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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
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
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
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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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