Business: Deloitte Annual Review of Football Finance 2019, Some key points

Whilst the Premier League retains its leadership in financial terms, the Premier League clubs face challenges to continue to deliver revenue growth and profitability. Meanwhile, Championship clubs are increasingly gambling to reach the top, and strenuous and creative efforts are being made by other European football leagues to enhance their own global appeal and close the gap to the Premier League.

You’ve got to hold and give

• Premier League clubs were unable to extend their own significant revenue lead in global football, as the German Bundesliga narrowed the revenue gap slightly. Nonetheless, the Premier League comfortably managed to hold its position as the largest revenue generating league in the world.
• The Bundesliga benefited from the commencement of a new broadcasting deal, which saw a step-change in the league’s broadcast revenue.
• It is imperative for Premier League clubs to remain dynamic in the creation of their own revenue, with a focus on matchday and commercial revenues, in order to maintain its substantial revenue advantage.
• Tottenham Hotspur’s new stadium, which opened its doors in April 2019, is the highest profile example of such dynamism. The stadium has been designed and built with a view to operating not just as a football stadium for 90 minutes, but rather an entertainment destination, including a ‘Sky Walk’ and its own microbrewery, as well as a ten-year partnership with the NFL to be the dedicated home of the NFL in the UK.
• With regards to commercial revenue, many Premier League and European clubs are looking to continue to utilise and grow their global footprint and popularity created in part through broadcast exposure in order to drive interest, and more importantly value, from their commercial partners.
• The key to success is connecting with and delivering value to their worldwide fanbase.
• As the Premier League and its clubs have enjoyed record revenues, profitability and investment in recent years, there is increased opportunity and pressure to further boost the future level of support to the wider football pyramid, charitable donations and good causes.
• Additional investment in a range of initiatives could undoubtedly benefit communities and enhance football’s role and position in society.
• For example, more investment to provide pitches and facilities for grassroots football, to help develop the women’s game; to promote anti-discrimination activities; to promote mental health and lifestyle issues; and to support the education and betterment of the next generation.
  

Don’t give up the chase

• Beyond the riches of the Premier League, it was a year of records in the Championship, most unenviable, as despite record revenue, record wage levels (in excess of revenue) resulted in record operating losses. Clubs clearly are still willing to invest heavily in playing talent and wages, in excess of their revenues, chasing the dream of the financial promised land of the Premier League.
• Given both La Liga and Bundesliga have their domestic broadcast rights locked in until 2021/22 and 2020/21 respectively, commercial growth is key for both leagues.
• Both are continuing to develop their international footprint in order to lay the foundations for commercial revenue expansion. The Bundesliga opened an office in New York in 2018, and La Liga have now opened nine international offices in eight countries – including two in China.

Catch me if you can

• The continued revenue growth of the Premier League and Football League has contributed to another year of growth in the overall size of the European football market. The 2017/18 season total got a boost from the 2018 FIFA World Cup being held in Russia, as well as revenue growth in all ‘big five’ leagues.
• Whilst the Premier League continues to lead the way, Spain and Germany are engaged in ongoing competition to be second in line. Germany leapfrogged Spain following the commencement of their new four-year broadcast deal. We expect Germany to retain their status as the second highest revenue generating league in the next edition, with La Liga potentially overtaking again in 2019/20.

Reference:

Deloitte, World in motion, Annual Review of Football Finance 2019, Sports Business Group, May 2019, link: https://www2.deloitte.com/uk/en/pages/sports-business-group/articles/annual-review-of-football-finance.html.