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Sports Business Group case studies

See our case studies, either by sport or service:

Football

 UEFA – Financial Fair Play
The Sports Business Group at Deloitte has provided advisory assistance to UEFA for the development of the UEFA Financial Fair Play Regulations (first approved in 2010) and has further assisted UEFA with implementation matters. The break-even requirement, the cornerstone of UEFA’s Financial Fair Play Regulations, applies to clubs in UEFA competitions from the 2013/14 season and aims to help clubs across Europe to achieve a more sustainable balance between their costs and revenues and encourages investment for the longer-term benefit of football. These requirements supplement the Club Licensing Regulations, which have been successfully operating across Europe since 2004/05. Previously, Deloitte also provided advisory assistance to UEFA for the development and implementation of the financial criteria of the Club Licensing Regulations.

For more information download the latest extract from our Deloitte Annual Review of Football Finance – ‘On the verge of break-even' as well as previous articles on Financial Fair Play.

Government of Saudi Arabia – Privatisation of sports clubs
We delivered a feasibility study for the privatisation of leading sports clubs in Saudi Arabia. This included a blueprint for the future structure and operation of Saudi Arabian professional football as well as the governance, organisational and operational frameworks required to achieve this, together with preparation plans for the privatisation of clubs. The study incorporated real estate assessments, financial forecasts and valuations and formed the basis of a submission to the Kingdom’s Supreme Economic Council for approval.

Singapore S.League – League restructuring
The key backers of the Singapore S.League wanted to develop the league to the next level. We were appointed to carry out a strategic review of the S.League in time for changes to begin to be implemented for the new season. The overall aim of the project was to provide recommendations to move the S.League towards a more self-financing model, allied to its commercial development. We produced a strategic blueprint to guide the development of the S.League over the medium and long-term. We provided recommendations relating to the S.League's vision & mission, structure & organisation, commercial operations, expenditure & funding, and facilities and stadia.

Premier League – Commercial strategy
We were appointed by the Premier League to evaluate the potential for more aggregated sponsorship and licensing models, compared to the current structure where the majority of rights are exploited individually by clubs.  

We explored the feasibility and potential financial returns of several alternative commercial models, drawing on benchmarks in other sports competitions and carrying out extensive consultations with stakeholders, sports marketing agencies and blue chip sports sponsors. We also modelled alternative distribution mechanisms.

Major European football club – Benchmarking best practice
We reviewed the organisation structure and corporate governance of a major European football club, including the provision of best practice examples from across a range of sports clubs. Our work formed the basis of a major reorganisation of the club’s strategy.

Premier League football clubs – matchday revenues
A Premier League football club wished to understand the characteristics of existing corporate hospitality buyers as well as the potential demand of the wider corporate market, to help with the design of corporate facilities at its new stadium. Our work involved a survey of existing, lapsed and potential buyers of the club’s corporate packages to gain an understanding of market characteristics and demand. We provided the club with a robust analysis of the behaviour, perceptions and price sensitivity of its existing corporate buyers. This provided a foundation for the planning and design of corporate facilities at the new stadium.

In a separate project, a Premier League football club was keen to add insightful research to support its strategic decisions on ticket pricing. We delivered a web-based survey targeting current and lapsed supporters, with over 5,000 responses. This provided an independent and objective base against which the club could compare its initial thoughts.

Championship football club – Business planning and wage costs benchmarking
We provided an analysis of projected wage costs and transfer spending of a Championship football club under a number of possible scenarios to inform the club’s management team in developing its strategy and business plan.

Football club transactions
We have provided business advisory and corporate finance services in respect of several football club transactions over recent years. In respect of financing transactions and either buy-side or sell-side activities, clients choose Deloitte because they trust and value our deep industry experience and advice to provide credibility and robust commercial insight to enable successful completion of the transaction.

Cricket

West Indies Cricket Board (WICB) – Strategic plan
We conducted a strategic review of the WICB to help realign its business model and operations. We reviewed the international cricket landscape including the commercial models and practices of other cricketing nations, producing key strategic recommendations. We conducted consultations and workshops with WICB management to develop a wider strategic plan, supported by relevant benchmarks from other sports together with sport-specific recommendations.

England & Wales Cricket Board (ECB) – Test match allocation
We were engaged by the ECB to formalise a system for the allocation of major matches and staging agreements with venues for the 18 First Class Counties. Our work covered legal issues, governance and detailed procedures, and we provided a framework for the ECB’s allocation of major matches.

English Cricket – Working party review
We provided technical assistance to a working party of a range of cricket stakeholders, to review aspects of English cricket, including the cricket calendar, major match finances, the allocation of major matches, sources of income and the development of new competition concepts for the benefit of the whole game.

County Cricket clubs – Business plan reviews
We were engaged by Birmingham City Council to review the business plan prepared by Warwickshire County Cricket Club for the redevelopment of Edgbaston. We reviewed and challenged the business plan, evaluating the likelihood and scale of potential upsides and downsides to their projections. The project received initial Council approval in 2009.

In a separate project, Hampshire County Cricket Club wanted to develop their Rose Bowl ground with the aim of securing additional major matches. Eastleigh Borough Council were a key partner in the project and were keen to understand more about the impact of the development on the club’s financial performance. We carried out a detailed review of Hampshire’s business plan, evaluating the likelihood and scale of potential upsides and downsides to their projections.

Rugby Union

International Rugby Board (IRB) – Calendar and season structure
As part of a review of the structure and schedule of international match windows, we were engaged by the IRB to assist in understanding the differing financial performance of matches as well as the views and requirements of National Unions. Through a series of consultations, we collated the opinions of Unions on commercial, high performance and scheduling objectives. We presented these findings to the IRB’s Working Group along with recommendations to help balance the requirements of each Union, and participated in the Working Group in order to determine an international match schedule from 2012 to 2019.

European Rugby Cup Limited (ERC) – Governance and strategic reviews
Deloitte were asked to assist with a brief review of the ERC’s corporate governance framework to ensure ERC is adopting appropriate standards of corporate governance practice, enabling it to effectively deliver its strategic aims. Our work included consultations, workshops and benchmarking of corporate governance standards across other sports to provide recommendations to the ERC Board.

