The European club football market is now worth a record £25.1bn (€28.5bn/$31.7bn) with the German Bundesliga leapfrogging Spain’s LaLiga to become the second largest revenue generating league in the world, according to a new report from professional and financial services company Deloitte.
The 28th Annual Review of Football Finance from the Sports Business Group at Deloitte revealed that the ‘big five’ European leagues increased their combined revenues by six per cent for the 2017-18 season.
While the English Premier League retained its traditional position at the head of the rankings with revenue of £5.44bn, the Bundesliga (£3.168bn) narrowly squeezed LaLiga (£3.073bn) into third position. Deloitte said this was due to the Bundesliga commencing a new broadcast rights cycle in 2017-18.
Italy’s Serie A was positioned fourth with £2.217bn in revenue, with France’s Ligue 1 generating £1.692bn. Dan Jones, partner and head of the Sports Business Group at Deloitte, said: “European club football is in the strongest financial position that we’ve ever seen.
“This reflects the drive among leading clubs to generate ever greater revenues to fund success on the pitch and also the sustained efforts of Uefa to improve profitability and sustainability of clubs through Financial Fair Play and club licensing. While the Premier League retains its leading position financially, we expect to see other leagues continue to grow in the coming years.”
Deloitte said the 92 Premier League and Football League clubs generated a record £5.8bn in revenue in 2017-18. With five English teams competing in the Uefa Champions League in 2017-18, all reaching the Round of 16 or beyond, Champions League revenue distributions to clubs increased substantially by around £71m. Alongside the increase in Uefa distributions, matchday and commercial revenue both grew by eight per cent and 12 per cent respectively.
As the financial consequences of record-breaking transfer activity in 2016-17 filtered through, increased spending by Premier League clubs resulted in the wages/revenue ratio rising to 59 per cent in 2017-18. Deloitte noted that this ratio is the fourth lowest since 1998-99. The increased wage spend contributed to reduced operating profits from 2016-17’s record levels, falling 16 per cent to £867m, which is still the second highest level of profitability ever.
Jones added: “We have seen Premier League clubs’ wage expenditure increase at a faster rate than revenue growth in 2017-18. This is the same pattern as observed in the second year of the previous Premier League broadcast rights cycles, as clubs continue to invest in playing talent. This wage spending is an indication of the competitive nature of the division, with the top clubs competing for financially lucrative places in Uefa competitions, and clubs lower down the division fighting to remain in the Premier League itself.
“With the sale of the Premier League’s domestic and international broadcast rights now complete for the 2019-20-2021-22 seasons, resulting in an overall eight per cent revenue increase, Premier League clubs will receive further increases in central distributions in the coming seasons. However, the increase is not as significant as in the previous two cycles and therefore clubs will aim to improve their competitive and financial position through developing and growing other commercial revenue.”