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Roar power Annual Review of Football Finance 2018 Sports Business Group - Deloitte
Roar power
Annual Review of Football
Finance 2018
Sports Business Group
June 2018
                            A
Roar power Annual Review of Football Finance 2018 Sports Business Group - Deloitte
Annual Review of Football Finance 2017 |
                                        Section title goes here

The financial results for the 2016/17
season may well be viewed in the future
as the defining moment in the delivery
of sustained profitability by football clubs
competing in the Premier League.

B
Roar power Annual Review of Football Finance 2018 Sports Business Group - Deloitte
Annual Review of Football Finance 2018 |
                                                                                                              Contents

Contents

Foreword                                    02   Edited by
                                                 Dan Jones
Delivering results worldwide                04
                                                 Sub-editors
The leading team in the business of sport   06   Timothy Bridge, Matthew Green

Europe’s premier leagues                    08   Authors
                                                 Michael Barnard, Matt Dwyer, Jake Wilson
Deloitte Football Intelligence Tool         14   and Christopher Winn

Premier League clubs                        16   Sports Business Group
                                                 Telephone: +44 (0)161 455 8787
Under my umbrella                           22   PO Box 500, 2 Hardman Street, Manchester, M60 2AT, UK
                                                 E-mail: sportsteamuk@deloitte.co.uk
Finding the leading edge                    23   www.deloitte.co.uk/sportsbusinessgroup

Football League clubs                       24   June 2018

Player transfers                            28
Fields of dreams                            29
Stadia                                      30
                                                 Please visit our website at
Moore’s Law                                 32   www.deloitte.co.uk/arff to download a copy of the full report
                                                 and to purchase the Databook.

                                                 Our 32 page Databook includes over 8,000 data items on
                                                 the various topics covered in this report, prepared on the
                                                 basis of our specialist and long-established methodologies.
                                                 It is available to purchase for £1,000 from www.deloitte.co.uk/arff

                                                                                                                    01
Roar power Annual Review of Football Finance 2018 Sports Business Group - Deloitte
Annual Review of Football Finance 2018 |
                                        Foreword

Roar power

Welcome to the Annual Review of Football Finance 2018, the                                                Top level football and the live, unscripted drama     league clubs entering insolvency proceedings
                                                                                                          it delivers, remains the premium content that         for over five years and our consistent reporting
publication that remains the most comprehensive analysis of                                               broadcasters wish to acquire and amid changing        of improved financial stability and profitability
the financial trends in, and prospects for, the football industry.                                        consumer habits and fragmentation that are            for that period, we hope that the developing
                                                                                                          impacting the entire entertainment industry,          financial maturity of the football industry will
                                                                                                          the Premier League has once again shown its           soon be more widely recognised.
This 27th edition follows a similar structure         decade ago when 60% of the Premier League’s         resilience and strength by retaining the vast
to previous years in outlining the key                clubs were making operating losses and the vast     majority of its audience and value. Indeed, once      This new era of profitability alongside the high
developments across European football, but            majority of any revenue increases were being        the sales process for the remaining domestic          quality of football strengthens the opportunity
the storyline that flows through has changed          paid out in wages, prompting concerns over          and international rights is completed, we expect      for the Premier League and its clubs to have a
somewhat. The phenomenal growth of the                long-term financial sustainability.                 the league will have delivered overall increases      huge influence upon their local communities
English Premier League, capped by its financial                                                           in television revenue.                                and more widely around the world. The Premier
record breaking 2016/17 season, seems to              Whilst the impact of the record broadcasting                                                              League currently supports not only the 20
have at last delivered a consistently profitable      arrangements for the Premier League cannot be       Whilst the ‘big six’ tighten their grip on the top    clubs but also the 72 Football League and 68
picture for top tier clubs and more signs of          underestimated and the increase in rights value     of the table, on any given weekend the matches        National League clubs to deliver community
long-term financial sustainability for those in the   across the past two cycles is the primary factor    remain as competitive and exciting as ever. This      programmes, which have been praised for the
Football League.                                      behind the growth in revenue, the benefit to        was demonstrated by the fact that the leading         impact they make.
                                                      clubs’ finances of operating in an appropriately    revenue generating club in world football,
                                                      regulated environment, via UEFA Financial           Manchester United, were defeated by all three         Continued growth will further boost the
King of the jungle                                    Fair Play regulations and the Premier League’s      promoted clubs during the 2017/18 season. It is       financial contribution to deliver high-class
The financial results for the 2016/17 season fully    cost control measures is equally evident. The       this unpredictability that appeals so strongly to     football facilities in communities and schools,
affirmed the English Premier League’s position        financial position of the clubs competing in the    broadcasters and other commercial partners.           whilst promoting the connection between the
as the market leader, with record revenue             Premier League on a consistent basis currently                                                            Premier League and future fans for the long-
generated of £4.5 billion, as every one of the 20     suggests that profitable performance and            The combination of financial success and stability,   term benefits of the clubs themselves and the
clubs set their own personal annual revenue           strengthening balance sheets, that looked so        and the global popularity of the competition          reputation of the competition.
record.                                               impossible a decade ago, are now the norm.          makes the Premier League an increasingly
                                                                                                          attractive asset to investors, offering a financial
With revenue growth outpacing the growth in           The recent announcement that the Premier            return alongside the thrill and excitement of         You got to put your behind in your past
the wage bill, no clubs reported an operating         League’s domestic rights selling process for        owning a major football club. Nonetheless, we         Below the Premier League, the desire of clubs
loss and only one reported a wages/revenue            2019/20 – 2021/22 did not deliver the uplift that   still sense in the market a hesitance amongst         competing in the Championship to benefit from
ratio above the UEFA guideline for a club’s           followers have become accustomed to over            traditional financial institutions to accept that     the potential financial windfall of promotion
financial health of 70%. It is a far cry from a       recent years should not be a cause for concern.     the landscape has changed. With no football           remains unwavering. Whilst the Championship

02
Annual Review of Football Finance 2018 |
                                                                                                                                                                                                        Foreword

                                                      those in receipt, and those not, of parachute         Germany’s Bundesliga will see growth              The circle of life
                                                      payments. The key concern remains that                from 2017/18 as a result of new broadcast         I’d like to thank all of those that have
                                                      financial disparity will in the future translate to   arrangements but their opportunity to close       contributed to this year’s edition of the Annual
                                                      more predictable on-pitch performances. If this       the gap on the Premier League may well rely       Review of Football Finance from across the
                                                      were to become the case, then it may well be          on their, and their clubs’, ability to innovate   football world and to say thanks to all former
                                                      less attractive for many Championship clubs to        and have the first mover advantage as new         colleagues who have made it such a huge
                                                      push for promotion in the future. Championship        revenue generating opportunities arise. This      success in the past and now work in a variety of
                                                      club owners will doubtless be heartened by the        will be particularly crucial given the recent     exciting roles across the sports industry. I am
                                                      success of clubs such as Burnley, Bournemouth         announcement that German clubs voted against      very grateful to my colleagues who have written
                                                      and Huddersfield in securing and retaining            any changes to the 50+1 ownership model that      this year’s edition and Henry Wong for his
“This new era of profitability                        Premier League status. Notably, the 2017/18           effectively retains fan control and rules out     design expertise.

 alongside the high quality                           season saw no ‘yo-yo’ effect among either the
                                                      promoted or relegated clubs from 2016/17.
                                                                                                            the significant owner investment seen in other
                                                                                                            countries.                                        Deloitte is proud to support the Green Ribbon
 of football strengthens the                                                                                                                                  Campaign, helping to #endthestigma of mental

 opportunity for the Premier                          Further down the English football pyramid,
                                                      League 1 and League 2 are together financially        Being brave doesn’t mean you go looking
                                                                                                                                                              health, an issue that impacts the football
                                                                                                                                                              community in the same way as any other.
 League and its clubs to have                         bigger than ever before and comfortably the           for trouble

 a huge influence upon their                          biggest leagues at that level anywhere in the
                                                      world. The cost control measures that have
                                                                                                            Changes to both the financial distribution
                                                                                                            mechanism and the format of the qualification
                                                                                                                                                              We hope you enjoy this edition.

