Revolution

Annual Review of
Football Finance – Highlights
Sports Business Group
June 2015

Annual Review of Football Finance 2015 Sports Business Group 1

Deloitte Annual Review of
Football Finance 2015

Our first football finance report was produced in The following sections of the full report include
June 1992, a couple of months ahead of the start of comprehensive data and analysis of the business drivers
the inaugural Premier League season. For more than and financial trends for clubs in the top four divisions
20 years we have documented clubs’ business and of English football, with a particular focus on Premier
commercial performance, striving to provide the most League and Championship clubs. The analysis covers
comprehensive picture possible of English professional through to the end of the 2013/14 season and we also
football’s finances, set within the context of the include some pointers to future financial results.
regulatory environment and the wider European game.
Revenue and profitability
The Sports Business Group at Deloitte provides an Analysis of matchday, broadcasting and commercial
in-depth analysis of football’s finances in its 52 page full revenue streams; Revenue projections to 2016/17;
report, which includes: The financial impact of participation in UEFA club
competitions, promotion and relegation; Operating
Europe’s premier leagues results and pre-tax profits and losses; Average
Scale of the overall European football market; attendances and stadium utilisation in the Premier
Comprehensive data and analysis of trends for clubs in League and Football League.
the ‘big five’ leagues including revenue breakdowns,
wage costs, operating results, and match attendances; Wages and transfers
Factors impacting on clubs’ future revenues; Key Analysis of clubs’ total wage costs; The relationship
financial indicators for six more European leagues. between revenue growth and wage costs; Club-by-club
analysis of wage costs including rankings, comparison
Industry insights to on-pitch performance, and wages to revenue ratios;
Our perspectives on six topics facing football, including Estimated total player wages; Cost control regulatory
the reasons for continued interest from investors in developments; Player transfer spending; Transfer flows
English football clubs, the challenge of the Europa between the top four divisions and to agents.
League, the importance of measuring player academy
success, the development of the Indian Super League, Club financing and investment
the continued strength of premium sports rights and Analysis of the sources of net debt financing, profiling
the increased involvement of Middle Eastern investment the aggregate net debt position of Premier League and
in football. Championship clubs, as well as an analysis of the top
ten clubs; Capital investment by clubs in the top four
Databook English divisions over the five years to 2013/14, with a
The full report, incorporating a pull-out Databook, focus on the clubs with the highest levels of investment
includes over 8,000 data items, prepared on the basis of in 2013/14.
our unique and long-established methodologies.

Please visit our website at www.deloitte.co.uk/sportsbusinessgroup

to access/download a free copy of the
Deloitte Annual Review of Football Finance 2015 – Highlights
and/or to purchase a copy of the full report.

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2
Contents

2 Foreword

4 Delivering results worldwide

6 Distinctive advice to football

7 The Wanted

8 Highlights: Europe’s premier leagues & Revenue and profitabilty

11 Visionary leadership

12 Highlights: Wages and transfers & Club financing and investment

14 Sphere of influence

15 It’s just not cricket

16 The Academy rewards?

Edited by
Dan Jones

Sub-editor
Adam Bull

Authors
Alex Bosshardt, Matthew Green, Chris Hanson, James Savage,
Chris Stenson and Alexander Thorpe

Sports Business Group

PO Box 500, 2 Hardman Street, Manchester, M60 2AT, UK
Telephone: +44 (0)161 455 8787
E-mail: [email protected]
www.deloitte.co.uk/sportsbusinessgroup

June 2015

Annual Review of Football Finance 2015 Sports Business Group 1

Foreword

Welcome to the 24th edition of the Deloitte From a costs perspective, UEFA’s Financial Fair Play
Annual Review of Football Finance, compiling our break-even requirement continues to make an impact.
analysis and commentary on the recent financial In the past two seasons only 31% of revenue growth
developments within and prospects for the world’s across Europe’s ‘big five’ leagues has been spent on
most popular sport. wages, in the two years preceding that it was 61%.

