Deloitte: European football market revs up 10% in 2020/21
August 19, 2022
The European football market as a whole saw revenues grow by 10 per cent to €27.6 billion in 2020/21 (€25.2bn in 2019/20) despite an almost complete absence of fans from stadia during the season, according to the 31st Annual Review of Football Finance from Deloitte’s Sports Business Group.
The strong recovery in revenue terms of the European market, which contracted for the first time in over a decade in the 2019/20 season as a result of the impact of COVID-19, was fuelled by deferred broadcast revenues and the success of the delayed UEFA EURO 2020 tournament.
The ‘big five’ European leagues – representing a 57 per cent share of the European football market – grew by 3 per cent to €15.6 billion. However, revenue polarisation between and within European football leagues continued at pace.
Largely attributable to deferred broadcast revenue, Premier League club revenues grew by 8 per cent to €5.5 billion in 2020/21. By contrast, the Bundesliga – which experienced the lowest uplift in aggregate broadcast revenue of the ‘big five’ in 2020/21 – reported a 6 per cent fall in revenue to €3.0 billion.
Revenues in Spain’s La Liga also contracted by 6 per cent to €2.9 billion. La Liga clubs collectively recorded a loss in operating profits for the first since the Sports Business Group began tracking this data on a club-by-club level, in the 2013/14 season.
Clubs in Serie A experienced the greatest percentage growth in aggregate revenues of any ‘big five’ league in 2020/21, increasing by 23 per cent to a record high of €2.5 billion. Driven by a 48 per cent increase in broadcast revenue due to significant deferrals, it is the only league to have reported higher combined revenues than before the start of the COVID-19 pandemic.
Ligue 1 fell further behind Serie A in revenue terms, with the divide between the two league’s total revenues having doubled to over €900 million. Ligue 1 clubs revenues grew by just 1 per cent during the 2020/21 season to €1.6 billion, as the curtailment rather than postponement of the competition led to very limited deferred revenue being recognised.
The Premier League was the only one of the ‘big five’ to report improved total operating profits in the year, cumulatively increasing from £49 million to £479 million. When excluding the Premier League, the ‘big five’ reported increased total operating losses during the year, increasing from €461 million to €901 million.
“Clubs across Europe played a significant proportion of matches behind closed doors or with reduced capacity during the 2020/21 season which caused an almost complete loss of matchday revenue,” noted Tim Bridge, lead partner in the Sports Business Group at Deloitte. “It’s 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.”
“However, it is important not to overlook the loss-making position of many clubs. The impact of the COVID-19 pandemic fundamentally changed the financial management of European football, with leagues and clubs having to seek external investment and responding to a shift in trends around transfer spending and club operations.”
“Leaps made to boost financial sustainability through new UEFA regulations and to professionalise the women’s game will challenge clubs to break from tradition, potentially boosting profitability in a notoriously loss-making industry and creating a more inclusive environment for all. It is an exciting period, but one to be well prepared for.
Despite matchday revenue falling to just £31 million, Premier League club revenues increased by 8 per cent to £4.9 billion in 2020/21, following the league’s first ever drop in revenues in the previous season. This increase is largely attributable to the reported broadcast rebate of £330 million which suppressed 2019/20 revenue, and the deferral of some broadcast income from the 2019/20 season into the 2020/21 financial period.
Premier League clubs’ wage costs increased 5 per cent to £3.5 billion in 2020/21, with only seven of the 17 consistent Premier League clubs reporting a reduction in wages. As a result of revenue growth outstripping the increase in wages, the division’s wages/revenue ratio reduced slightly from 73 per cent to 71 per cent in 2020/21.
While operating profits in Premier League clubs increased from £49 million to £479 million during the 2020/21 season, pre-tax losses remained significant despite decreasing from £991 million to £669 million. This is the third consecutive year that Premier League clubs have reported pre-tax losses, with only four clubs reporting a pre-tax profit in 2020/21.
Overall, Premier League clubs’ net debt at the end of the 2020/21 season increased 4 per cent to £4.1 billion (2020: £3.9bn).