 local communities and more                           been implemented by the Football League are           process for the UEFA Champions League from        Dan Jones, Partner

 widely around the world.“                            a further clear example of the positive impact
                                                      that financial regulations can have.
                                                                                                            2018/19 will alter the footballing landscape in
                                                                                                            Europe slightly but the rumoured FIFA led wider
                                                                                                                                                              www.deloitte.co.uk/sportsbusinessgroup

                                                                                                            changes in global club football could have a
                                                                                                            much more significant impact.
is the biggest second tier competition in world       You can either run from it, or learn from it
football, generating more revenue than it ever        More widely, whilst growth was achieved across        Such change to the structure of club football
has before, club owners and management                all of Europe’s ‘big five’ leagues, none of the       requires careful consideration and detailed
have on the whole taken the decision to stretch       Premier League’s competitors could match the          assessment by football’s governing bodies,
themselves financially to gain promotion and          pace, and the challenge now rests with them           as whilst the initial financial boost of a new
this is the driver of the traditionally significant   to try and close the gap, in revenue terms, in        tournament or format could be substantial, the
operating losses and high wages to revenue ratio.     the coming years. Spain’s La Liga is already          long term popularity and sustainability of the
                                                      benefitting from its move to collective rights        current calendar should not be undervalued.
The operating losses of the Championship are          selling and has publicly stated its ambition and      The development of football in the future
once again at record levels, in part driven by        intent to significantly increase broadcasting         remains something that we are excited to track.
the financial results of Newcastle United, who        revenue. We expect that Spain will see the            We hope to continue to make the Deloitte
maintained a wage bill comparable with Premier        fastest rate of revenue growth in the next            Annual Review of Football Finance a guide on
League clubs. At a revenue level, the Premier         few years and with the tight financial controls       that journey.
League broadcast arrangements have also               that Spanish clubs now operate under, we’d
impacted the Championship with there now              expect that this will also translate to continued
being a more significant differentiation between      profitability.

                                                                                                                                                                                                              03
Annual Review of Football Finance 2018 |
                                        Sports Business Group

Delivering results worldwide

Deloitte has a unique focus on the sports sector, led from                                                 Various strategic projects       Economic impact study
the UK and operating across the world. Our experience,                                                     Continuing assistance to the     Assessment of the Economic
                                                                                                           British Olympic Association      Impact of the Irish Breeding
long-standing relationships and understanding of the                                                       through to the Tokyo Olympic     and Racing Industry.
industry mean we bring valuable expertise to any project                                                   Games 2020.

from day one.
For more than a quarter of a century, across            Deloitte are also audit and tax advisers to many   Consulting services              Strategic business plan
over 40 countries, we have worked with more             sports businesses.                                 Assistance to the Association    Support in the development of
organisations in sport than any other advisers.                                                            of Tennis Professionals across   the strategic plan for the club’s
Our specialist Sports Business Group at Deloitte        For further details on how Deloitte can add        a range of strategic topics.     inaugural Indian Super League
provides:                                               value to your project and your business,                                            season and long term future.
                                                        visit our website www.deloitte.co.uk/
•   Business planning                                   sportsbusinessgroup
•   Revenue enhancement and cost control
•   Market analysis and benchmarking                    Telephone: +44 (0)161 455 8787                     Business plan development        Strategic plan
•   Strategic review                                    Email: sportsteamuk@deloitte.co.uk                 Development of a strategic       Assistance in the creation of a
•   Economic impact studies                                                                                business plan for the            six year strategic plan.
•   Venue feasibility and development services                                                             developing sport of Power
•   Sports regulation advice                                                                               Hockey.
•   Due diligence
•   Corporate finance advisory
•   Business improvement and restructuring
•   Forensic and dispute services

04
Annual Review of Football Finance 2018 |
                                        Sports Business Group

                                                           05
Annual Review of Football Finance 2018 |
                                        Sports Business Group

The leading team in the business of sport

Improve your strategy
and governance

Working together with our clients,
Deloitte’s unique experience,
                                                                                                                                         Optimise your revenues
insights, robust evidence-based            Business
                                           planning
advice, and credibility in sport
                                                                                                                                            Deloitte bring experience,
helps build a strong case and                                                 Strategy review
                                                                             and development
                                                                                                                                             information, insights and
consensus for change amongst
                                                                                                                                        leading practices to help our
key stakeholders and enables
                                                                                                                                          clients to analyse and grow
our clients to positively influence
                                                                                                                                     their revenues and profitability.
and react to their wider political, Economic impact                                                                Commercial
economic and social environment.        studies                                                                    development
                                                                                                 Market analysis                                We give our clients a
                                                                             Governance and     and development
                                                                                                                                          competitive advantage by
We help deliver effective                                                     organisational
                                                                                  design                                                delivering solutions to help
governance, strategies,
                                                                                                                                            engage their fans, grow
competitions and impact analysis
                                                                                                                                        attendances, promote their
for sports organisations to build                         Restructuring of                                         Benchmarking
                                                         competitions and                                            and best                     brand, build value
their integrity, credibility, quality,                                                           Ticketing and
                                                             calendar                             hospitality
                                                                                                                      practice               from new markets and
youth player development,
                                                                                                   strategies                                    accelerate growth.
popularity and value.

                                                                                                             Media rights analysis

06
Annual Review of Football Finance 2018 |
                                                                                                                                                          Sports Business Group

Make informed investment
decisions

Deloitte has an extensive track-            Advice on the
record of delivering tailored added-      development of
                                          stadia and other
                                                                                                                                     Ensure financial integrity
value services to a wide range of
                                              facilities       Business and
investors, owners and financiers                               venue market                                                          Deloitte brings to clients an
in respect of various sports assets                          feasibility studies
                                                                                                                                 unrivalled deep understanding
around the world such as clubs
                                                                                                                                            of sports’ regulatory
and sports marketing companies.
                                        Financial and                                                                          requirements, how the business
                                       commercial due                                                                             of sport works in practice, and
We utilise our experience, industry       diligence                                                       Audit and
                                                            Targeting and                                compliance             the wider economic, accounting
knowledge and global networks
                                                             acquiring a
                                                                                   Risk management                               and legal environment in which
to provide independent and                                 sports business
                                                                                                                                               a sport operates.
trusted advice to help our clients
understand the commercial
                                          Disposing of a                                                                            Our clients benefit from our
realities of their proposed              sports business                                                  Club licensing               expert review, advice and
investments, and plan successfully                                                                       and cost control               reports to manage their
for the future.                                                                                            regulations
                                                                                    Investigatory                                   risks, comply with statutory
                                                                                     and dispute                                 requirements, resolve disputes,
                                                                                       services
                                                                                                                                        and implement effective
                                                                                                                                               sport regulations.
                                                                                                    Sports tax advisory

                                                                                                                                                                             07
Annual Review of Football Finance 2018 |
                                        Europe’s premier leagues

Europe’s premier leagues

Strong growth in broadcasting rights                     Chart 1: European football market size – 2015/16 and 2016/17 (€ billion)
values across European football’s biggest                                                                                                               UEFA distributions
domestic and continental competitions
drove total European football market                                 2.4
                                                                                                                                                        Distributions to clubs for participation in UEFA club
                                                                                                                        3.1
revenue to €25.5 billion in 2016/17, a 4%                            9%
                                                                                                                        13%                             competitions grew by 3% to over €1.8 billion in 2016/17,
increase on 2015/16.                                                        0.7                                                0.7                      with the ‘big five’ leagues receiving 67% of total
                                                               2.8          3%                                                 3%
                                                               11%                                                                                      distributions.
                                                                                                            2.6
                                                                                                            11%

European football market                                             €25.5 billion                                      €24.6 billion                   The 2018/19 season will see the commencement of the
                                                                           2016/17                                            2015/16          13.4
The ‘big five’ European leagues grew their                                                                                                     54%      next UEFA broadcast rights cycle, with UEFA having
                                                               4.9                        14.7
collective revenue by €1.3 billion (9%) in 2016/17,            19%
                                                                                           58%                                                          targeted a revenue increase of around 30%. Changes to
                                                                                                                  4.8
primarily due to increased broadcasting rights                                                                    19%                                   the format with staggered kick-off times and guaranteed
revenue as the English Premier League, Spanish                                                                                                          representation for clubs in the traditionally strongest
La Liga and French Ligue 1 recorded uplifts as                                                                                                          markets (with Italy set to benefit most notably) are
they each entered new rights cycles.                                                                                                                    intended to attract broadcast interest.

