European football market grows 9% to €12.6 billion

Deloitte’s latest Annual Review of Football Finance, released today, reports on the growth of the European football market and the overall improvement in the finances of the clubs in Europe’s ‘big five’ leagues. 

Dan Jones, Partner in the Sports Business Group at Deloitte, commented: “Revenue growth amongst the ‘big five’ leagues and the successful World Cup in Germany helped drive up the total revenue of the European football market to €12.6 billion in 2006.  Whilst there are a variety of challenges to be assessed and addressed by the game, there are many positive aspects about the overall financial picture. 

English Premier League clubs remain well ahead in terms of revenue (€2.0 billion) and profitability (€200m).  Next season the revenue of Premier League clubs will be boosted by new TV deals to over €2.5 billion.  Meanwhile, the problems affecting Italian football will mean that the revenue gap between the Premier League and Serie A is likely to be €1 billion in 2007/08.” 

Jones added: “The distribution of wealth remains an ongoing challenge.  Whilst it is not an easy task to manage, achieving a suitable balance is crucial for the sport to continue to be as attractive to fans, broadcasters, sponsors and investors.”

Looking ahead to this summer’s transfer window and into next season, Paul Rawnsley, Director in the Sports Business Group commented: “Cost control is the key to delivering a successful and profitable football club business.  The key performance indicator for the clubs is the wages to turnover ratio, which across each of the ‘big five’ leagues has stabilised at a more comfortable level – at around 60% to 65%, and a lower level of under 50% for German Bundesliga clubs - than compared to two or three seasons ago. 

“We continue to strongly encourage clubs across Europe to implement properly assessed and structured performance related pay structures that not only help to insulate the business when on-pitch results are not so good, but also help motivate and reward players and management for winning.”

Other key findings of the Annual Review of Football Finance 2007 include:

• The combined revenue of the ‘big five’ leagues contributed 53% (€6.7 billion) of the total revenue of the European football market of €12.6 billion in 2006. 
• English Premier League clubs generated the highest revenues (€2.0 billion) and profitability (€200m) of any football league in the world in 2005/06.  Their lead over second placed Italian Serie A clubs (total revenue of €1.4 billion) will grow further next season. The other ‘big five’ leagues’ total revenues are Germany (€1.2 billion), Spain (€1.2 billion) and France (€0.9 billion).
• French Ligue 1 clubs generated the biggest increase in revenue (up 31%/€200m) to €0.9 billion, largely due to new TV deals.
• In 1995/96 Italian Serie A clubs and the English Premier League clubs were fairly evenly matched in terms of overall revenue generation (around €450-500m) and average attendances (around 30,000 per league match).  In 2006/07 Serie A revenue is estimated to have fallen to less than €1.2 billion – well below the Premier League total of €2.0 billion, and lower than the estimated revenue of €1.3 billion generated by top division clubs in each of Germany and Spain. Serie A average attendances have plummeted to less than 20,000; now the lowest amongst the ‘big five’ leagues.
• Below the ‘big five’ leagues, the Dutch Eredivisie generates the next highest revenue of any top tier domestic league (€355m in 2005/06). This is less than the English second tier Football League Championship competition whose clubs’ combined revenues were €460m in 2005/06. 
• The UEFA Champions League competition generated €0.6 billion from centrally negotiated broadcasting and sponsorship rights arrangements, with €437m (72%) of that distributed to the 32 clubs participating from the group phase onwards.

Alan Switzer, Director in the Sports Business Group at Deloitte went on to discuss the importance of investment in stadia facilities: “An amount equivalent to over 15% of revenue generated by English Premier League clubs since 1992/93 – that’s €2.5 billion - has been invested in their stadia facilities; the ‘shop window’ for the game.  Appropriate cost control and profit generation are essential to provide a sustainable business model for clubs and to provide the funds for investment in the future of the game.”

- ENDS -

Note to editors

Basis of preparation
The News Release and Highlights are extracted from the relevant sections of the Deloitte Annual Review of Football Finance (May 2007).  The bases of the opinions and calculations are explained in that publication.

The analysis of the financial results of various European leagues, and comparisons between them, has been based on figures extracted from the relevant company or group financial statements or from information provided to us by national associations/leagues.

In some cases Deloitte have made adjustments to the disclosed figures to enable, in Deloitte’s view, a more meaningful comparison of the financial results and position of the football business on a club by club basis.  Deloitte have not performed any verification work or audited any of the information contained in the statutory financial statements for the purpose of their analysis.

In relation to estimates and financial projections, actual results are likely to be different from those projected because events and circumstances frequently do not occur as expected, and those differences may be material.  Deloitte can give no assurance as to whether or how closely the actual results ultimately achieved will correspond to those projected and no reliance should be placed by any party on such projections.

The published financial statements of clubs rarely split wages costs between playing staff and non-playing staff.  Therefore, unless otherwise stated, references to wages relate to total wages for a club/division, including playing and non-playing staff.

The publication and this News Release are intended to provide general information on the finances of the clubs in English football and other European leagues and cannot be relied upon to cover specific situations.  No responsibility for loss occasioned to any person acting, or refraining from action, as a result of any material in this News Release will be accepted by Deloitte & Touche LLP, Deloitte Touche Tohmatsu, and all other member firms of Deloitte Touche Tohmatsu organisation and their affiliates and in all cases any successor or assignee.  Readers should not act upon any material in this News Release without taking relevant professional advice.

Exchange rate
The exchange rate at 30 June 2006 has been used to convert figures to Euros (£1 = €1.4464).

About the Sports Business Group at Deloitte
Over the last 15 years Deloitte has developed a unique focus on the business of sport. Our specialist Sports Business Group offers a multi-disciplined expert service with dedicated people and skills capable of adding significant value to the business of sport. Whether it is benchmarking or strategic business reviews, operational turnarounds, revenue enhancement strategies or stadium/venue development plans, business planning, market and demand analysis, acquisitions, due diligence, expert witness, economic impact assessments, audits or tax planning; we have worked with more clubs, leagues, governing bodies, stadia developers, event organisers, commercial partners, financiers and investors than any other adviser. For further information on our services you can access our website at www.deloitte.co.uk/sportsbusinessgroup  

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In this press release references to Deloitte are references to Deloitte & Touche LLP which is among the country’s leading professional services firms, providing audit, tax, consulting and corporate finance services. Known as an employer of choice for innovative human resources programmes, it is dedicated to helping its clients and people excel. Deloitte & Touche LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu (‘DTT’), a Swiss Verein whose member firms are separate and independent legal entities.  Neither DTT nor any of its member firms has any liability for each other’s omissions.  Services are provided by member firms or their subsidiaries and not by DTT.  Deloitte & Touche LLP is authorised and regulated by the Financial Services Authority. The information contained in this press release is correct at the time of going to press. For further information, visit our website at www.deloitte.co.uk