London - The
Premier League is set to announce a record annual pre-tax loss of £312
million because of the declining value of the sterling and new
accounting rules, the Financial Times reported on Friday.
English football's top flight is the wealthiest major domestic
football competition in the world, with much of its income generated
from lucrative overseas broadcast deals.
This season alone is set to see the 20 clubs in the Premier League
each take a cut from international media rights agreements worth an
estimated £3 billion in total.
The league clubs have usually received their share in sterling, with
the Premier League using financial instruments known as derivatives to
offset the exchange rate risk that comes from the fact that television
contracts are also paid in US dollars and euros - a process called
But UK rules for the reporting of derivatives have changed, with
companies now required to value their contracts annually at market
prices, instead of waiting until a deal had been completed to make a
formal declaration of its worth.
Last season's edition was the first time these new rules had become applicable to the Premier League.
On July 31, 2016, the last day of the Premier League's financial
year, the pound was worth $1.32 - a 12 percent decline since Britain
voted to leave the European Union in a national referendum.
Results for that financial year, which includes 5 000/1 outsiders
Leicester City's shock Premier League title triumph, are due to be
published next week.
The Financial Times, citing Premier League documents yet to be made
public, said the new reporting rules had turned what would have been a
slight profit into a multi-million pound loss.
According to the FT report, the Premier League said the loss had done
no actual damage to its income or ability to make distributions to its
The consequences for the Premier League of 'Brexit' which, following
the referendum, is due to take place in 2019 after two years of
'divorce' talks, may not be limited to currency fluctuations.
Currently, Premier League clubs can sign EU players without having to apply for work permits on their behalf.
Non-EU players must satisfy criteria regarding how many international
appearances they have made and how strong their national team is in
order to be granted visas, although exemptions can be granted.
A study by The Guardian published in September showed that two thirds
of Premier League players from the EU would not meet these criteria.
Fewer stars means reduced international appeal, potentially making
rival championships such as Spain's La Liga or Germany's Bundesliga more
attractive to overseas broadcasters and so reducing the long-term
financial strength of the Premier League.