This growth was not restricted to the ‘big five’         The 2018 FIFA World Cup Finals in Russia                        ‘Big five’ European leagues    As both Champions League and UEFA Europa League
leagues, with total revenue across non-’big five’        will have an influence on the European                                                         revenue significantly increase, UEFA’s revenue
European leagues also increasing.                        football market in the next two years, initially                Non ‘big five’ top leagues     distribution model is also planned to change, giving
                                                         through revenue directly associated with the                                                   greater recognition of both current and historic sporting
Nonetheless, the 2016/17 season saw a                    tournament itself, and to a lesser extent the                   ‘Big five’ countries’ other    performance and reducing the market pool share.
continuation of the trend of polarisation within         indirect legacy uplifts for Russian football.                   leagues
the European football market, with the ‘big                                                                                                             The higher distributions will particularly boost the
five’ leagues and the UEFA Champions League              Despite these potential increases, it is unlikely               FIFA, UEFA and National        revenue of the top clubs consistently competing in the
growing at a rate unmatched by other leagues.            that the Russian Premier League will close the                  Associations                   Champions League. Given that UEFA has clearly identified
                                                         gap, in revenue terms, to the ‘big five’ in the near                                           competitive balance as a key issue to address across
Encouragingly, the financial position of European        future, meaning that any possible transition to a               Non ‘big five’ other leagues   European football, then various alternative regulatory
football appears healthier than it has been for          ‘big six’ is not imminent.                                                                     measures will need to be considered in the coming
a long time, reflecting the global popularity                                                                     Source: Leagues; UEFA; FIFA;          seasons.
of the game, but also the professionalism of                                                                      Deloitte analysis.
leading clubs and the strength of the regulatory
environment in which they operate.

08
Annual Review of Football Finance 2018 |
                                                                                                                                                                                               Europe’s premier leagues

Revenue growth continued apace across                 The 2016/17 to 2019/20 domestic cycle                  Chart 2: ‘Big five’ European league clubs’ revenue – 2016/17 (€m)
the ‘big five’ European leagues in 2016/17            increased revenues by over 20% to a
                                                                                                             6,000
with an increasing gap between the English            reported €738m per season, yet this still                                                                                             Matchday
                                                                                                                      5,297
Premier League, which is in something of              only represented c.40% of the value of the
                                                                                                                       1,358
a financial league of its own, and French             domestic rights for the Premier League. Given          5,000     26%                                                                  Broadcasting
Ligue 1 which has in recent years fallen              the contribution of broadcasting revenue to
further behind the other ‘big five’ leagues.          European football clubs’ total revenue, this                                                                                          Sponsorship/Commercial
                                                                                                             4,000
                                                      relatively low value will see Ligue 1 fall further               3,221
                                                                                                                       61%
                                                      behind the other ‘big five’ European leagues in                              2,854       2,793                                        Other commercial
‘Big five’ European leagues’ revenue                  revenue terms.                                         3,000
                                                                                                                                    826          475
                                                                                                                                    29%          17%
The success of La Liga’s collective sales                                                                                                                 2,075
                                                                                                                                                 960                                    Note: Commercial revenue is not
approach has been such that broadcast                 Distributions by UEFA to clubs from the                                                    34%       614     297 1,643
                                                                                                             2,000                 1,484                           18%            345   disaggregated into ‘sponsorship’
                                                                                                                                    52%                    30%
revenue growth of 20%, following on from              ‘big five’ participating in the Champions League                                                                            21%   and ‘other commercial’ for clubs in
                                                                                                                                                 854      1,244
26% growth in the 2015/16 season, has seen            and Europa League increased by 4% to                                                                 60%                          England, Spain and Italy.
                                                                                                                                                 31%
                                                                                                             1,000
collective La Liga revenue increase to a record       €1.2 billion and continue to play a significant role             718                                        217     819     182
                                                                                                                       13%          544          504              10%
                                                                                                                                                                          50%
                                                                                                                                                                                  11%   Source: Leagues; Deloitte analysis.
€2.9 billion in 2016/17. As a result, the Spanish     in the financial performance of those leagues, as                             19%          18%

league has overtaken the Bundesliga to be the         well as on the Deloitte Football Money League.            0    England       Spain     Germany      Italy          France

second highest revenue-generating league in           Southampton’s debut appearance in the Money                     Average revenue per club (€m)
the world.                                            League top 20, and AS Roma’s absence, were                       265          143          155       104            82
                                                      both heavily influenced by their participation (or
                                                                                                                      Average match attendance
Bundesliga clubs collectively maintained              lack of) in UEFA competitions.
                                                                                                                      35,838       27,630     40,693     21,262          21,078
their strong overall revenue growth, primarily
through an increase in commercial revenues, up        Premier League clubs took the largest portion                   Stadium utilisation

15% from 2015/16 to €1.4 billion representing         of revenue distributed by UEFA to clubs in                       96%          71%          91%      52%             67%
almost 75% more than generated by La Liga,            2016/17, in total receiving more than €300m,
as their traditional strength in this area shone      over 50% more than Ligue 1 clubs, who
through.                                              collectively earned the least of the ‘big five’
                                                      leagues. However, the ratio of the difference in       The success of La Liga’s collective sales
2016/17 saw Serie A revenue grow by 8% to over        distributions between the most and the least
                                                                                                             approach has seen collective La Liga
€2 billion for the first time. The majority of this   among the ‘big five’ did reduce, from almost 2:1
growth came from commercial sources, with             to 1.6:1.                                              revenue increase to a record €2.9 billion
revenue increasing by €91m (17%) on 2015/16, a
                                                                                                             in 2016/17. As a result, the Spanish
remarkable €75m (over 80%) of which was solely
attributable to Internazionale, following the                                                                league has overtaken the Bundesliga
club’s acquisition by Chinese electronics retailer
                                                                                                             to be the second highest revenue-
Suning in June 2016.
                                                                                                             generating league in the world.
France’s Ligue 1 remained the lowest revenue-
generating of Europe’s ‘big five’ leagues, at €1.6
billion in 2016/17, despite entering a new four-
year domestic broadcasting rights cycle.
                                                                                                                                                                                                                          09
Annual Review of Football Finance 2018 |
                                        Europe’s premier leagues