In a separate project, we were appointed by ERC, to support the Board in conducting a strategic review of the organisation and its tournaments, the Heineken Cup and European Challenge Cup.

Irish Rugby Football Union (IRFU) – Rugby World Cup feasibility study
The Sports Business Group at Deloitte was appointed by the IRFU to assess the feasibility of Ireland hosting a future Rugby World Cup (RWC). We performed gap analysis comparing RWC hosting requirements to existing Irish facilities/capacities and identifying how any gaps could be addressed. We also modelled the potential tournament revenues, costs and capital investment. Our report has played a central role in bid discussions with all stakeholders including the IRFU, Gaelic Games Association (GAA) and Northern Ireland and Republic of Ireland governments. In March 2013 the GAA voted to support a RWC bid through provision of GAA venues.

Welsh Rugby Union (WRU) – Audiovisual rights review
Deloitte were engaged to assist the WRU in reviewing its domestic and international media rights strategy in respect of its home Autumn international matches and domestic rugby. Our report enabled the WRU to understand the performance of its rights, the key dynamics and trends within the UK broadcast market and the potential value of the rights, to provide the WRU with an independent analysis to support its strategy and discussions with interested parties.

Scottish Rugby Union (SRU) – Review and revision of five year strategic plan and review of performance rugby
We were asked by the SRU to assist in a review and revision of its strategic plan, in order to guide a restructuring of the business across key areas. We prepared a semi-structured consultation questionnaire that was distributed to key stakeholders, the responses to which helped inform the content for a set of workshops with senior SRU representatives. The feedback and our subsequent report helped the SRU to re-assess its business and develop a set of new corporate objectives and KPIs.

We were subsequently engaged to assist with a detailed strategic review of the performance functions associated with Scottish Rugby. Our work in collaboration with key performance staff allowed the SRU to identify appropriate performance metrics, measured across reasonable timeframes and with responsibility defined across various performance functions.

Leicester Tigers RFC – Strategic plan
Deloitte assisted the club in developing a five-year strategic plan setting out its future direction, objectives and expectations and to provide a contextual illustration of the club’s current position in relation to its peers in the sports industry. Our work included the development of appropriate management reporting structures to record and monitor performance against the objectives of the strategic plan.

Tennis

Association of Tennis Professionals (ATP) – Tournament financial review
The ATP was keen to make various changes to the men’s tennis tour calendar, including prize money increases, the re-categorisation and structuring of tournaments; and various format changes. We assessed the potential financial impact of these changes on the tournaments, and the potential for tournaments to grow revenues.

Womens’ Tennis Association (WTA) – Tournament financial review
Deloitte was engaged by the WTA Board to perform a review of the financial performance of its c.50 WTA tournaments during the period 2006-2010. We designed a financial reporting template and produced a report analysing tournaments’ results in relevant sub-groups according to tier and/or geographical region, including benchmark KPIs from other sports where appropriate.

Association of Tennis Professionals (ATP) – Economic impact study of the ATP World Tour Finals
ATP World Tour Finals are the culmination of the ATP World Tour calendar and are currently hosted in London. The ATP were keen to develop a comprehensive analysis of the economic impact of the event on London and we employed our major event economic impact methodology to deliver a detailed stakeholder expenditure assessment of the event’s impact. We consulted with key stakeholders at the event including event management, broadcasters, sponsors, and conducted primary market research with spectators to fully understand event-related expenditure, which we then flowed through a bespoke economic impact model to quantify the associated indirect impact.

Women’s Tennis Association (WTA) – Potential economic impact of the WTA Championships
The annual WTA Championships are contested by the top-ranked players in women’s tennis. The event is the most prestigious and important tournament in the WTA Tour. We set out the potential economic impact of the event on a host city, using estimates developed after considering the economic impact of a range of major tennis events, including the WTA Championships in Istanbul, and the WTA’s plans for changing the structure of the event itself. We also considered the impact of the event on media exposure and new media demand.

Motorsports

Bridgepoint – Acquisition of Dorna Sports
Bridgepoint was bidding to acquire Dorna Sports, whose principle activity was the organisation and promotion of motorcycling’s MotoGP World Championship. We delivered commercial due diligence including an assessment of the business, key revenue drivers, an outline of the competitive environment within which it operates and an assessment of the macro and micro market factors likely to influence its performance in the future.

Horseracing

British Horseracing Authority (BHA) – Economic impact of British Racing reports
We have produced three studies into the Economic impact of the British Horseracing industry for the governing body of racing. The reports are the definitive guides into the impact of the horseracing industry in terms of revenues and expenditure, employment, taxation generated, capital investment, media exposure, its relationship with the betting industry, etc. The reports have provided valuable advocacy, educational and promotional tools for the industry. The latest report was issued in June 2013 and discussed how the industry has withstood the economic headwinds of the last five years.

British Horseracing Authority (BHA) – Strategic direction
The BHA was launched in August 2007 and considered a strategic review of the fixture list to be its first priority. Deloitte worked in partnership with the BHA to deliver a strategic review to identify the optimal fixture list for British Horseracing. Our role included the collection and analysis of detailed financial information from racecourses and betting operator information, performing consultations and producing the final published report.

Great British Racing (GBR, formally Racing for Change) – Business assistance
GBR is an ambitious project conducted on behalf of the British Racing industry to broaden the appeal of racing. It seeks to maximise participation in racing through betting, racegoing, ownership and all forms of engagement with the sport – resulting in growth in the sport’s revenues. The Sports Business Group has provided a broad range of support to the project including:

  • Development of a web-based customer communication and research forum to engage with all stakeholders in the industry around GBR’s direction;
  • Assistance with establishing appropriate GBR objectives and measuring its success against these targets; and
  • Bringing learning points from other sports as to how they maximise their premium assets.

Tote – Commercial due diligence
The tote is the UK’s monopoly provider of pool betting on racing, and also has extensive bookmaking activities including 540 shops and interactive betting channels. The Sports Business Group, in conjunction with Deloitte's Betting and Gaming unit, performed commercial due diligence for a consortium consisting of the Racing industry, tote management and private equity. Our work included an assessment of the tote’s business, the key markets in which it operates and an assessment of the macro and micro market factors likely to influence its future performance in the future.

