to over £100 m for United
and Arsenal.
1: Manchester United £2,463 million (2016 £2,402 million)
United have consolidated their position at the top of the table as a result of higher
broadcast income and making profits of £11 million compared to losses of £10 million
on player sales.
Not selling players at a loss helped too, along with winning two trophies.