European football’s ‘big five’ leagues are               Reported figures suggest that the top two           Chart 3: ‘Big five’ European league clubs’ revenue – 2014/15 to 2018/19 (€m)
already looking to other, more innovative,               German divisions combined will generate an
                                                                                                             6,000                                                      5,650
ways of increasing revenue, as the intrinsic             average of €1.4 billion per season over the four                                                   5,400                       England             Italy
                                                                                                                                                5,297
link between on field success and revenue                year cycle to 2021/22, and see the Bundesliga                              4,865
generation strengthens.                                  return to its position as the second-highest        5,000                                                                      France              Spain
                                                                                                                        4,403
                                                         revenue generating league in the world.
                                                                                                                                                                        3,690           Germany
                                                                                                             4,000
England                                                  Spain                                                                                              3,350
The impact of the three-year broadcasting                As 2016/17 saw the first results of the new                                                                    3,470       Source: Leagues; Deloitte analysis.
                                                                                                                                                2,854
                                                                                                             3,000                  2,712                   3,050
cycle which commenced in 2016/17 looks set               full three-year collective rights sales deliver                2,392                   2,793
to ensure the Premier League remains well                increased broadcast revenues, La Liga publicly                             2,437                               2,280
ahead of the other ‘big five’ European leagues (in       stated its desire to close the current revenue                 2,053                   2,075       2,130
                                                                                                             2,000                  1,917
                                                                                                                        1,790                               1,720       1,880
revenue terms) over the coming years.                    gap to the Premier League. As such, it has looked                                      1,643
                                                                                                                        1,418       1,485
                                                         to develop and innovate on a worldwide scale.
                                                                                                             1,000
However, the tender process for domestic and
                                                                                                                                                                Projected
international broadcasting rights for the three-         La Liga’s international expansion, through the
year cycle beginning in 2019/20, whilst not yet          ‘La Liga Global Network’ launched in 2017,              0     2014/15     2015/16     2016/17     2017/18    2018/19
completed, looks very unlikely to deliver the ‘step      has the objectives of boosting the value of
change’ growth seen across the previous two              international media rights, engaging new
cycles.                                                  followers of Spanish football, and generating       France
                                                         commercial opportunities for both the league        Whilst remaining the lowest revenue generating            Replacement growth
A more mature phase of competition amongst               and its clubs.                                      of the ‘big five’ leagues, Ligue 1 clubs’ collective
bidders for UK domestic rights in this next                                                                  revenues have grown at a faster rate from                 The leagues and clubs of the ‘big five’
cycle may see the Bundesliga and La Liga                 Italy                                               2015/16 to 2016/17 than in previous years,                are applying innovative international
narrowing the revenue gap to the Premier                 Aggregate Serie A revenues are expected to          primarily due to the start a new four-year                strategies to widen their global reach, as
League somewhat, yet once the sale process               grow, with the commencement of new UEFA             domestic broadcast rights cycle. The international        they attempt to grow commercial
for international rights is completed, we expect         broadcast deals and changes to Champions            rights cycle commencing in 2018/19 is expected            revenues. Several have opened offices
the total value of Premier League broadcasting           League regulations, guaranteeing four Serie         to deliver a less significant revenue increase.           in key overseas markets to manage local
rights to remain in excess of €1 billion more than       A clubs will compete in the Group stages                                                                      partnerships alongside market specific
any other league.                                        of the competition, hence increasing UEFA           Recent external investment in a number                    social media accounts and events.
                                                         distributions from the 2018/19 season.              of French clubs is hoped to stimulate an
Germany                                                                                                      increased level of competitiveness and in turn,           An example of further innovation is
Whilst 2016/17 saw the Bundesliga temporarily            In addition, 2018/19 will also mark the start of    commercial attractiveness, to Ligue 1, as it              Digital Billboard Replacement (‘DBR’)
slip below La Liga in revenue terms, the                 a new international broadcasting rights cycle       looks to keep pace with the revenue growth of             technology, allowing different brands to
perennially impressive commercial performance            for Serie A, delivering growth of around 80%        other ‘big five’ leagues.                                 advertise to different audiences or in
of German clubs (9% ten-year CAGR) provides a            on the existing deal, to a reported €340m                                                                     different geographies simultaneously.
strong platform on which the new domestic and            per annum. Despite such growth, the value of        The recent announcement of a new                          DBR has already been used across the
international broadcasting rights cycle looks set        Serie A international broadcast rights remain       broadcasting tights arrangement with Mediapro             ‘big five’ leagues to varying degrees, and
to deliver a further revenue boost in 2018/19.           comfortably less than those of the Premier          covering the period 2020/21 to 2023/24                    may deliver enhanced commercial
                                                         League and La Liga.                                 provides confidence about the medium term                 revenue generating opportunities.
                                                                                                             financial growth of Ligue 1.
10
Annual Review of Football Finance 2018 |
                                                                                                                                                                                                       Europe’s premier leagues

Boosted by the increased revenue of                   Germany                                              Chart 4: ‘Big five’ European league clubs’ revenue and wage costs – 2015/16 and 2016/17 (€m)
Premier League and La Liga clubs, total               Bundesliga clubs increased their wage bill by
                                                                                                           6,000
wage costs across Europe’s ‘big five’                 10% to €1.5 billion.                                                    5,297
leagues grew by 4% to €8.5 billion. The                                                                               4,865
overall wages to revenue ratio across the             The Bundesliga still has the lowest wages            5,000
‘big five’ leagues reduced to 58%, with               to revenue ratio (53%) of any of the ‘big five’
the weakening of the pound against the                leagues, but this increased during the year amid
                                                                                                           4,000
euro masking the underlying extent of                 limited revenue growth.
wage growth.                                                                                                                                         2,854                    2,793
                                                                                                                                                                     2,712
                                                      Bayern Munich continued to dominate on               3,000      3,045
                                                                                                                               2,894       2,437
                                                      the pitch, becoming the first team to win five                                                                                     1,917
                                                                                                                                                                                                     2,075
England                                               consecutive Bundesliga titles, as their wage         2,000                                                                                              1,485
                                                                                                                                                                                                                      1,643
Premier League clubs’ wage costs increased            costs of €265m reached almost €100m more                                                       1,680
                                                                                                                                            1,476                             1,478                  1,380
by 9% to almost £2.5 billion (€2.9 billion), as       than those of second-highest wage spenders                                                                     1,341               1,343
                                                                                                           1,000                                                                                              1,019   1,078
clubs benefitted from increased centralised           Borussia Dortmund.
distributions, helping to maintain their position
as by far the biggest wage spenders – paying          Italy                                                    0      15/16   16/17        15/16     16/17          15/16     16/17      15/16   16/17       15/16    16/17
out over 70% more than the top Spanish clubs.         Serie A’s wages to revenue ratio reduced from                      England                 Spain                 Germany               Italy              France
                                                      70% to 67% in 2016/17, it’s lowest level since the              63%      55%          61%          59%         49%       53%        70%        67%      69%        66%
Spain                                                 2005/06 season, but remained the highest ratio
                                                                                                                       152     145           74          84           75       82          67         69      4851       54
As clubs reinvested the additional revenue            across the ‘big five’ leagues. Wage costs grew
generated from the collective sale of                 3% to €1.4 billion, dominated by Internazionale’s
broadcasting rights, clubs in La Liga                 22% increase in wage spending as Suning                  Revenue               Wage costs           Wages/revenue ratio             Average club wages
consolidated their position as the second-            supported investment in the squad.
highest wage spenders of Europe’s ‘big five’                                                               Source: Leagues; Deloitte analysis.
leagues in the 2016/17 season.                        Juventus’ wage spend increased 19% to €262m,
                                                      over 25 times larger than Crotone, who at
Wages increased by 14% to almost €1.7 billion,        €10.3m had the lowest wage spend of any club         France                                                            All five leagues wages/
the fastest growth of any of the ‘big five’ leagues   in the ‘big five’ leagues.                           Wage spending in Ligue 1 grew by 6% to almost
                                                                                                                                                                             revenue ratios are below
for the second year running. Real Madrid and FC                                                            €1.1 billion in 2016/17, as increased broadcasting
Barcelona again accounted for almost half (47%)                                                            revenues were reinvested into playing squads.                     70%, the industry marker of a
of all wage spend, each spending nearly 30                                                                 However, the French league’s wages to revenue
                                                                                                                                                                             club’s financial health.
times more than the lowest-spenders, Leganes.                                                              ratio fell by three percentage points to 66%, as
                                                                                                           only 37% of revenue growth was spent on wages.
Despite this recent period of rapidly increased
wage spending, La Liga’s wages to revenue ratio                                                            Despite a reduction in wages costs of 7% in
fell by two percentage points to 59% in 2016/17,                                                           2016/17, PSG remain the largest spenders in
highlighting the scale of growth in clubs’                                                                 France. The impact of the acquisition of Neymar
revenue and the success of financial regulations                                                           Jr., and the Parisian club’s other transfer activity
implemented by the Spanish governing bodies.                                                               in the summer of 2017 is likely to see wage costs
                                                                                                           increase substantially in 2017/18.
                                                                                                                                                                                                                               11
Annual Review of Football Finance 2018 |
                                        Europe’s premier leagues