Public sector and sport

Cardiff City Council – Viability and financial review
We provided an independent review of the £700m International Sports Village at Cardiff Bay, our opinion on the optimum mix of facilities, and validated the initial financial overview of the project. Subsequently we identified how the scheme could be supported commercially whilst meeting community requirements, provided assistance in discussions with the Secretary of State and helped resolve areas of potential conflict between the Council and the consortium partners.

National Health Service – Strategic framework for the Sport and Health Champion
The Chief Executive of NHS North West was appointed by the Health Secretary as the National Champion for Sport and Health. This is key strategic role for energising the delivery of sport and health policy inside the NHS and beyond. We assisted with the definition of the role, identifying strategic areas of focus and a potential delivery framework.

Misc sports

International Volleyball Federation (FIVB) – Organisational structure review
We delivered a comprehensive review of the FIVB’s organisational structure to assist its incoming President in his strategic thinking. Following extensive internal consultation and benchmarking with relevant international governing bodies, we proposed a number of changes to the organisation structure which are currently being implemented.

International Basketball Federation (FIBA) – Development of qualification structure for major competitions
We helped FIBA to evaluate the potential impact of proposed changes to the qualifying format for FIBA’s major international competitions. Through a series of detailed stakeholder consultations, we were able to produce a model of the potential financial impact of the qualification options to assist FIBA in refining its thinking and to select a preferred option.

International Equestrian Federation (FEI) – Economic impact study of the World Equestrian Games
The World Equestrian Games were hosted in Kentucky in 2010, and the FEI was keen to understand the economic impact of the event to inform their planning and marketing of the event in the future. We used our tried and tested economic impact methodology to evaluate the impact of the event on Kentucky. This involved consultations with the FEI, the local Organising Committee, competing teams, media, sponsors and trade stall operators, as well as a survey of spectators including corporate attendees.

International Cycling Union (UCI) – Strategic development and stakeholder consultation
We were engaged by the UCI to develop a strategic plan for the future development and promotion of cycling globally, with a particular focus on developing new cycling formats and expanding the sport of cycling into new markets and territories. Through a combination of workshops, stakeholder consultations and an examination of the global sports marketplace, we assisted the UCI management to identify strategic options for future development, within the context of the dynamics of professional cycling.

In 2013, we were appointed by the UCI to conduct a wide-ranging stakeholder consultation process, entitled “A Bright Future for Cycling”. We designed online surveys for the general public and for the “cycling family” and over 6,350 responses were received. We also facilitated a series of working group meetings for key stakeholders. The themes for these were split across four broad “pillars”; globalisation, anti-doping, the cycling calendar and riders. Our report set out eleven recommendations, all of which were accepted by the UCI Management Committee in June 2013, and is available to download from the UCI website.

European Olympic Committees (EOC) – Financial viability
The EOC represents 49 European National Olympic Committees, and required a financial feasibility study of a proposed European Games – a multi-sport Games that would take place every four years. Our work included a detailed analysis to provide estimates of the potential revenues, costs, financial commitments and key operational issues associated with such an event, to develop the concept further and form the basis for wider stakeholder consultation.

UK Sport and British Cycling – Organisational and risk review
Deloitte were commissioned by British Cycling and UK Sport to conduct an independent review to assess the impact of the creation of Team Sky on British Cycling’s World Class Performance Programme (WCPP). Our report analysed the operational arrangements between the WCPP and Team Sky together with an assessment of how any risks arising under the existing framework were mitigated. Our work assisted both British Cycling and Team Sky to ensure that their performance targets were supported in the best way.

Middle East Sports Clubs – Strategic planning
We were appointed to develop a commercial plan and strategic objectives for a Middle East Sports Club. We undertook a full review of the current commercial situation of the club and provided comparative benchmark analysis from a selection of clubs across world sport. We established strategic objectives and initiatives centred on four pillars: stadium and ticketing, sponsorship, media and merchandising. A financial model was developed to support the recommended commercial strategy.

Middle East Sports Clubs – Governance structure review
We were appointed to advise on the organisational restructuring of a sports club in the Middle East. Our analysis resulted in recommendations to the client regarding the club’s governance structure and commercial and property assets, coupled with a practical implementation plan.

In a separate project, Baniyas Sports Club appointed Deloitte to develop a strategic plan and organisational design for the club. Through consultations with senior management and key stakeholders as well as a series of workshops, we provided the club with a set of strategic objectives together with relevant benchmarks from European football clubs.

IMG joint ventures – Business plan development
Deloitte were appointed by IMG Dogus, a joint venture between global sports marketing company IMG and Turkish conglomerate Dogus Group. With support from our local firm, we provided advice in relation to the Turkish sports, entertainment and fashion market, and developed a business plan document for the joint venture.

In a separate project, Deloitte were appointed to provide advice and support to IMG Reliance, a joint venture between IMG and Reliance industries, to assist in the development of business and financial plans for the development of football and basketball in India, through its partnerships with the All India Football Federation and Basketball Federation of India.

Fanmode – Strategic advice and key stakeholder introductions
We were asked by our client to assist with the introduction of an innovative technology into the sports business market. We provided introductions to key stakeholders in the sports business industry, prepared a strategic plan to help the client manage the process and provided an independent review of their business plan and financial projections.

Volvo Ocean Race – Economic impact study
We were appointed by Volvo Ocean Race to conduct an in-depth economic impact study of the race on the host port of Alicante. Our methodology included benchmark analysis, a face-to-face visitor survey, in-depth interviews with key stakeholders, local economic analysis and a user-friendly, full report of findings. In the 2008/09 race we delivered economic impact reports on the Race departure from Alicante, and on the stopover ports of Singapore, Galway and Stockholm.

Organiser of a major sporting event – Global media impact evaluation
We assisted our client in the development of their global media strategy for a major sporting event. We developed a model to provide projections for the potential global audience figures, and used this to evaluate event structure assumptions, as discussions with potential broadcast partners evolved.

Assistance with Listed Events consultation
The Department for Culture, Media and Sport (DCMS) invited parties to make submission as part of its review of those sports events that should be listed for broadcast on Free-to-Air (FTA) television in the UK. This process followed recommendations from a Panel as to which events should be listed. We undertook research and analysis for a number of National Governing Bodies, outlining the potential impact of the Panel recommendations for certain events to be placed on the list. Our clients included the International Rugby Board, Rugby Football Union, English and Wales Cricket Board and Six Nations. Our work formed part of each body’s submission to the DCMS.

