The Premier League are set to announce a record pre-tax loss of £312million, when it reveals its annual results.
As such, the Premier League have been forced to declare the cost of protecting itself from the currency risk attacked to its big-money TV deals.
Next week, Companies House will publish the Premier League’s filings for the financial year upto July 31, 2016.
Exchange rates have had a major effect, something the Financial Reporting Council had previously warned companies, ahead of the vote to leave the EU.
The Premier League has paid the TV contracts that have fuelled the largesse of the English top flight in sterling, dollars and euros. League clubs have been paid in sterling, using derivatives to manage the exchange risk.
But last summer, the Premier League became required to present results in line with new UK accounting standards.
The Premier League has long utilised a number of hedging contracts – lasting up to three years and maturing at different times. But companies have had to value contracts annually at market prices, and could no longer use hedges to insure themselves against adverse market moves and make a final record later.
As such, on the final day of the Premier League’s financial year the pound stood at $1.32 – 12 per cent down following the EU referendum.
That turned a gain of £638,000 under old methods into a paper loss of £250million, according to the Premier League. They insist the figure had no impact on its real income or operations, or on its ability to pay clubs.
Revenues have continued to increase, reaching £2.04bn and the league’s £5.1bn domestic TV deals means they’ll have more cash incoming also.