European football market grows by €1 billion in 2007

Contact: Tamara Vlastelica Bakic
Deloitte in Macedonia
Senior Coordinator
+381 11 38 12 100

Revenues for the ‘big five’ European football leagues have exceeded €7 billion for the first time according to the latest Annual Review of Football Finance from the business advisory firm, Deloitte.  The overall size of the European football market has grown to €13.6 billion in 2006/07, up €1 billion from the previous season.

Dan Jones, Partner in the Sports Business Group at Deloitte, commented: “Revenue from the ‘big five’ European leagues grew by more than €0.4 billion (6%) to exceed €7 billion for the first time in 2006/07, representing more than half (52%) of the total European market.

“Amongst the ‘big five’ European leagues, English Premier League clubs generated the highest revenue in all three categories (matchday, broadcast and commercial) for the first time since 2001/02, reporting record total revenues of €2.3 billion in 2006/07. The revenue gap between the English Premier League and its nearest challenger, the German Bundesliga (€1.4 billion), widened to €0.9 billion in 2006/07.”

Both the German Bundesliga and Spain’s La Liga achieved year-on-year revenue growth of 15%, helping these two leagues to overtake Italy’s Serie A in revenue terms in 2006/07. With the return of Juventus to Serie A in 2007/08, the race for second place is expected to be a closely fought three-way contest in next year’s edition, albeit around €1 billion in revenue behind England’s Premier League.

The key performance indicator for the clubs is the wages to turnover ratio, which was in the relatively narrow range of 62% - 64% in four of the ‘big five’ leagues in 2006/07, with Germany’s Bundesliga the exception with a much lower wages to turnover figure of 45%.

Jones comments: “With a much lower wages to turnover ratio than in any other ‘big five’ European league, the German Bundesliga knocked England’s Premier League off top spot in terms of operating profitability in 2006/07, for the first time since our analysis began. However, German clubs’ impressive financial performance has not been matched by recent on-pitch success in European club competitions, in contrast with the recent sporting performance of English clubs. Whilst it is not an easy task to manage, achieving a suitable balance between financial management and success on the pitch is crucial for a league to be attractive to fans, broadcasters, sponsors and investors.”

Looking ahead to this summer’s transfer window and into next season, Alex Byars, Senior Consultant in the Sports Business Group, commented: “Following record levels of transfer spending by European clubs in both the summer 2007 and January 2008 transfer windows, we expect the showcase of talent at UEFA Euro 2008 to trigger buoyant levels of transfer activity this summer as clubs seek to invest some of their extra revenues in strengthening their squads.

“As on-pitch performance can have a large impact on a club’s revenues from one season to the next, we continue to strongly encourage clubs across Europe to maintain a flexible and sustainable cost base - irrespective of the size of club - to ensure that clubs only spend what they can afford. Performance related pay structures which are properly designed and implemented will not only help to insulate the club when on-pitch results are not as good as expected, but can also help motivate and reward players and management for winning.”

Other key findings of the Annual Review of Football Finance 2008 include:

• The combined revenue of the ‘big five’ leagues contributed €7.1 billion (52%) of the total revenue of the European football market of €13.6 billion in 2007.
• English Premier League clubs generated the highest revenues (€2.3 billion) of any football league in the world in 2006/07.  Their lead over the chasing pack, which grew to €0.9 billion in 2006/07, is expected to grow further to around €1 billion in 2007/08.
• Following year-on-year revenue growth of 15% in both cases, the German Bundesliga and Spain’s La Liga both overtook Italy’s Serie A in revenue terms in 2006/07. The other ‘big five’ leagues’ total revenues in 2006/07 were Germany (€1.4 billion), Spain (€1.3 billion), Italy (€1.2 billion) and France (€1.0 billion).
• 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 clubs’ revenue was less than €1.2 billion – around half the Premier League clubs’ total of €2.3 billion and also, for the first time since our analysis began, behind both the German Bundesliga and Spain’s La Liga.  Serie A average attendances plummeted to less than 20,000 in 2006/07, the lowest amongst the ‘big five’ leagues.
• The Top 20 clubs in the Deloitte Football Money League in 2006/07 were all European and – with combined total revenue of €3.7 billion (up 11%) – accounted for more than 25% of the total European football market. Celtic from the Scottish Premier League were the only club from outside the ‘big five’ European leagues amongst the Top 20 clubs by revenue in 2006/07.
• Below the ‘big five’ leagues, the Dutch Eredivisie generated the next highest revenue of any top tier domestic league (€398m in 2006/07). This is less than the English second tier Football League Championship competition whose clubs’ combined revenues were €489m in 2006/07. 
• 2006/07 was the first year of new UEFA Champions League broadcast revenue deals, which resulted in an increase in central payments to Champions League clubs to €0.6 billion, of which €0.4 billion (70%) were received by clubs from the ‘big five’ European leagues.

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