 

 

Audit and governance

Controls review & risk assessment

 

UK Sport and British Cycling – Organisational and risk review

Deloitte were commissioned by British Cycling and UK Sport to conduct an independent review to assess the impact of the creation of Team Sky on British Cycling’s World Class Performance Programme (WCPP). Our report analysed the operational arrangements between the WCPP and Team Sky together with an assessment of how any risks arising under the existing framework were mitigated. Our work assisted both British Cycling and Team Sky to ensure that their performance targets were supported in the best way.

European Rugby Cup Limited (ERC) – Governance review

Deloitte were asked to assist with a brief review of ERC’s corporate governance framework to ensure ERC is adopting appropriate standards of corporate governance practice, enabling it to effectively deliver its strategic aims. Our work included consultations, workshops and benchmarking of corporate governance standards across other sports to provide recommendations to the ERC Board.

UK Sport – Modernisation of National Governing Bodies

UK Sport chose the Sports Business Group to conduct a high-level review of the Modernisation Programme for National Governing Bodies (NGBs), entitled ‘Investing in Change’. This crucial project aimed to help NGBs move towards more effective and efficient operations and help Sports Councils and Government to clearly prioritise funding to support NGBs in their modernisation.

 

Improving governance

 

International Volleyball Federation (FIVB) – Organisational structure review

We delivered a comprehensive review of the FIVB’s organisational structure to assist its incoming President in his strategic thinking. Following extensive internal consultation and benchmarking with relevant international governing bodies, we proposed a number of changes to the organisation structure which are currently being implemented.

Professional Cycling Team – Process excellence review

We were asked to independently review the controls, communication and governance structures in place at a professional cycling team to identify areas where they could be strengthened. Our findings were presented to the Board and were incorporated into the team’s strategic and operational plans.

Major European football club – Benchmarking best practice

We reviewed the organisation structure and corporate governance of a major European football club, including the provision of best practice examples from across a range of sports clubs. Our work formed the basis of a major reorganisation of the club’s strategy.

Middle East Sports Club – Governance structure review

We were appointed to advise on the organisational restructuring of a sports club in the Middle East. Our analysis resulted in recommendations to the client regarding the club’s governance structure and commercial and property assets, coupled with a practical implementation plan.

Sports Tax

Corporate tax and capital allowances

 

New stadium project for a large UK based sports organisation

A large sports organisation intended to replace its old stadium with a larger, state of the art facility.

The construction of a new stadium is a complex transaction involving significant amounts of new external financing, complex transactions with local authorities and large amounts of capital expenditure.

We were involved with the client from an early stage, helping to evaluate the feasibility of the overall project – with high-level tax advice regarding the corporate structure of the development and modelling the tax deductibility of the expenditure expected to be incurred.

Once the project was approved, we worked with the organisation to finalise a legal and operational structure that met with the securitisation banks’ requirements but also ensured that i) appropriate ‘interests in land’ were granted to group companies to entitle them to claim capital allowances and ii) potential tax pitfalls were avoided (e.g. trapped losses).

As part of the project, there were a number of capital transactions entered into with the local authority including transfers of land. Such transfers have material capital gains tax implications. It was necessary to establish whether each transaction could be evaluated in isolation or whether they were part of a single larger transaction, and where land was exchanged (with no cash consideration) we advised on the mechanics for determining an appropriate transaction value to bring into account for tax purposes.

From inception and throughout the process our team kept HMRC informed of developments. This constructive dialogue with HMRC enabled the organisation to agree the treatment of a number of fundamental (and material) tax matters upfront. At completion of the project, we worked intensively with the organisation and HMRC to agree all remaining tax aspects of the development thereby averting lengthy and timely correspondence.

 

Employment taxes

 

HMRC compliance review of a Premier League football club

HMRC carried out an employer compliance review of a Premier League football club. HMRC challenged the tax/NIC treatment applied by the club in a wide range of areas, including testimonials, staff entertainment, clothing including club suits, employment status, relocation payments, academy players’ accommodation, FA Premier League fines, legal expenses, use of hospitality/corporate boxes and termination payments. The Employment taxes team was engaged to manage the review and carry out all HMRC liaison and negotiation, resulting in a significantly reduced final settlement with HMRC.

Agents’ fees

We have recently undertaken some work for a Premier League football club to look at the payment of agents’ fees and how they are treated from a player and club perspective.

Football and the association with agents has been the subject of much media debate, with the resulting fairly negative view of agents being accepted. This is one area that HMRC have focussed on; investigating agents, players and clubs to challenge the way in which this area of the game has traditionally been run.

By adopting a joined up approach across all sides of a transaction where a fee is paid to an agent, HMRC have been able to identify instances where transactions have been miss-described and as a result, tax or national insurance that could otherwise have been due has not been accounted for. This has involved a significant amount of resource from HMRC, with a permanent team working almost exclusively on sport pulling together a vast amount of research, not all of it correct. By working through the individual transactions and looking through the history of both player and agent we have been able to correct HMRC’s view as to the relationships and thus ensure that clubs receive full benefit for payments they make where the agent acts for them alone.

A further success noted is that HMRC now recognise that there is an apparent duality in the actions of agents, which the FA Premier League also accepts, and will allow agents fees to be split between the players and the clubs.

By engaging in a detailed review, we have been able to assist both clubs (and indirectly players) by clarifying the tax position in this area and making considerable savings. In one case we were able to reduce the expected exposure on agents’ fees by 90%.

Image Rights

Image rights continue to be a focus for clubs and players, whilst remaining in HMRC’s radar.

We have provided assistance to clients in two ways:

  1. The provision of investigation support where HMRC have challenged the arrangements in place, providing detailed evidence as to how clubs have used the images of their players for commercial benefit; and
  2. Assistance in the preparation of business plans for individual players, involving liaison with commercial teams and other elements of the client’s business.

By reaching settlement with HMRC on this matter we were able to reduce a potential liability of £10m to £4m.

