eBusiness Weekly
Professional services firm Deloitte has unveiled its Annual Review of Football Finance for 2020, showing that Europe’s ‘big five’ leagues generated record high combined turnover of close to €17billion ($19,3) in the 2018-19 season, but also warning of “significant revenue reduction” next year in the aftermath of the Covid-19 global pandemic.
The 29th edition of the Annual Review from the Sports Business Group at Deloitte showed that the English Premier League remains comfortably Europe’s richest division, with total revenues of £5,2bn (€5,7bn/$6,6bn) making it 73 per cent larger than Spain’s LaLiga, the continent’s second-richest league.
The Premier League broke the £5billion barrier for the first time in history, growing seven per cent over the 2017-18 season, an increase which Deloitte attributes to increased distribution of Uefa funds to English clubs.
The 2018-19 season saw a Premier League clean sweep of Uefa competitions, with England providing all four finalists for the Uefa Champions League and Uefa Europa League.
LaLiga revenues reached €3.4bn, enough to see it overtake Germany’s Bundesliga (€3,3bn) as Europe’s second league in revenue terms. Italy’s Serie A (€2,5bn) and France’s Ligue 1 (€1.9bn) complete the total €17bn turnover generated by the top five leagues.
Lower down, the three divisions which make up England’s Football League – the Championship, League One and League Two – broke the £1bn mark for the first time.
Turnover in the second-tier Championship reached £785m, an increase of five per cent on the previous year, but the revenue of wages to revenue in the division also increased to a record-high 107 per cent, demonstrating that clubs are still taking huge financial gambles in their attempts to reach the riches of the Premier League.
Tim Bridge, director in the Sports Business Group at Deloitte, commented: “The level of losses in the Championship has been a recurring concern for many years. Even before the financial impact caused by the pandemic, EFL clubs were typically sustained by owner largesse and/or the pursuit of uncertain and uncontrollable promotion or player transfer windfalls.
“Now is the time for serious action to address the issue of financial stability.”
In total, European football generated revenues of €28.9bn (£25.5bn). With two thirds of that coming from the top divisions in England, France, Italy, Germany and Spain, however, the Deloitte report cautions that the gap between the haves and the have-nots continues to grow, and that the disparity is likely to be exacerbated by the Covid-19 pandemic, which has seen almost all football in Europe put on hold.
The contractually-protected revenues of the biggest clubs, as well as the reliance of smaller teams on matchday income and short-term commercial agreements, leave the top five leagues in a much stronger position than those farther down the ladder.
Deloitte expects that the Bundesliga’s swift return to action after the Covid-mandated hiatus will see it rebound stronger than its rivals in the next edition of the review.
Top-flight German football has already been underway for a month, missing just two months of action due to the pandemic, while LaLiga is set to resume today (Thursday) and the Premier League next Wednesday.
Should that return go smoothly, and the 2019-20 season be completed in the next two months, Deloitte predicts a drop in revenues of around £1bn for the Premier League clubs, with as much as half of that revenue permanently lost.
The report also predicts, however, that the 2020-21 season will see revenues rebound to a record high across the continent, with some of the income lost in the 19-20 campaign “deferred” to the following.
Dan Jones, partner and head of the Sports Business Group at Deloitte, explained: “We expect the ongoing Covid-19 pandemic to cause significant revenue reduction and operating losses across European football in the current season’s financial results.
“Clubs are having to weather multiple financial impacts, including rebates or deferrals of commercial and broadcast incomes, as well as the loss of match day income and other event-related revenue.
“Much remains uncertain, particularly around the timing and scale of the return of fans to stadiums and the impact on commercial and broadcast partners’ wider businesses.
“The football industry will be hopeful that a V-shaped recovery and a return to relative financial normality for the 2021-22 season is possible.” — sportbusiness.com.
