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New Deloitte Central Europe CEO begins term

Alastair Teare leading the Central Europe member as of 1 June 2012

  • Football continues to be recession resilient with creditable revenue growth;
  • Cost control remains the sport’s biggest challenge.

The European football market grew by 4% (€0.6 billion) in revenue terms to €16.9 billion in 2010/11, according to the 21st Annual Review of Football Finance from the Sports Business Group at Deloitte. Despite a difficult economic climate, Europe’s ‘big five’ leagues (Bundesliga, La Liga, Ligue 1, Premier League and Serie A) reported combined revenue growth of €181m (2%), to a collective total of €8.6 billion.

Dan Jones, Partner in the Sports Business Group at Deloitte, commented: “Whilst this is a slower rate of increase than the average achieved over the previous decade (7%), it still represents a solid performance given the challenges in the wider economy. In particular, new Premier League and Serie A broadcast contracts commencing in 2010/11 emphasised top-flight football’s continued ability to drive audiences.”

The English Premier League remained the leading league in world football, with its clubs generating revenues of €2.5 billion in 2010/11 (an increase of 12% in Sterling terms). Further depreciation of Sterling against the Euro meant the gap to the German Bundesliga (€1,746m), the second ranked league, reduced by 6%, but was still €769m.

Jones explained: “The German Bundesliga has the highest average attendances in European football (42,100) which, when combined with an increase in commercial revenues from Europe’s largest economy, helped maintain its second placed revenue ranking. The additional UEFA Champions League spot for Germany from 2012/13 and 50% uplift in domestic league broadcasting rights from 2013/14 will help continue the Bundesliga’s impressive recent revenue growth and secure its status as the Premier League’s closest rival in revenue terms.”

Spain’s La Liga achieved revenue growth of €74m (5%) to €1,718m. This was driven by increases of €47m (10%) from commercial and €39m (5%) from broadcast sources, more than offsetting a drop in matchday revenue of €12m (3%). The overall revenue increase hides the polarisation within the league as Real Madrid and Barcelona enjoyed a combined revenue increase of €93m (11%), whilst the remaining 18 La Liga clubs experienced a cumulative decrease in revenues of €19m (2%).

Revenue in Italy’s Serie A increased by €21m (1%) to €1,553m in 2010/11. The return to collective selling of Serie A broadcasting rights delivered revenue growth and helped balance the revenue more evenly among clubs.

France’s Ligue 1 clubs’ revenues reduced by €32m (3%), to €1,040m, in 2010/11, largely due to French clubs’ weaker performance in the Champions League. This widened the revenue gap to Serie A to €513m.

Jones added: “European football’s continuing ability to achieve revenue growth in tough economic times is impressive. Whilst the rate of growth varies between leagues and clubs, the sport’s fundamental ability to engage and drive audiences remains a core strength. Nonetheless, a number of leagues and clubs, particularly in France, Italy and Spain, face key challenges in improving the matchday experience for spectators, with the acceleration of plans or completion of existing projects required in order to deliver long-term matchday and commercial benefits. French clubs in particular need to capitalise on the stadium redevelopments being carried out in preparation for France hosting Euro 2016.”

The ‘big five’ leagues’ wages increased by over €100m (2%) to exceed €5.6 billion in 2010/11, with a marked difference in the rate of growth amongst the five leagues.

As with revenues, Premier League clubs’ wages grew the fastest in 2010/11, to €1,771m, whilst La Liga (€1,005m) and Bundesliga clubs’ (€923m) wage costs both grew by 4%. Ligue 1 wage costs (€777m) were unchanged and Serie A clubs reduced wage costs by €24m (2%) to €1,157m. In England (70%), France (75%) and Italy (75%) the combined wages to revenue ratio of top division clubs was at least 70%, the first time this has happened in three of the ‘big five’ leagues in the same season.

The Bundesliga remained Europe’s most profitable league with a €33m (24%) increase in operating profits to €171m. The gap to the Premier League, where operating profits decreased to €75m, widened. Serie A and Ligue 1 remained loss making. In Spain, six La Liga clubs started the 2011/12 season in administration.

Adam Bull, Consultant in the Sports Business Group at Deloitte, commented: “Cost control continues to be European club football’s greatest challenge. The wages to revenue ratio across Europe’s ‘big five’ leagues has increased from 60% to 66% over the last five years, with wage costs growing at a faster pace than revenues. We therefore welcome UEFA’s financial fair play regulations which are aimed at helping clubs to more efficiently manage the relationship between revenue and expenditure. For those clubs wishing to participate in UEFA’s competitions, the financial results for 2011/12 will, for the first time, count towards their UEFA Financial Fair Play break-even calculation.”

Other key findings from the Deloitte Annual Review of Football Finance 2012 include:

  • Broadcasting revenue in the ‘big five’ leagues grew by 3% to exceed €4.1 billion in 2010/11, representing 48% of collective ‘big five’ revenue. Three of the ‘big five’ leagues (England, Italy and France) generate more than half their revenue from broadcasting;
  • Matchday revenue decreased by 2% to €1.8 billion in 2010/11, comprising 21% of ‘big five’ league revenues. Matchday revenues in England’s Premier League (€610m) were over 40% higher than the nearest competitor, Spain’s La Liga (€428m);
  • Commercial revenue increased by 5% to €2.7 billion and accounted for 31% of the revenue generated by Europe’s ‘big 5’ leagues. This increase was largely driven by the larger clubs in the Premier League and La Liga with a more global profile securing improved commercial contracts with sponsors and partners;
  • Average league match attendances in 2010/11 increased in the Bundesliga (to 42,100) and in the Premier League (to 35,400), the two best attended leagues in Europe. Average attendances in Ligue 1 fell for the third successive season and were below 20,000 for the first time since 2002/03. UEFA’s decision to host Euro 2016 in France presents a significant opportunity for many French clubs to refurbish their stadia and increase attendances and matchday revenue;
  • Outside of the ‘big five’ countries, Russia (€614m), Turkey (€515m) and The Netherlands (€431m) have the largest revenue generating leagues. The Football League Championship remains the highest revenue generating non top-tier domestic football league (€468m) and the eighth highest European league overall.

Ends 

Notes 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 2012). The bases of the opinions and calculations are explained in that publication.

The published financial statements of clubs rarely split wage 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 analysis of the financial results and position of English clubs, and comparisons between them, has been based on figures extracted from the latest available group or company financial statements. 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 and over time. Deloitte have not performed any verification work or audited any of the information contained in the financial statements or other sources in respect of each club 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 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 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 2011 has been used to convert figures between Euros and Pounds Sterling (£1 = €1.1073).

About the Sports Business Group at Deloitte

Over the last 20 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 strategic business reviews, operational turnarounds, revenue enhancement, stadium and facilities development plans, business planning, feasibility studies, economic impact studies, due diligence, benchmarking, reviews of sports regulations, market analysis, corporate finance advisory work, valuations and bid support on acquisitions and disposals; 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: http://www.deloitte.co.uk/sportsbusinessgroup

***

About Deloitte

In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.

Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.

The information contained in this press release is correct at the time of going to press.

For more information, please visit www.deloitte.co.uk.

Member of Deloitte Touche Tohmatsu Limited.

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