One area of caution is that foreign players with overseas image rights companies are now seeing challenges from HMRC that the income earned by those companies is UK sourced and thus should be taxable in the UK. It is therefore vital that any Image Rights agreements are properly structured and managed to be fully tax compliant.

 

Indirect Tax

 

Premier League football clubs new stadium projects

Deloitte has worked with a number of Premier League football clubs to assist in ensuring that new stadium projects do not create an unnecessary VAT cost. Due to the expense of new stadia and the tight budgets, it is essential that VAT is considered at the outset to ensure defined budgets are met and strict controls on costs are applied. One stadium we advised on required a number of property acquisition and disposals as well as providing social housing in the areas around the stadium – all of which have significant VAT issues. Our team of VAT specialists advised on the structure and negotiations between parties to minimise any VAT exposure.

Deloitte has worked with a number of sports businesses which have been involved in acquisitions by private equity investors. The VAT incurred on costs associated with such transactions can be very significant and HMRC often challenge VAT recovery. Deloitte helped save significant amounts of VAT by assisting discussions with HMRC and ensuring VAT was correctly recovered.

Maximising VAT savings opportunities for Premier League football clubs and county cricket clubs

Deloitte has identified and submitted a significant amount of successful VAT reclaims that, upon payment, have gone straight to the clubs’ bottom line. Claims (often made retrospectively) have arisen in relation to VAT overpaid in a number of different areas ranging from the exploitation of new and emerging revenue streams in branded merchandising, catering and corporate hospitality, TV and broadcasting rights and multi-platform ticketing. Deloitte works alongside its clients to review operations, identify claim opportunities, lodge claims and then liaise with HMRC to secure repayments.

Mitigating VAT costs for charitable sports organisations/national governing bodies

It is not uncommon for charitable sports organisations and national governing bodies to receive both grant-funding and VAT exempt supplies. As such, it is often necessary to devise and agree complex business/non-business and Partial Exemption methods to calculate the right amount of VAT incurred on expenditure which the entity is entitled to recover. Deloitte has undertaken a number of projects to develop suitable business/non-business and Partial Exemption methodologies which:

  • are fair and reasonable;
  • allow for the maximum amount of VAT to be recovered (working within the parameters of what is acceptable under tax law); and
  • are relatively simple to operate by the taxpayer and audit by the tax authority.

Corporate Finance

Football club transactions

We have provided business advisory and corporate finance services in respect of several football club transactions over recent years. In respect of financing transactions and either buy-side or sell-side activities, clients choose Deloitte because they trust and value our deep industry experience and advice to provide credibility and robust commercial insight to enable successful completion of the transaction.

A sample of football club transactions:

  • Financial, tax and commercial due diligence for an investor consortium in respect of their proposed acquisition of an English Premier League football club.
  • Preparation of an information memorandum to assist the owners of a Championship football club to attract new investment.
  • Assistance to a potential investor in respect of a leading Italian Serie A football club, including appraisal of developments in respect of changes to the sale and distribution of broadcast rights.
  • Market report and financial due diligence conducted for a potential investor in a major French top division football club.
  • Financial due diligence to support General Sports and Entertainment's successful acquisition of Derby County Football Club.
  • Financial and commercial due diligence services in connection with the £350 million financing package for Kop/Liverpool Football Club completed in January 2008.
  • Advice on investment strategy approach, including market overview and benchmarking of certain English Championship and Premier League football clubs to assist a potential investor.
  • Market report and financial due diligence in respect of the initial acquisition and subsequent refinancing of Manchester United Football Club. 

Other sports business corporate finance case studies

  • Commercial and financial due diligence in respect of a potential mixed private equity/debt investment in a global sports rights agency.
  • Commercial diligence work in respect of the business dynamics of Formula 1 and assistance in the preparation of management’s business plan and an information memorandum for team fundraising.
  • Due diligence services to International Management Group in respect of the acquisition of BSI Speedway, the company which holds the promoting rights of the FIM World Individual Speedway Grand Prix Series and FIM Speedway World Cup.
  • Market and financial due diligence in respect of a leading UK sports betting entity.
  • Independent business review for financiers to football clubs.
  • Due diligence in respect of the refinancing of Wembley National Stadium Limited.
  • Business valuation reports in respect of various Premier League football clubs. Financial, market and tax due diligence report for Wasserman Media Group in respect of their acquisition of the SFX sports agency.
  • Commercial due diligence to support Bridgepoint’s successful bid to acquire Dorna Sports, owner of Moto GP.
  • Commercial and financial due diligence for Advent International on Sportfive, a leading European sports rights agency, resulting in the successful acquisition of the agency by Advent.

Sport business forensic and dispute services

A sample of cases on which our specialists have acted:

  • Reporting on the mechanism for the sale of UEFA Champions League TV rights and its distribution of income: expert report on its impact on the ‘solidarity’ in European football – in response to an EU Competition Authority statement of objections.
  • Preparation of an expert report, for International (Swiss) Arbitration proceedings, on the sports marketing, media and commercial rights aspects of a commercial dispute over the consequential losses from the cancellation of a global sports competition.
  • Expert report for the South Africa’s Governmental Enquiry into the ‘listing’ of broadcast sports events on behalf of the satellite broadcaster SuperSport.
  • Economic expert before the Court of Arbitration for Sport in Lausanne in the ENIC v UEFA case relating to football club ownership regulations.
  • Preparation of an expert report on the economic impact of the transfer system in football for submission to the European Commission, in relation to that body’s Enquiry into the football player transfer system.
  • Preparation of an expert report on commercial consequences and potential losses in a dispute between two Premier League football clubs over the transfer of a player.
  • Performing the forensic accounting exercise on behalf of the Enquiry set up by the Rugby Football Union into alleged improper payments regarding Rotherham RUFC.
  • Advice in respect of football industry matters for the loss of earnings case, Ben Collett v Gary Smith/Middlesbrough FC.
  • Expert for Southend United and Everton FC on planning enquiries in respect of football industry matters and economic impact.
  • The Deloitte Annual Review of Football Finance has been used as 'agreed evidence' in a number of legal cases, at both UK and European level.

