European football market grows to €15.7 billion
Football proves recession resilient but cost control requires greater focus
Despite the challenging global economic environment, the European football market grew to €15.7 billion in 2008/09. In their local currencies, the ‘big five’ leagues (England, France, Italy, Germany and Spain) each managed to increase their revenues in 2008/09 to a collective total of €7.9 billion (up from €7.7 billion in 2007/08). The Bundesliga, Serie A and Ligue 1 achieved growth across all three major revenue streams - broadcasting, matchday and commercial revenue.
The English Premier League remained the highest revenue generating league in world football with its clubs generating €2.3 billion. However, sterling’s 7% depreciation against the euro contributed to a narrowing of the gap to €0.7 billion to its nearest rival, the Bundesliga. The Bundesliga recorded an impressive 10% of revenue growth to €1,575m and moved ahead of La Liga, whose growth to €1,501m was driven by treble winning Barcelona and Real Madrid, whilst total revenues declined at the other 18 clubs. Serie A’s revenues increased by €73m (5%) to €1,494m, ahead of Ligue 1 whose revenues (€1,048m) exceeded €1 billion for the first time.
Dan Jones, Partner in the Sports Business Group at Deloitte, commented: “European football’s continued revenue growth demonstrates an impressive resilience to the extremely challenging economic times – underlying the continued loyalty of its fans and the continued attractiveness of football to sponsors and broadcasters. Unquestionably, football’s biggest challenge is not revenue generation, but rather the need for much greater cost control – notably over players’ wages and transfer fees.”
The ‘big five’ leagues’ wages increased by €305m (6%) to exceed €5 billion for the first time. In England and Italy wage growth was greater than revenue growth putting further pressure on operating profits. The Bundesliga became Europe’s most profitable league as its clubs generated increased operating profits of €172m to comfortably overtake the Premier League, whose profits fell markedly to €93m. Serie A and Ligue 1 remained loss making. In Spain, Barcelona and Real Madrid generated substantial operating profits but the remaining clubs recorded a significant aggregate operating loss.
The new UEFA Club Licensing and Financial Fair Play Regulations, which were approved in May 2010 and apply for entry into UEFA competitions, will require many European clubs to take action to better balance their revenue and expenditure. A key part of the regulations is the ‘break-even’ requirement which, in basic terms, means clubs will be required to spend no more than they earn after taking into account certain exempt expenditure.
Alan Switzer, Director in the Sports Business Group at Deloitte, commented: “Since the new UEFA Club Licensing and Financial Fair Play Regulations will first apply for financial statements ending in 2012, with no sanctions before 2013/14, clubs should have sufficient lead time to adapt but need to start preparing themselves now. In addition to continuing to grow their revenues, including through investment in their facilities, clubs must focus on ensuring their cost base better reflects their revenues and has sufficient flexibility built in to deal with any revenue shocks.”
Other key findings from the Deloitte Annual Review of Football Finance 2010 include:
You can find additional information on European Football.
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