Deloitte predicts that a return of fans to full stadia, new broadcast deals and improved commercial deals will boost Premier League revenues to exceed £6 billion in the 2022/23 season.
“As the Premier League enters its fourth decade, it’s further ahead of the competition than ever before, having emerged from the pandemic without as significant an increase in net debt as many might have expected,” adds Bridge. “The stark reality, however, is that the league last broke even at a pre-tax level in the 2017/18 season, highlighting the crucial need for strong governance and financial planning in the years ahead.”
Championship clubs’ combined revenues of £600 million in 2020/21 was a decrease of £78 million (12 per cent) compared to 2019/20. This was largely as a result of clubs’ matchday revenues falling by £101 million (from £166 million in 2018/19 to £16 million in 2020/21), as the majority of matches in the 2020/21 season were played behind closed doors or with restricted attendances.
Championship clubs’ wage costs exceeded revenues for the fourth-consecutive year with a record high wages/revenue ratio of 125 per cent. Whilst in aggregate Championship clubs managed to reduce wage costs by 8 per cent to £747 million, these savings were exceeded by the loss of overall revenue.
Championship clubs’ net debt at the end of the 2020/21 season of £1.8 billion was up £433 million (32 per cent) compared to the end of the previous season.
In 2020/21, League One club revenues fell by 22 per cent to £129 million, while League Two club revenues fell by 4 per cent to £94 million. The negative financial impact of the COVID-19 pandemic meant that the average of League One clubs’ wage costs of £5.5 million surpassed revenue for the first time with a wages/revenue ratio of 103 per cent. For League Two clubs the average wage cost was £3.1 million, with a wages/revenue ratio of 80 per cent.
“There now can be no doubt that significant change is required to drive long-term financial sustainability in the Championship,” asserts Bridge. “Without sustained collaboration across the English football system the gap to the Premier League, the competitive advantage of clubs with parachute payments and the cycle of clubs gambling on promotion will continue to increase.”
Deloitte’s analysis highlights a boom in investment across Europe’s ‘big five’ leagues, as clubs have sought and attracted investment at the very top level. Fifteen investments in clubs across the ‘big five’ leagues took place in 2021, more than in 2019 and 2020 combined (12). The vast majority (87 per cent) of investments were made by high-net-worth individuals and private equity firms, with more than two-thirds of investments being made from the US.
Multi-club ownership (MCO) has grown in popularity, with over 70 MCOs now thought to be in existence, more than double the amount only five years ago (28). Nine of the 20 Premier League clubs operate within a MCO model.
“Football is proving an attractive opportunity for a growing pool of international investors, whose confidence has been buoyed by clubs’ recovery post-COVID,” advises Sam Boor, sports M&A advisory lead in Deloitte’s Sports Business Group. “To ensure that new investment brings value to all – those on the pitch, in the stands and in the boardrooms – the importance of responsible investment, which protects the financial and operational sustainability of clubs, cannot be overemphasised.”
Key findings:
- The European football market grew combined revenues by 10 per cent (€2.4bn) in 2020/21 to €27.6 billion – despite an almost complete absence of fans from stadia during the season – with the uplift largely driven by deferred broadcast revenues from the previous year and the success of the postponed UEFA EURO 2020 tournament.
- The ‘big five’ European leagues – the Premier League, Bundesliga, La Liga, Serie A and Ligue 1 – generated €15.6 billion in revenue in 2020/21, a 3 per cent increase from the previous year (€15.1 billion in 2019/20).
- Premier League club revenues grew by 8 per cent to £4.9 billion, up from £4.5 billion in 2019/20, and are expected to hit £5.5 billion in the 2021/22 season.
- The Premier League was the only one of the ‘big five’ European leagues to see clubs improve total operating profits in the year, which cumulatively increased from £49 million to £479 million.
- Premier League clubs’ net debt at the end of the 2020/21 season increased just 4 per cent to £4.1 billion. In comparison, Championship clubs’ net debt at the end of the 2020/21 season was £1.8 billion, an increase of 32 per cent.
- Championship clubs’ wage costs exceeded revenues for the fourth-consecutive year with a record high wages/revenue ratio of 125 per cent.