Business Advisory and Consulting

Business Planning

 

Premier League football club – Business planning
We were engaged by a Premier League football club to develop a strategic business plan in conjunction with a proposed move to a new stadium. The club were keen to understand the impact that the stadium would have from a revenue perspective and on the funding of areas of the club. Working closely with senior management we produced a comprehensive five year model that looked at key drivers and impact on key revenue and cost areas, utilising benchmarks and primary research where appropriate.

Welsh Rugby Union (WRU) – Audiovisual rights review
Deloitte were engaged to assist the WRU in reviewing its domestic and international media rights strategy in respect of its home Autumn international matches and domestic rugby. Our report enabled the WRU to understand the performance of its rights, the key dynamics and trends within the UK broadcast market and the potential value of the rights, to provide the WRU with an independent analysis to support its strategy and discussions with interested parties.

Irish Rugby Football Union (IRFU) – Rugby World Cup feasibility study
The Sports Business Group at Deloitte was appointed by the IRFU to assess the feasibility of Ireland hosting a future Rugby World Cup (RWC).  We performed gap analysis comparing RWC hosting requirements to existing Irish facilities/capacities and identifying how any gaps could be addressed. We also modelled the potential tournament revenues, costs and capital investment. Our report has played a central role in bid discussions with all stakeholders including the IRFU, Gaelic Games Association (GAA) and Northern Ireland and Republic of Ireland governments. In March 2013 the GAA voted to support a RWC bid through provision of GAA venues.

County Cricket clubs – Business plan reviews
We were engaged by Birmingham City Council to review the business plan prepared by Warwickshire County Cricket Club for the redevelopment of Edgbaston. We reviewed and challenged the business plan, evaluating the likelihood and scale of potential upsides and downsides to their projections. The project received initial Council approval in 2009.

In a separate project, Hampshire County Cricket Club wanted to develop their Rose Bowl ground with the aim of securing additional major matches. Eastleigh Borough Council were a key partner in the project and were keen to understand more about the impact of the development on the club’s financial performance. We carried out a detailed review of Hampshire’s business plan, evaluating the likelihood and scale of potential upsides and downsides to their projections.

IMG joint ventures – Business plan development
Deloitte were appointed by IMG Dogus, a joint venture between global sports marketing company IMG and Turkish conglomerate Dogus Group. With support from our local firm, we provided advice in relation to the Turkish sports, entertainment and fashion market, and developed a business plan document for the joint venture.

In a separate project, Deloitte were appointed to provide advice and support to IMG Reliance, a joint venture between IMG and Reliance industries, to assist in the development of business and financial plans for the development of football and basketball in India, through its partnerships with the All India Football Federation and Basketball Federation of India.

European Olympic Committees (EOC) – Financial viability
The EOC represents 49 European National Olympic Committees, and required a financial feasibility study of a proposed European Games – a multi-sport Games that would take place every four years. Our work included a detailed analysis to provide estimates of the potential revenues, costs, financial commitments and key operational issues associated with such an event, to develop the concept further and form the basis for wider stakeholder consultation.

Championship football club – Business planning and wage- costs benchmarking
We provided an analysis of projected wage costs and transfer spending of a Championship football club under a number of possible scenarios to inform the club’s management team in developing its strategy and business plan.

Association of Tennis Professionals (ATP) – Tournament financial review
The ATP was keen to make various changes to the men’s tennis tour calendar, including prize money increases, the re-categorisation and structuring of tournaments and various format changes. We assessed the potential financial impact of these changes on the tournaments, and the potential for tournaments to grow revenues.

Womens’ Tennis Association (WTA) – Tournament financial review
Deloitte was engaged by the WTA Board to perform a review of the financial performance of its c.50 WTA tournaments during the period 2006-2010. We designed a financial reporting template and produced a report analysing tournaments’ results in relevant sub-groups according to tier and/or geographical region, including benchmark KPIs from other sports where appropriate.

 

Revenue enhancement and cost control

 

Premier League – Commercial strategy
We were appointed by the Premier League to evaluate the potential for more aggregated sponsorship and licensing models, compared to the current structure where the majority of rights are exploited individually by clubs.  

We explored the feasibility and potential financial returns of several alternative commercial models, drawing on benchmarks in other sports competitions and carrying out extensive consultations with stakeholders, sports marketing agencies and blue chip sports sponsors. We also modelled alternative distribution mechanisms.

Premier League football clubs – Matchday revenues
A Premier League football club wished to understand the characteristics of existing corporate hospitality buyers as well as the potential demand of the wider corporate market, to help with the design of corporate facilities at its new stadium. Our work involved a survey of existing, lapsed and potential buyers of the club’s corporate packages to gain an understanding of market characteristics and demand. We provided the club with a robust analysis of the behaviour, perceptions and price sensitivity of its existing corporate buyers. This provided a foundation for the planning and design of corporate facilities at the new stadium.

In a separate project, a Premier League football club was keen to add insightful research to support its strategic decisions on ticket pricing. We delivered a web-based survey targeting current and lapsed supporters, with over 5,000 responses. This provided an independent and objective base against which the club could compare its initial thoughts.

Major European football club – Performance related pay
In a ground breaking project we helped a major European football club to better align wages and turnover through the greater use of performance related pay. We quantified the relationship between incremental revenues and costs from on pitch success, which put a value on the importance of UEFA Champions League football. We also helped the client understand the relative and absolute importance of each competition to their financial results.

 

Sports Business Information System

 

Premier League football club – Benchmarking best practice
We provided a Premier League football club with detailed analysis of how the target was performing relative to its key competitors across key revenue and cost streams, attendances and capacity utilisation, ticket pricing, corporate hospitality capacity, packaging and pricing, fan profiling, and key commercial deal values. Our work enabled the client to gain a further understanding of top-tier professional football and the club's position amongst its competitors.

International Federation – Commercial benchmarking
The client, and in turn the football federation, wanted to gain an understanding of the commercial aspects of four successful professional sports leagues for use in the re-launch of their own domestic league. We provided the client with detailed case studies from four world leading sports leagues. Our work enabled the client to gain a further understanding of the commercial operations of the benchmark sports leagues, the differences in models the leagues used and how these could be applied the client’s league.

European football club investor – Corporate governance and structuring benchmarking
Our client was the majority shareholder of a leading European football club, which wanted to develop their understanding of possible forms of ownership for professional sports clubs. We delivered an analysis of different ownership forms currently used by European football clubs and US sports franchises.