The effectiveness of financial regulations               Chart 5: ‘Big five’ European league clubs’ profitability – 2012/13 to 2016/17 (€m)
across the ‘big five’ leagues, and beyond,
                                                         1,200                         UEFA FFP      Start of FFP            Start of            Enhanced
                                                                                                                                                                    1,203
                                                                                                                                                                                Encouraging financial
continues to be reflected in the improving
operating results across the continent.
                                                                                     regulations
                                                                                            first
                                                                                                     break-even
                                                                                                    requirement
                                                                                                                          break-even
                                                                                                                          compliance
                                                                                                                                             version of FFP
                                                                                                                                                regulations
                                                                                                                                                                                sustainability
                                                                                       approved                           monitoring
                                                         1,000                                                                                                                  UEFA’s Financial Fair Play Regulations
                                                                                                                                                                                – complemented by the introduction
England                                                    800                                                                       739        721                             and evolution of financial regulations
For the first time, no Premier League clubs                                                                                                                                     in respect of various European leagues
                                                                                                                                                             681
recorded operating losses, delivering a record                                                                                                                                  – have helped encourage clubs across
                                                           600
aggregate operating result of £1,034m, more                                                                                                                                     Europe to improve their governance,
                                                                                                                                                                     437
than double that reported in 2015/16 (£509m).                                                                                                                397                transparency and financial behaviour.
                                                                                                                                     347
                                                           400                                                                                  316
                                                                                                                          264                                        343
Spain                                                                234
                                                                                                                                                             284
                                                                                                                                                                                UEFA’s compliance monitoring and
                                                                             172                                190                  250        260
After a recent concerted effort by both La Liga                                           138       171                                                                         enforcement activities have promoted
                                                           200                                                  104
                                                                                                     81                  96
and its clubs to operate in a more financially                       136                                                                                                        the effectiveness of their regulations.
                                                                              93          103
sustainable manner, the combined profitability                                                                             (3)                                       (26)       In the first four seasons to 2016/17,
                                                                     (66)    (64)                              (67)                                          (40)
                                                             0                                      (97)
of clubs was maintained in 2016/17 at a                                                  (102)                                      (140)       (35)                 (51)
                                                                                                                                                                                around 30 clubs in breach of the
                                                                     (84)                                      (160)      (53)                               (98)
combined operating profit of €437m (up from                                  (116)       (110)
                                                                                                    (149)                           (143)      (133)                            break-even requirement have been
€397m).                                                   -200       07/08   08/09       09/10      10/11     11/12      12/13      13/14      14/15     15/16      16/17       subject to sanctions and settlement
                                                                                                                                                                                arrangements.
The introduction and monitoring of robust                    England         France              Germany               Note: The operating result is the net of revenues less
financial controls by La Liga over recent                                                                              wage costs and other operating costs. The operating      Enhanced requirements for clubs from
                                                                                                                       result excludes player trading and certain exceptional
seasons, coupled with the potential for                      Italy           Spain                                                                                              2018/19 should further promote the
                                                                                                                       items. Aggregate operating results for Spanish clubs
continued revenue growth has given Spanish                                                                             were not available prior to 2013/14.                     effectiveness of UEFA’s regulations.
clubs the platform from which sustained                                                                                                                                         Approved changes to the regulations
operating profits may be consistently achieved.                                                                        Source: Leagues; Deloitte analysis.                      will include a forward-looking
                                                                                                                                                                                assessment of clubs’ financial results,
Germany                                                  However, due to the limit on significant                      However, with Serie A revenue set to benefit             harmonisation of certain financial
Bundesliga clubs generated a record aggregate            investments, Bundesliga clubs may need to                     from upcoming changes to the UEFA competition            reporting requirements, and new risk
operating profit of €343m in 2016/17, a 21%              find alternative methods of generating revenue,               structure and the start of a new domestic                indicators in respect of debt-levels and
increase on 2015/16 (€284m) maintaining the              enhancing the need for clubs to innovate as                   broadcast rights, Italian clubs will hope to deliver     player transfer spending.
financial prudence which has delivered combined          they look to develop their international brand                an aggregate operating profit in the near future.
operating profit in each of the last 20 years.           and seek commercial partnerships.                                                                                      Whilst a decade ago it appeared
                                                                                                                       France                                                   improbable that football could address
In March 2018 Bundesliga clubs voted to retain           Italy                                                         Ligue 1 also reported an operating loss (€51m)           the prevalent losses and spiralling debts
the ’50+1 rule’ which stipulates that members            2016/17 saw Italian clubs record a combined                   in 2016/17, despite the additional revenue               of the clubs, cost control regulations are
of a club maintain the majority stake, and               operating loss (€26m) as Serie A’s financial                  delivered by the new four-year domestic                  helping to deliver a more sustainable
voting rights, in the club and has contributed           performance and sustainability continues to                   broadcast rights cycle and increased UEFA                balance between costs and revenues
significantly to this stability.                         gradually improve.                                            distributions arising from AS Monaco’s strong            for the long-term benefit of the game.
                                                                                                                       UEFA Champions League campaign.

12
Annual Review of Football Finance 2018 |
                                                                                                                                                                                                  Europe’s premier leagues

At a time when UEFA have reported                   Portugal                                               Chart 6: Selected other European league clubs’ revenue – 2016/17 (€m)
improved operating results across the               Portugal’s Primeira Liga is now the only major
                                                                                                           800      734
region, and positive rates of revenue               European league where clubs’ broadcast rights                           52
                                                                                                                                  701
growth, Europe’s non ’big five’ leagues’            are sold on an individual basis, resulting in                   242           154
revenue continues to develop strongly.              significant revenue inequality. This disparity         600
The influence of UEFA club competition              is further enhanced by UEFA distributions                                     428          451
participation is becoming increasingly              consistently being received by the same three                   352                         79       366
                                                                                                           400                                 180             37
defining, and changes to UEFA                       clubs; Benfica, Porto and Sporting Lisbon,                                                            88
competitions from the 2018/19 season                who generate the majority of the combined                                                                         211
                                                                                                                                                         190                   184       176          162
                                                                                                           200                                 81                     88        50                              129
could have a potentially significant impact         revenues, which have increased 6% to €366m.                                                                                           46
                                                                                                                                                                                                      110
                                                                                                                                  84           111                          44  59        78                     64
for these non ‘big five’ leagues.                                                                                   88                    35
                                                                                                                                                          51           79       56 19 25        27 15     37 22       43
                                                    Scotland                                                 0     Turkey        Russia    Netherlands Portugal     Scotland Denmark    Austria     Sweden     Poland
                                                    Scottish Premiership revenues increased by
                                                                                                                   Average revenue per club (€m)
Turkey                                              63% to £181m in 2016/17, driven by the on-field
                                                                                                                    41            44           25         20          18         13         18           10            8
The Turkish Süper Lig is the largest revenue        success of Celtic, and the return of Rangers to
generating European league outside of the ‘big      Scotland’s top-flight. Celtic’s participation in the           Wages/revenue ratio

five’, with total revenues of €734m. Broadcast      2016/17 UEFA Champions League contributed                       71%           72%          59%       71%         58%        60%        70%          53%          62%
revenues represent almost half of total revenue.    €32m, more than the amount distributed across                  Number of clubs
A successful bid to host EURO 2024 could help       all 12 clubs from the Scottish leagues’ own                     18            16           18         18          12         14         10           16           16
boost the financial future of Turkish football.     broadcast revenues in 2016/17.

