Football Finance: “European football has made great come-back after COVID-19 pandemic”, Deloitte Reports

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Finance company, Deloitte says that the European football market has made a very good comeback. This means that football finance in Europe is now on a steady path.

During the coronavirus pandemic in 2019/2020, the revenue of the European Leagues decreased drastically just like in 2008/2009 putting a red flag on football finance.

The reasons for the turnaround were the success of Euro 2020 and the payment of deferred broadcast revenues.

The revenue of the major European Leagues (which are England, Spain, Italy, Germany, and France) is expected to even surpass the revenue before the pandemic.

While speaking about his company’s Annual Review of Football Finance, Tim Bridge said that the big leagues worked hard to seek funds from external sources. This he said was a shift from the conventional way of clubs’ finance.

Football Finance:  "European football has made great come-back after COVID-19 pandemic", Deloitte Reports
Tim Bridge forecasts that the European Clubs would seek other sources of funds other than the traditional methods. (Photo by Lynne Cameron/Getty Images for Soccerex)

Deloitte’s Tim Bridge forecasts an exciting time for leagues and clubs that would cause them to break out of the traditional way of generating funds and seek other alternatives.

He said: “It’s a testament to the resilience of the industry, the value driven by broadcast deals, and the success of the Euros that the European football market has achieved tenacious growth, in revenue terms, over the past year.”

Deloitte’s annual review of football finance reveals:

  • The European football market grew combined revenue to £24.4bn in 2020-21 – up by 10% on the previous year
  • The Premier League clubs’ revenues rose to £4.9bn – up 8%
  • The ‘big five’ European leagues generated £13.8bn in revenue – up 3%
  • The Premier League was the only one of the ‘big five’ to see clubs improve total operating profits – from £49m to £479m
  • The ‘big five’ excluding the Premier League reported increased total operating losses – from £408m to £797m
  • Premier League clubs’ net debt at the end of 2020/21 was £4.1bn – up 4%
  • Championship clubs’ net debt was £1.8bn – up 32%
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General Report of the Top Five Leagues

The top five European leagues represent a 57% share of the European football market, but revenue polarisation between and within European leagues continues to grow.

The English Premier League, the Italian Serie A, the Spanish La Liga and the UEFA club competitions in 2019/2020 season were completed during the 2020/2021 financial year. This means that a portion of the broadcast revenue for 2019/20 is found in 2020/21.

The delayed broadcast revenue is the major reason why English Premier League grew in 2020/21 while Italian Serie A had a 23% increase in revenue, a record high of £2.2 billion.

Spanish La Liga and the German Bundesliga suffered a little decline while the French Ligue 1 had 1% increase in revenue

While the other major league has a slight increase or decline, the Premier League’s revenue is way ahead of the competition and it is expected to enjoy a leading advantage even further.

To give a little perspective to EPL lead in revenue, it is almost double that of the German Bundesliga in 2020/21, with La Liga and Serie A a little further back.

It generated almost double that of the Bundesliga (£2.7bn) in 2020-21, with La Liga and Serie A narrowly further back.

Now that the fans are back and there is a new UEFA broadcasting cycle from 2021/22 to 2023/24 season, this current 2022/23 season has been forecasted to bring the top five leagues a record sum of £16.4bn in aggregate revenue.

Premier League’s Report on Football Finance after Covid

The wage cost for the Premier League clubs increased by 5% in 2020/21. Only seven out of the consistent Premier League clubs recorded a decrease.

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Even though the operating profits increased, only four clubs reported a pre-tax profit.  Pre-tax losses are still significant though they dropped from £991m to £669m.

It is worth noting that 78% of the Premier League’s aggregate commercial revenue was generated by its ‘big six’ clubs.

The average revenue per club was £243m, with the sixth highest – Arsenal (£325m) – being way ahead of the seventh highest – Leicester City (£226m).

In 2020/21, though the revenue gap between the big six of the EPL and the rest had a £56m reduction; it should grow even wider seeing that the match day revenue increases and the big six benefit from the new UEFA broadcast cycle.

Tim Bridge said that the Premier League “emerged from the pandemic without as significant an increase in net debt as many might have expected” but stressed the need for “strong governance and financial planning in the years ahead”.

English Football League’s Report

The competitive advantage of clubs with parachute payments has had an impact in the Championship, along with the cycle of clubs gambling on promotion.

The combined revenue of the league decreased to £600 million (which is a 12% decrease) due to the drop in the match day revenue by £600m. Championship clubs managed to reduce the wage cost by 8% to £747 million and surpassed the revenue for the fourth consecutive year with a record high in the wages/revenue ration of 125%.

The clubs’ revenue in League One dropped by a staggering 22% bringing it down to £129m and the average wage costs of £5.5million surpassed revenue for the first time with a wages/revenue ratio of 103%.

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The revenue for the clubs in League Two, however, dropped by 4% to £94m and the wage cost was £3.1m, with a ratio of 80%.

Tim Bridge said: There now can be no doubt that significant change is required to drive long-term financial sustainability in the Championship.”

Football Finance of Women’s game

Unlike the men’s competition, Deloitte wasn’t able to get the same quality of audit for the women.

The women’s competition had a record-breaking year, with the highest sales of tickets (500,000) for the Euro 2022 and a record 17.4 million viewers who tuned in to watch the BBC’s coverage of the Euros Final between Germany and England.

Deloitte says that it would continue to record the progress of the women

However, Deloitte was unable to perform the same kind of audit on the women’s game as the men’s.

The commercial was the largest source of revenue for the women’s clubs. This brings in a whopping 50% of the total sum with clubs reporting an increase of 30% in total in 2020/21.

The revenue of broadcasting grew by over 20% with the Women’s Super League securing a £8m rights deal with BBC and Sky Sports, which increased the viewership by 285% in its first year.

UEFA predicts that the women’s football in Europe could have a raise in commercial value of £578m a year by 2033 with the fans for the game potentially rising from 144 million to 328 million across that period.

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