International Rugby Board (IRB) – Valuation of broadcast and commercial rights for the Rugby World Cup
We provided independent advice to the IRB regarding the potential value of broadcast and commercial rights to Rugby World Cup 2015 and Rugby World Cup 2019 depending on the host location.

UEFA – Hospitality market assessment
In preparation for the Euro 2012 tournament, UEFA engaged Deloitte to investigate the potential levels of demand for corporate hospitality packages from a range of European territories. We provided information on current demand, key trends, expected developments and demand across other sports events for six key European markets. This information was used by UEFA to inform the hospitality sales strategy for the tournament.

 

Strategic Review

 

Leicester Tigers RFC – Strategic plan
Deloitte assisted the club in developing a five-year strategic plan setting out its future direction, objectives and expectations and to provide a contextual illustration of the club’s current position in relation to its peers in the sports industry. Our work included the development of appropriate management reporting structures to record and monitor performance against the objectives of the strategic plan.

Scottish Rugby Union (SRU) – Review and revision of five year strategic plan and review of performance rugby
We were asked by the SRU to assist in a review and revision of its strategic plan, in order to guide a restructuring of the business across key areas. We prepared a semi-structured consultation questionnaire that was distributed to key stakeholders, the responses to which helped inform the content for a set of workshops with senior SRU representatives. The feedback and our subsequent report helped the SRU to re-assess its business and develop a set of new corporate objectives and KPIs.

We were subsequently engaged to assist with a detailed strategic review of the performance functions associated with Scottish Rugby. Our work in collaboration with key performance staff allowed the SRU to identify appropriate performance metrics, measured across reasonable timeframes and with responsibility defined across various performance functions.

West Indies Cricket Board (WICB) – Strategic plan
We conducted a strategic review of the WICB to help realign its business model and operations. We reviewed the international cricket landscape including the commercial models and practices of other cricketing nations, producing key strategic recommendations. We conducted consultations and workshops with WICB management to develop a wider strategic plan, supported by relevant benchmarks from other sports together with sport-specific recommendations.

International Cycling Union (UCI) – Strategic development
We were engaged by the UCI to develop a strategic plan for the future development and promotion of cycling globally, with a particular focus on developing new cycling formats and expanding the sport of cycling into new markets and territories. Through a combination of workshops, consultations with stakeholders and an examination of the global sports marketplace, we assisted the UCI management to identify strategic options for future development, within the context of the dynamics of professional cycling.

Middle East Sports Clubs – Strategic planning
We were appointed to develop a commercial plan and strategic objectives for a Middle East Sports Club. We undertook a full review of the current commercial situation of the club and provided comparative benchmark analysis from a selection of clubs across world sport. We established strategic objectives and initiatives centred on four pillars: stadium and ticketing, sponsorship, media and merchandising. A financial model was developed to support the recommended commercial strategy.

In a separate project, Baniyas Sports Club appointed Deloitte to develop a strategic plan and organisational design for the club. Through consultations with senior management and key stakeholders as well as a series of workshops, we provided the club with a set of strategic objectives together with relevant benchmarks from European football clubs.

European Rugby Cup Limited (ERC) – Strategic review
Deloitte were appointed by ERC, to support the Board in conducting a strategic review of the organisation and its tournaments, the Heineken Cup and European Challenge Cup.

United Soccer League (USL) – Strategic review 
Deloitte were asked to evaluate the options for the future direction of USL-1, and maximise the attractiveness for investors. We performed benchmark analysis to compare USL-1 with other leagues on key metrics and presented our results in an interactive workshop, which focused on the implications of our study as well as the next steps for USL-1 and its teams.

 

Economic impact

 

International Rugby Board (IRB) – Potential economic impact of the Rugby World Cup (RWC)
We used Deloitte’s major event economic impact methodology to estimate the potential impact of a future RWC on potential host nations. We outlined the generic economic benefits to a country, compared the RWC to other sports events, identified factors that could affect the impact in different rugby regions, estimated the direct and indirect economic impact of a RWC on these regions, and outlined the possible contribution of a host country’s government via taxation.

Women’s Tennis Association (WTA) – Potential economic impact of the WTA Championships
The annual WTA Championships are contested by the top-ranked players in women’s tennis. The event is the most prestigious and important tournament in the WTA Tour. We set out the potential economic impact of the event on a host city, using estimates developed after considering the economic impact of a range of major tennis events, including the WTA Championships in Istanbul, and the WTA’s plans for changing the structure of the event itself. We also considered the impact of the event on media exposure and new media demand.

We have conducted similar economic impact studies for the FEI World Cup Finals and the America’s Cup.

International Equestrian Federation (FEI) – Economic impact study of the World Equestrian Games
The World Equestrian Games were hosted in Kentucky in 2010, and the FEI was keen to understand the economic impact of the event to inform their planning and marketing of the event going forward. We used our tried and tested economic impact methodology to evaluate the impact of the event on Kentucky. This involved consultations with the FEI, the local Organising Committee, competing teams, media, sponsors and trade stall operators, as well as a survey of spectators including corporate attendees.

Association of Tennis Professionals (ATP) – Economic impact study of the ATP World Tour Finals
ATP World Tour Finals are the culmination of the ATP World Tour calendar and are currently hosted in London. The ATP were keen to develop a comprehensive analysis of the economic impact of the event on London and we employed our major event economic impact methodology to deliver a detailed stakeholder expenditure assessment of the event’s impact. We consulted with key stakeholders at the event including event management, broadcasters, sponsors, and conducted primary market research with spectators to fully understand event-related expenditure, which we then flowed through a bespoke economic impact model to quantify the associated indirect impact.

We have conducted similar economic impact assessments for The Ryder Cup, Volvo Ocean Race and Laureus World Sports awards.

 

Sports venue development

 

The Football Association (the FA) – Business plan review and cashflow assessment
Deloitte were asked by the FA to review the operational business plan and assess the proposed funding and construction expenditure cashflow projections in relation to the proposed National Football Centre. Our review, which extended to cover the commercial and financial risks in connection with the proposed on-site hotel plans, helped the FA to identify potential risks and mitigate these in order to obtain Board approval.