Russia                                              Aggregate matchday and commercial revenues             Denmark, Sweden and Poland                                                       Matchday
Ahead of hosting the 2018 FIFA World Cup            both increased by over 40%, as Rangers                 Each of these leagues were heavily influenced
Finals, the Russia Premier League remains the       participation in the top division for the first time   by the performance of their member clubs in                                      Broadcasting
seventh largest revenue generating league in        since the 2011/12 season, helped to drive the          UEFA competitions, after strong showings in the
Europe. The financial profile of Russian football   top division of the SPFL back into the top ten         previous season. The failure of Danish, Swedish                                  Sponsorship/Commercial
is dominated by income from commercial              revenue generating leagues in Europe.                  and Polish clubs to replicate the respective
sources, which accounted for 83% of total                                                                  success seen by FC Copenhagen, Malmö and                                         Other commercial
revenues.                                           Austria                                                Legia Warsaw in previous season resulted in
                                                    Austrian Bundesliga revenue grew by 10% to             reduced distributions, and overall revenue for                               Note: This chart includes a sample
Netherlands                                         €176m, primarily driven by increased UEFA              each of their domestic leagues.                                              of countries ranking below fifth in
                                                                                                                                                                                        terms of average club revenue for
Ajax’s run to the Final of the Europa League saw    distributions up €5m to €16m as a result of the
                                                                                                                                                                                        the most recent available financial
UEFA distributions to Dutch clubs increase by       performance of Red Bull Salzburg in reaching           None of these leagues were represented in the                                results. Figures in respect of clubs in
€7m to €55m. Yet despite this, total revenues       the Champions League Play-off round before             2017/18 Champions League, and as such no                                     Sweden relate to year to December
fell by 6% to €451m in 2016/17, as no Dutch club    competing in the UEFA Europa League Group              significant improvement is expected to be seen                               2016. Figures in respect of Turkey,
                                                                                                                                                                                        Portugal and Russia are for FY2016.
reached the Group Stages of the Champions           stage.                                                 in the next edition.                                                         Figures in respect of clubs in
League. Feyenoord’s participation in 2017/18                                                                                                                                            Denmark and Poland relate to the
should aid a recovery in the next edition of this   2017/18 has seen Red Bull Salzburg reach the                                                                                        year to December 2017.
report.                                             Semi-final of the Europa League, which should
                                                                                                                                                                                        Source: Leagues; Club accounts;
                                                    boost Austrian Bundesliga revenues further in                                                                                       UEFA; Deloitte analysis.
                                                    next year’s edition.
                                                                                                                                                                                                                            13
Annual Review of Football Finance 2018 |
                                        Sports Business Group

Deloitte Football Intelligence Tool

The Deloitte Football Intelligence Tool (FIT) is used by clubs,
                                                                                                                                  01

                                                                                                             League wide trends
                                                                                                                   and analysis
investors, industry experts and the media to quickly and reliably
                                                                                                                                  Big five European
interrogate the finances of the European football market.                                                                         leagues plotted on
FIT gives you access to over 20 years of data contained within                                                                    map, with users

the Annual Review of Football Finance.
                                                                                                                                  able to select one
                                                                                                                                  or more by clicking
                                                                                                                                  on them.
                                                                                                                                                        02
                                                                                                                                                        Users can plot the
                                                                                                                                                        charts based on
This digital solution allows the user to                This subscription service is ideal for:                                                         a range of league
manipulate data in a quick and easy to use                                                                                                              level metrics, such
format, using the leading technology to display         •• Football club executives looking to                                                          as revenue, wage
many of the data points contained in the                   understand their organisation’s performance                                                  costs and average
Annual Review of Football Finance Databook                 and position within the market and to                                                        attendance.
and a host of other industry information. We               benchmark against other clubs;
hope FIT will be a valuable asset for anyone
looking to deepen their understanding of the            •• Aspiring club investors looking to identify and
football business.                                         assess a club;

                                                        •• Industry analysts, agencies, lawyers and
                                                           others working closely with the football
                                                           industry; and

                                                        •• Sports media and broadcasters looking for

                                                                                                                                                                 03

                                                                                                                                                                                      Club trends and
                                                           further insight and analysis.

                                                        If you would like to find out more about the                                                             Revenue splits for
                                                        tool and to book your free, personalised                                                                 each league set
                                                        demonstration, please contact                                                                            out and shown

                                                                                                                                                                                      analysis
                                                        sportsteamuk@deloitte.co.uk                                                                              over time.

14
Annual Review of Football Finance 2018 |
                                                                                                                                                                                    Sports Business Group

   05                                                                                                                                       10

                                                                                                                           Club profiling
   Matrix analysis                                                                                                                          Explore the local
   on a club-by-club                                                                                                                        area of a given club,
   basis with the axes
   defined by user
                                                                                                                                            with population data
                                                                                                                                            displaying the socio-                  11
   selected metrics.
   Peer group averages
   and correlation lines
                              06
                              Overall revenue
                                                                                                                                            economic profile of
                                                                                                                                            the catchment area.
                                                                                                                                                                                   Historical details
                                                                                                                                                                                   of key financial
                                                                                                                                                                                   measures and
   also plotted.              trend for given
                              selection of clubs,
                              with ability to click
                                                                                     08
                                                                                     NEW for this year, users can see
                                                                                                                                                                                   supporting matrix
                                                                                                                                                                                   analysis for two
                                                                                                                                                                                   parameters
                              through to further                                     the performance of their selected                                                             simultaneously.
                              explore historic                                       club over time, compared with a
                              revenue trends.                                        selected peer group.

04                                                                                                 09
                                                                                                   Users can create their
An interactive map of
Europe allows the user to
quickly select the clubs
                                                           07
                                                           Users can configure
                                                                                                   own peer groups by
                                                                                                   filtering by a variety of
                                                                                                   possible metrics such as
                                         Individual club
                                         benchmarking

most appropriate to their                                  the screen by selecting                 stadium size, whether
specific geography and                                     any metric they wish                    a club has played in
circumstances, with FIT                                    to explore, setting up                  European competitions,
currently containing data                                  the overall dashboard                   their average attendance
for the ‘big five’ European                                to reflect their areas                  or their league position.
leagues and the EFL                                        of interest, providing
Championship.                                              visual analysis of
                                                           specific clubs.

                                                                                                                                                                                                        15
Annual Review of Football Finance 2018 |
                                        Sports Business Group

Premier League clubs                                                                                                                                                 Matchday revenue slipped marginally by 1%
                                                                                                                                                                     (£5m) to £617m, and represents its lowest
                                                                                                                                                                     proportion of the total (13%) in Premier League
                                                                                                                                                                     history. The increases in broadcasting revenue
                                                                                                                                                                     have allowed many Premier League clubs to
                                                                                                                                                                     freeze season and matchday ticket prices for a
                                                                                                                                                                     number of years now, while other clubs, such as
                                                                                                                                                                     Everton, took the step to reduce the price they
Premier League clubs’ revenue grew by                                                                        further commercial value to their inventory.            charge their fans. Furthermore, 2016/17 was
25% to £4.5 billion in 2016/17. This was                    Impact of individual                             With Chelsea recently agreeing a reported               the first year of a Premier League cap of £30 on
primarily due to the Premier League’s                                                                        £50m five-year shirt sleeve deal with Hyundai,          away fan tickets, in efforts to make away games
new three year broadcasting rights
                                                            clubs                                            reported to be double the previous record               more financially accessible to fans.
arrangements coming into effect, helping                    Of the 17 clubs that competed in the             in this category held by Manchester City, it is
drive revenue to record levels.                             Premier League in both 2015/16 and               clear there is appeal and value for commercial
                                                            2016/17, Manchester United generated             partners.
                                                            the most revenue (£581m), as the                                                                            Future revenue growth
Premier League clubs’ revenue                               highest revenue generating football              Chart 7: Premier League clubs’ revenues
The average revenue of a Premier League club                club in the world. Leicester City had the        2014/15-2018/19 (£m)                                       Although the Premier League’s recent
was £228m in 2016/17, an increase of £46m,                  largest revenue growth in 2016/17, with                                                                     domestic rights selling process for
                                                                                                             6,000
and double the amount as recently as 2010/11                their total increasing £105m (81%) to                                                  Projected            2019/20 – 2021/22 has not secured the
(£114m per club). The impact on revenue of the              £234m, the biggest ever single year                                                          5,000          large increases seen in previous cycles,
                                                                                                                                                 4,780
strong domestic and international demand for                revenue increase of an English club.             5,000                    4,552              1,380          once the sales process has been
                                                                                                                                                 1,280
Premier League football from broadcasters and               This was principally due to their                                         1,167       27%
                                                                                                                                                          28%
                                                                                                                                                                        completed for the remaining domestic
                                                                                                                                       26%
sponsors alike is clear to see.                             remarkable run to the UEFA Champions                              3,639                                     and international rights, we still expect
                                                                                                             4,000
                                                            League quarter-finals which saw them                      3,350                                             it to deliver overall growth in Premier
                                                                                                                              1,090                      2,950
Over 90% of the £913m increase in Premier                   receive UEFA distributions of £70m.                                       2,768      2,850                  League broadcasting values.
                                                                                                                      987      30%
                                                                                                                                                  60%
                                                                                                                                                          59%
                                                                                                                       29%             61%
League clubs’ revenue in 2016/17 was due to                                                                  3,000

