- Football continues to show resilience to the extreme challenges faced by many of Europe’s economies;
- Cost control is still the key challenge, though there are some signs of improvement
Despite wider economic pressures, the European football market continues to perform well with 11% (€1.9 billion) growth in revenue terms to €19.4 billion in 2011/12, largely driven by Europe’s ‘big five’ leagues (Bundesliga, La Liga, Ligue 1, Premier League and Serie A) and the impact of UEFA Euro 2012. The ‘big five’ leagues account for €9.3 billion (48%) of total revenues, demonstrating the commercial attractiveness of the top clubs and competitions.
Dan Jones, Partner in the Sports Business Group at Deloitte, commented: “Each of the ‘big five’ leagues posted record revenue levels in 2011/12, leading to an increase of €685m, 8%, compared with 2010/11. The total revenue generated by these leagues is likely to surpass €10 billion within the next two years, twice the level they generated in 2001/02.”
The Premier League retained its status as world football’s highest revenue generating league, with its clubs achieving £87m (4%) growth to £2,360m in 2011/12. In euro terms, growth was swelled by sterling’s appreciation against the euro. This led to a €400m (16%) increase to €2.9 billion and restored the gap to its nearest rival, the Bundesliga, to over €1 billion. New three year broadcast deals, starting in 2013/14 and worth over £5.5 billion, will ensure that the Premier League remains the clear market leader in revenue terms for the foreseeable future.
By delivering revenue growth of €126m (7%) to reach €1,872m in 2011/12, the Bundesliga extended the gap between itself and third place La Liga from €27m to €107m. In local currency, this represented the largest absolute increase of the ‘big five’ leagues in 2011/12, with over three quarters of this growth driven by Germany’s two largest clubs, Bayern Munich and Borussia Dortmund.
Jones noted: “The Bundesliga looks well set to secure its position as the Premier League’s closest rival in revenue terms. Its future growth will be driven by new, more lucrative domestic broadcast contracts due to begin at the start of the 2013/14 season, and an increasing success in expanding into international markets coupled with an all-German 2013 Champions League final.”
Spain’s La Liga achieved revenue growth of €46m (3%) to €1,765m in 2011/12, but there was a stark contrast between Real Madrid and Barcelona, and the rest of La Liga. Whilst the ‘big two’ enjoyed a €65m (7%) aggregate revenue increase in 2011/12, the remaining 18 clubs suffered a cumulative €19m (2%) fall in revenues.
Serie A’s €17m (1%) rate of revenue growth was the slowest of the ‘big five’ leagues in 2011/12, with the league’s total revenue reaching €1,570m. Italian clubs continue to be heavily reliant on broadcast revenue. Matchday and commercial revenues for most clubs were severely constrained due to comparatively poor quality facilities and lack of stadium ownership. Juventus’ positive experience following their move to a new home ground in 2011, facilitating a €40m (61%) increase in matchday and commercial revenues, highlights the opportunity for other Italian clubs.
Although it remains the lowest revenue generating ‘big five’ league, France’s Ligue 1 delivered the fastest rate of growth in local currency, with a 9% (€96m) increase driving revenues to €1,136m. The growth was entirely driven by Paris Saint-Germain, whose revenue increased by €121m (120%) to €222m. By contrast, the remaining 19 Ligue 1 clubs recorded an aggregate fall in revenues of €25m.
The combined wage costs of the ‘big five’ leagues were €6.1 billion in 2011/12. This is €430m (8%) higher than 2010/11 and represents a slightly slower growth rate than for their combined revenue. In the absence of the impact of the depreciation of the euro against sterling, the like-for-like growth was just 4%.
Premier League wages remain far greater than those of the other ‘big five’ leagues. Totalling €2,049m, they were €870m (74%) greater than that of its nearest rival, Serie A. This gap is likely to exceed €1 billion in future as Premier League clubs’ spending power increases given the size of their new broadcast deal.
Premier League wages grew by 4% in local currency in 2011/12, whilst Bundesliga (€953m) and La Liga (€1,057m) clubs’ wage costs both grew by 3%. Serie A clubs’ wage costs rose by 2% (€1,179m). Ligue 1 experienced the fastest rate of growth in local currency, with wage costs increasing by 8% (€64m) to reach €841m. Almost three quarters (€47m) of the Ligue 1 wage growth was due to Paris Saint-Germain, but the club’s revenue growth meant that their wages to revenue ratio fell from 69% to 53%.
In England (70%), Italy (75%) and France (74%) the combined wages/revenue ratio of top division clubs was at least 70%.
The Bundesliga once again leads the way in terms of operating profitability. Its clubs generated €190m in 2011/12, a €19m (11%) increase on the previous season. There were also operating profit improvements in England (€40m, 49%) and France (€30m, 31%). Serie A remains the poorest performing ‘big five’ league in terms of profitability, with its clubs’ operating losses increasing by €11m (7%) in 2011/12.
Adam Bull, Senior Consultant in the Sports Business Group at Deloitte, commented: “Operating results improved in England, France and Germany, which may be a sign of clubs’ desire to achieve a more sustainable balance between their levels of expenditure and revenue generation, in what is the first season to count for UEFA’s Financial Fair Play break-even requirement. However, in many cases the performance of the biggest clubs does mask that of the majority.”
Other key findings from the Deloitte Annual Review of Football Finance 2013 include:
- Commercial revenue was the driving force behind the ‘big five’ leagues’ revenue growth in 2011/12. Its €394m (15%) increase represented 58% of the total growth and enabled it to exceed €3 billion for the first time;
- Broadcast revenue remains comfortably the largest contributor to the total revenue of the ‘big five’ leagues, at €4.3 billion (47% of the total). This has been reaffirmed by the agreement of new and significantly improved broadcasting deals in the Bundesliga and the Premier League from 2013/14;
- Matchday revenue, which reached €1.9 billion in 2011/12 and accounted for 20% of the ‘big five’ leagues’ total revenue, continues to suffer most from the economic downturn, having experienced the lowest absolute growth of the three revenue sources;
- Average league match attendances in 2011/12 increased by 5% in the Bundesliga (to 44,293) and marginally in La Liga (to 26,050). Premier League attendances reduced slightly (to 34,646), albeit the stadia remained highly utilised at 93%, and Premier League attendances rebounded to average 35,906 in 2012/13 (95% utilised). Average attendances in Serie A (22,005) and Ligue 1 (18,869) fell for the third and fourth successive seasons respectively;
- Outside of the ‘big five’ countries, Russia (€636m), Turkey (€444m) and the Netherlands (€434m) have the largest revenue generating leagues in Europe;
- England’s Football League Championship is by far the world’s highest revenue generating second tier competition with total revenue of €588m in 2011/12;
- Brazil’s Campeonato Brasileiro Série A is the leader for revenue generation outside Europe with its clubs generating revenue of around €880m in 2012.
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Note to editors:
The exchange rate at 30 June 2012 has been used to convert figures between Euros and Pounds Sterling (£1 = €1.236).
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 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, 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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