Major County Cricket Club – Project origination
We delivered a relocation feasibility study to understand whether a major cricket club moving to a new stadium made financial sense. We also developed a high-level specification for the new stadium which detailed capacity and facilities, and identified key commercial components and developed an outline specification for a redeveloped stadium at their current site.

Rugby Football Union (RFU) – Creating venue value
We reviewed the proposed redevelopment of the South Stand at Twickenham, which the RFU were keen to use as an opportunity to develop a number of new non-matchday revenue streams including a hotel, health & fitness club, conference suites, offices, retail facilities, and an exhibition and arts venue. We assessed the commercial viability of the scheme and calculated the financial impact for the RFU, which helped to refine the scheme and increased its level of return.

Sports regulation

 

UEFA – Financial Fair Play
The Sports Business Group at Deloitte has provided advisory assistance to UEFA for the development of the UEFA Financial Fair Play Regulations (first approved in 2010) and has further assisted UEFA with implementation matters. The break-even requirement, the cornerstone of UEFA’s Financial Fair Play Regulations, applies to clubs in UEFA competitions from the 2013/14 season and aims to help clubs across Europe to achieve a more sustainable balance between their costs and revenues and encourages investment for the longer-term benefit of football. These requirements supplement the Club Licensing Regulations, which have been successfully operating across Europe since 2004/05. Previously, Deloitte also provided advisory assistance to UEFA for the development and implementation of the financial criteria of the Club Licensing Regulations.

For more information, download the latest extract from our Deloitte Annual Review of Football Finance – ‘On the verge of break-even' as well as previous articles on Financial Fair Play.

Government of Saudi Arabia – Privatisation of sports clubs
We delivered a feasibility study for the privatisation of leading sports clubs in Saudi Arabia. This included a blueprint for the future structure and operation of Saudi Arabian professional football as well as the governance, organisational and operational frameworks required to achieve this, together with preparation plans for the privatisation of clubs. The study incorporated real estate assessments, financial forecasts and valuations and formed the basis of a submission to the Kingdom’s Supreme Economic Council for approval.

International Basketball Federation (FIBA) – Development of qualification structure for major competitions
We helped FIBA to evaluate the potential impact of proposed changes to the qualifying format for FIBA’s major international competitions. Through a series of detailed stakeholder consultations, we were able to produce a model of the potential financial impact of the qualification options to assist FIBA in refining its thinking and to select a preferred option.

Singapore S.League – League restructuring
The key backers of the Singapore S.League wanted to develop the League to the next level. We were appointed to carry out a strategic review of the S.League in time for changes to begin to be implemented for the new season. The overall aim of the project was to provide recommendations to move the S.League towards a more self-financing model, allied to its commercial development. We produced a strategic blueprint to guide the development of the S.League over the medium and long-term. We provided recommendations relating to the S.League's vision & mission, structure & organisation, commercial operations, expenditure & funding, and facilities and stadia.

English Cricket – Working party review
We provided technical assistance to a working party of a range of cricket stakeholders, to review aspects of English cricket, including the cricket calendar, major match finances, the allocation of major matches, sources of income and the development of new competition concepts for the benefit of the whole game.

Deloitte Real Estate

Major Events

 

London 2012
The London Organising Committee for the Olympic and Paralympic Games (LOCOG) appointed Deloitte Real Estate to project manage the delivery of the temporary venues and overlay at Greenwich Park, Horse Guards Parade, the Mall and Hyde Park for the Games, which were considered to be some of the most complex temporary venues to deliver.

These venues were constructed, the Games held and the venue dismantled, all in very short timescales, with minimum disruption to the existing locations. In the case of Horse Guards Parade, a 15,000 seat stadium had to be constructed along with associated spectator, media and press facilities within 36 days to avoid disrupting Trooping the Colour and the Queen’s birthday celebrations.

Key members of Deloitte Real Estate’s specialist Sport and Leisure team were embedded within LOCOG to manage the delivery of these temporary venues and overlay. Our project management role included overseeing the design and development, as well as involvement in the procurement process, managing stakeholders, programme management and overseeing the construction phase.

 

Sports Venue Development

 

KC Stadium, Hull
Hull City Council appointed Deloitte Real Estate’s specialist Sport and Leisure team following the successful delivery by Deloitte Real Estate of new stadia in Middlesbrough, Stoke and Sunderland, to carry out a feasibility study looking at the viability of a new stadium and, subsequently, to project manage the delivery of the stadium.

First we carried out a detailed feasibility study. This considered the need for a new stadium, what facilities it should include, where it should be located, what it would cost, how it would be funded and financed, the ownership model, operating structure and operational costs, how it would be delivered and what it would look like.

Following completion of the feasibility study, we were appointed as project manager for the delivery of the concept outlined in the study. This took the scheme from the initial concept, through the detailed design and planning, procurement and construction phases. We also prepared the business plan and helped the council negotiate with the clubs.

The new 25,000 seat stadium is home to Hull City Football Club and Hull FC Rugby Club. The development also includes a 1,500 seat indoor arena, two competition level synthetic hockey pitches, crèche, college facilities and improvements to facilities in the park. This £46m project was completed within budget and ahead of programme, and has since won a number of Awards.

 

Leisure Centre Rationalisation

 

St Albans Leisure Centres
Deloitte Real Estate are delivering three new leisure centres for St Albans City & District Council. Our appointment includes project management, design team and business planning services.

Deloitte Real Estate’s specialist Sport and Leisure team were initially appointed to assist the Council in deciding how to implement the findings of a previous feasibility study. The Council took the decision to fund the new £23m Westminster Lodge Leisure Centre through land sales, prudential borrowing and grant funding and appointed Deloitte to provide project management, design team and business planning services for the new centre. This included overseeing the procurement of the operator for the new centre. The new centre at London Colney is being delivered in a different way under a procurement route where the operator will fund, design, build and operate the centre, with a small percentage of funding coming from the Council. Deloitte Real Estate have project managed all aspects of the delivery of this facility, including the operator procurement.  

On the back of this work Deloitte Real Estate have now been appointed to provide project management and design team services for a new tennis centre will be delivered at Batchwood to replace the old centre which was burnt down.

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