broadcasting revenue, with the financial reward             Other factors influencing large                           1,780
                                                                                                                              1,927                                     In the shorter term, 2017/18 was the
                                                                                                                               53%
of participation in the Premier League now                  increases in clubs’ revenue included             2,000     53%                                              first season in which five English teams
greater than ever. Total central distributions to           Tottenham’s return to Champions                                                                             competed in the Champions League,
clubs increased by 46% (£760m) to £2.4 billion,             League football and Liverpool’s opening                                                                     while 2018/19 marks the start of a new
                                                                                                             1,000
an average increase of £38m per Premier                     of their new Main Stand. Every one of                                     617        650     670            UEFA broadcasting rights cycle, both of
                                                                                                                      583      622
League club. Clubs competing in the Premier                 the twenty clubs set a new personal                        18%     17%     13%        13%     13%
                                                                                                                                                                        which will lead to significant increases
League can now expect to receive between                    record for total revenue in 2016/17.                0    14/15    15/16   16/17    17/18     18/19          in UEFA distributions received by
c.£95m and £150m in central distributions per                                                                         Average revenue per club                          Premier League clubs. Coupled with
season, with the ratio between the highest and                                                                        168      182     228       239     250            the increases in commercial revenue,
lowest earning recipients of 1.6:1 in 2016/17           Commercial revenue grew by 7% (£77m) to £1.2                                                                    we expect total Premier League clubs’
helping the Premier League to retain its status         billion and now makes up just over a quarter of         Commercial                    Matchday                  revenue to rise to £4.8 billion in
as the most equal of the ‘big five’ leagues.            the total. We expect to see further growth, as all                                                              2017/18 and £5 billion in 2018/19.
                                                        Premier League clubs have been able to feature          Broadcasting            Source: Deloitte analysis.
                                                        shirt sleeve sponsors from 2017/18, adding
16
Annual Review of Football Finance 2018 |
                                                                                                                                                                                         Premier League clubs

Whilst the Premier League’s central                                                               Chart 8: Premier League and Championship clubs’ average revenues – 2016/17 (£m)
distribution mechanism remains the most             Media rights 2019-2022
                                                                                                   500
equal amongst the ‘big five’ leagues, there
remains a significant revenue variance              In February 2018, the Premier League
between groups of clubs within the league.          announced that it had sold the main five       400             353
The ‘big six’ clubs generated an average of         packages of domestic broadcasting rights                       103              316
£415m each in 2016/17, compared to just             to Premier League football for the                                              111
                                                                                                   300
£147m across the rest of the clubs.                 2019/20-2021/22 cycle, with Sky Sports                               12
                                                    gaining four packages (128 matches per                          52
                                                                                                                              13                183
                                                    season) for £3.6 billion (£9.3m per game),     200                                    17
                                                                                                                   132                           39
                                                                                                                                    122                              122
Premier League clubs’ revenue levels                and BT Sport taking one package (32                                                                  10
                                                                                                                                                113           12           5
The vast majority of Premier League clubs           matches per season) for £885m (£9.2m           100                                                               92              51
                                                                                                                                                                                          6                20
ranked in the top 40 revenue generating clubs       per game). As a result, the Premier                             54               53
                                                                                                                                                                                 8
                                                                                                                                                                                              10   4
                                                                                                                                                                                                       7        3
                                                                                                                                                                                                                    6
                                                                                                                                                                                     27
in the world in 2016/17, with five of the Premier   League has so far secured 87% of the                                                                 21                13
                                                                                                     0           UCL clubs        UEL clubs    Premier           Premier        Championship Championship
League’s ‘big six’ clubs taking positions in the    value generated for the 2016/17-2018/19                                                    League            League              with       without
top ten. Amongst the rest of the ‘big five’, only   cycle for domestic live rights with two                                                    (other)         (relegated)        parachute    parachute
Spain, through Real Madrid and Barcelona, has       packages of a total of 40 games per
more than one club in this elite top ten.           season still remaining to be sold.
                                                                                                      Commercial
The average revenue of Premier League clubs         Whilst on the face of it, this may appear                                                                      Record-breaking
participating in the Champions League fell to       disappointing, especially given the               Broadcasting other
£353m in 2016/17. This was principally due to       decrease in value per match broadcast,
                                                                                                                                                                   transfer spending
Manchester United taking part in the UEFA           the considerable growth over the last two         Broadcasting UEFA                                            We have already seen some clubs
Europa League, and Chelsea and Liverpool            cycles means that the Premier League will                                                                      utilising their significant revenue
also failing to qualify for Europe’s elite club     still comfortably remain the market leader.       Broadcasting PL central                                      increases, with a record £1.9 billion
competition. However, the importance of the                                                                                                                        spent on transfers in the 2017/18
Europa League was once again highlighted by         The sales process for the international           Matchday                                                     season, as clubs seek to gain a
Manchester United’s successful campaign,            rights is ongoing and we anticipate                                                                            competitive advantage over their peers
earning a Champions League spot in 2017/18          further growth in the overall value of        Note: UCL clubs comprised Arsenal,                               in pursuit of both success and survival.
despite a sixth place finish in the Premier         the international broadcasting rights,        Leicester City, Manchester City
                                                                                                  and Tottenham Hotspur. UEL clubs
League.                                             which already generate over £1 billion a                                                                       We may again see similar levels of
                                                                                                  comprised Manchester United,
                                                    season. When the majority of rights for       Southampton and West Ham                                         spending in the coming year, with the
The three relegated clubs in 2016/17 had £122m      the new cycle are tendered later in 2018,     United.                                                          FIFA World Cup providing the perfect
average revenue, with all three clubs receiving     with significant uplifts already agreed in                                                                     shop window for talent; indeed, the
                                                                                                  Source: Premier League; UEFA;
a parachute payment of c.£42m in 2017/18.           the USA, China, Brazil and Africa             Deloitte analysis.
                                                                                                                                                                   2018/19 season may be the first time
In 2007/08, ten years previously, parachute         through to 2022, it is likely that the new                                                                     Premier League clubs’ surpass the
payments to clubs were just £12m.                   broadcasting arrangement’s values will                                                                         £2 billion mark in gross transfer spend.
                                                    once again represent a record, despite
                                                    the domestic reduction.

                                                                                                                                                                                                                        17
Annual Review of Football Finance 2018 |
                                        Premier League clubs

Premier League clubs’ wage costs grew by
9% in 2016/17, reaching a record                            Impact of individual
                                                                                                       Chart 9: Premier League clubs’ revenues
                                                                                                       and wage costs – 2015/16-2016/17 (£m)         Market leading
£2.5 billion. This relative restraint,
compared to revenue increases, meant
                                                            clubs                                      5,000                         4,552           revenues, cost control
revenue growth outpaced wage growth for
only the third time in the last ten seasons,
                                                            The only clubs to pay more than the
                                                            league’s average wage costs were the       4,000         3,639                           regulations and
resulting in the lowest wages/revenue
ratio in almost 20 years.
                                                            ‘big six’, once more demonstrating the
                                                            gap in financial resources between
                                                                                                       3,000
                                                                                                                                                     stronger financial
                                                            them and the rest of the league. Absent
                                                            of European competition and the                           2,277
                                                                                                                                     2,487           discipline exercised
                                                                                                                                                     by club owners and
Premier League clubs’ wage costs                            associated costs, Chelsea and Liverpool    2,000

In 2016/17, the Premier League’s wages/revenue              were the only clubs to reduce their
ratio fell to just 55%, its lowest level since
1997/98 (52%). For the first time ever, Premier
                                                            wage costs year-on-year, yet both teams
                                                            saw improvements in their fortunes
                                                                                                       1,000
                                                                                                                                                     management, mean
League clubs’ revenue has grown at a faster rate
than wages over a ten year period, while all bar
                                                            with the former being crowned Premier
                                                            League champions and the latter
                                                                                                           0        2015/16         2016/17
                                                                                                                                                     that they no longer
one of the clubs participating in the 2016/17               qualifying for the Champions League.
                                                                                                                                                     need to, or do, spend
                                                                                                                      63%            55%
Premier League grew their revenue at a faster                                                                         114            124
rate than their wage spend since 2012/13.                   Manchester United (£263m) continued
                                                            to be the division’s highest wage payers                                                 all their revenue
Such relative restraint from Premier League
clubs in wage spending is assisted by the
                                                            on a 12 month reporting basis, but their
                                                            wages/revenue ratio of just 45% was            Revenue             Wages/revenue ratio   growth in increased
continued implementation of both the Premier
League Short Term Cost Control Rules, as well
                                                            the second lowest in the league behind
                                                            Tottenham Hotspur (42%). Leicester             Wage costs          Average wage costs    wages.
as UEFA’s Financial Fair Play Regulations. It               City, as in 2015/16, had the largest                               per club
also reflects the financial lead that the Premier           increase in relative terms (40%), aside
League has its over its rivals, as well as the              from the promoted clubs. This increase
stronger financial discipline exercised by club             is attributable in part to investment in   Source: Deloitte analysis.
owners and management, that they no longer                  the playing squad in the clubs maiden

                                                                                                                                                      £1.9 billion
need to, or do, spend all their revenue growth in           Champions League campaign.
increased wages.

                                                                                                                                                        Contributed by English
                                                                                                                                                         professional football
                                                                                                                                                          to Government in
                                                                                                                                                           taxes in 2016/17

18
Annual Review of Football Finance 2018 |
                                                                                                                                                                                                                                                                                                   Premier League clubs

Only one Premier League club reported               Chart 10: Premier League clubs’ revenues and wage costs – 2016/17 (£m)
a wages/revenue ratio in excess of 70%,
                                                               581
the indicative warning threshold level              600

                                                                                                                        Tottenham Hotspur
used by UEFA as part of their Financial Fair
Play Regulations. This is a decrease from                                 476
                                                    500
seven clubs in 2015/16, as clubs once again
                                                                                        419

                                                                                                                                                                                                                 West Bromwich Albion
                                                                                                                                                                       West Ham United
showed spending restraint in the first year

                                                                                                                                            Leicester City
                                                                                                  368

                                                                                                                                                                                                                                        AFC Bournemouth
                                                    400                                                     365

                                                                                                                                                                                         Southampton
of a more lucrative broadcasting rights

                                                                                                                                                             Average
cycle.

                                                                                                                                                                                                                                                                                                                       Middlesbrough
                                                                                                                        306

                                                                                                                                                                                                                                                                       Swansea City
                                                                                                                                                                                                       Everton

                                                                                                                                                                                                                                                                                      Sunderland
                                                                                                                                                                                                                                                          Stoke City
                                                    300
                                                                                                                                            234              228

                                                                                                                                                                                                                                                                                                   Watford

                                                                                                                                                                                                                                                                                                                                       Hull City
                                                                                                                                                                                                                                                                                                             Burnley
                                                               263        264
Correlation between wage costs and                                                                221                                                                  185               182           171
                                                    200                                 199                 208
league position                                                                                                                                                                                                  138                    136               136          128            126          122       122       122             117
The Spearman’s rank correlation coefficient,                                                                            127

                                                                                                            Liverpool
                                                                                                                                                             124

                                                                          Man City
                                                                Man Utd
                                                                                                                                            113

                                                                                                  Chelsea
                                                                                                                                                                                         112

                                                                                        Arsenal
which measures the relationship between             100                                                                                                                 95                             105
                                                                                                                                                                                                                                                          85           99
                                                                                                                                                                                                                                                                                      84
                                                                                                                                                                                                                 79                     72                                                         76
league position and total wage cost rank,                                                                                                                                                                                                                                                                    61        65              61

increased to 0.81 in 2016/17. Nine clubs finished     0        45%        55%          47%        60%       57%         42%                 48%              55%       51%               62%           61%       57%                    53%               62%          77%            67%          62%       50%       53%             52%
within one place either side of the ranking
of their wage costs. This level of correlation
contrasts to the 2015/16 season, where the                Revenue                    Wage costs                   Wages/revenue ratio                                                                                                                                       Note: The 2016/17 financial statements for Crystal
relative performances of Aston Villa, Leicester                                                                                                                                                                                                                             Palace were unavailable at the time of publication.
                                                                                                                                                                                                                                                                            Manchester City figures are for a 13 month reporting
City and Chelsea helped drive the lowest level of
                                                                                                                                                                                                                                                                            period. AFC Bournemouth figures are for an 11 month
correlation ever recorded in our analysis (0.54).                                                                                                                                                                                                                           reporting period.
                                                          Future wages trends
The 2016/17 league finishing positions were                                                                                                                                                                                                                                 Source: Deloitte analysis.

much more aligned to wage spend, as the top               In an environment of cost control, the                                                       Of particular interest may be the future
six wage spenders filled the top six league               clubs’ wages/revenue ratio is expected to                                                    structuring of wage spend, with
positions. At the other end of the table, the             remain relatively low, and with the top six                                                  performance related pay, particularly                                                                                Only one club reported a
three promoted clubs had the three lowest                 wage spenders in 2016/17 occupying the                                                       amongst those clubs recently promoted,
                                                                                                                                                                                                                                                                            wages/revenue ratio in excess
wage costs in the Premier League, with only               top six positions in the Premier League in                                                   being more and more common. Clubs are
Burnley maintaining their Premier League status.          2017/18, a strong correlation between                                                        increasingly incentivising and rewarding                                                                             of 70%, which demonstrates
However, with four different winners in the               wage costs and league position seems to                                                      players for avoiding relegation, with
                                                                                                                                                                                                                                                                            the new financial discipline
last six seasons, and all three promoted clubs            be being maintained.                                                                         bonuses for additional points earned and
surviving in 2017/18 for only the third time in                                                                                                        number of appearances contingent on that                                                                             amongst the Premier League
Premier League history, the Premier League                Although it is anticipated that wage costs                                                   survival, alongside the more traditional
                                                                                                                                                                                                                                                                            clubs.
continues to prove itself as one of the most              will continue to rise in the coming seasons,                                                 success-based bonuses.
competitive, and attractive, leagues in Europe.           we do not foresee increases to be at a level
                                                          which can jeopardise the profitability of
                                                          the Premier League as a whole.

                                                                                                                                                                                                                                                                                                                                                   19
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