The path to profit for the Premier League has not been
New Power Generation one solely of regulatory led cost control; these factors
We have chronicled the development of the business of have coincided with substantial revenue increases across
football in England and across Europe for over twenty the league. All 20 Premier League clubs are now ranked
years. In that time we have seen two consistent trends in the top 40 globally in terms of revenue, with even
run in tandem; first, spectacular and relentless revenue the smallest still earning enough to rank in the top six
growth across Europe’s biggest clubs and leagues and of any of the other ‘big five’ European leagues. This
second, what we termed “football’s biggest challenge” continues to be underpinned by the strength of the
as far back as 1995, an even more rapid increase in player Premier League’s broadcast deals, driving a 48% uplift
costs. In recent years we’ve observed and welcomed the in the combined broadcast revenues of Premier League
development, implementation and subsequent effects of clubs in 2013/14.
cost control regulations within the game.

We suggested last year that Financial Fair Play could Sign of the Times
be the most significant development in the football The scale of the financial superiority of the Premier
business since the Bosman ruling. Early signs are that League is clear and explored in greater detail in Europe’s
this is the case. Indeed the change in club profitability premier leagues and Revenue and profitability.
in 2013/14 was more profound than anything we could However, such is the size of the Premier League’s financial
have forecast. This year’s edition may mark a turning lead, that it is important to consider what this means
point in football finance and the dawn of a new age of for the wider football industry, including other major
significant profitability for Premier League clubs. European leagues as well as the rest of the English
football pyramid.
England’s top division has passed the £3 billion revenue
mark for the first time and widened the gap to its nearest On a continental level, it is difficult to see any of the
rival, the Bundesliga, to over £1 billion. The Premier other ‘big five’ European leagues closing the gap to the
League now generates more revenue than La Liga and Premier League in the near term, let alone catching up
Serie A combined. with them.

The Premier League’s virtuous circle of compelling Unsurprisingly, the growth of England has caused
content attracting ever increasing broadcast revenues, European peers to cast their eyes across the Channel
which in turn attracts some of the best coaches and to see how this financial success has been achieved.
playing talent from around the world, complemented There is clear evidence emerging in some leagues of
by capacity attendances at its stadia is a familiar one to change in areas that have traditionally hindered the sort
readers of this publication. of league wide growth English clubs have benefited
from. For example, Spain’s La Liga is closer than ever
Previously, the biggest failing in a business sense of to moving to the collective selling of broadcast rights,
England’s top flight was its failure to convert its brand intended to deliver more equal and increased revenues
and market leadership into profits. This year changes across the league. Meanwhile in Italy, Juventus continue
that, with the Premier League reporting its first pre-tax to demonstrate the benefits that could be achieved for
profit since 1999. This record breaking profitability may Serie A clubs through investment in, and improvement
move clubs from being seen as exciting and enticing of, clubs’ matchday facilities. More recently in Germany,
trophy assets to being recognised as businesses capable leading football figures have commented on their desire
of delivering consistent profits. to see more competition in, and hence more revenue
from, the broadcast market.

2
Nonetheless, while there are undoubtedly areas of Under the Cherry Moon
potential further growth for Europe’s top leagues, this While the emergence of the Premier League clubs
year’s report reconfirms that the Premier League has into profit is of both continental, and even global
cemented its place as the “world’s favourite league.” significance, this year’s numbers again bring into sharp
The Premier League and its clubs have gained first mover focus the impact the league has domestically. The size
advantage in becoming the leading imported league in of the Premier League prize grows ever greater and this
a number of key foreign markets, leaving other leagues year again demonstrates that the desire to reach the
with the difficult task of not only competing against the league, by those clubs in the Championship has never
Premier League but also domestic football properties as been greater. While we saw all bar one of the Premier
well as the UEFA Champions League for the hearts and League clubs achieving operating profits, only three
minds of broadcasters, sponsors and fans alike. Championship clubs were able to achieve this. With
wage costs still exceeding revenues across the division
as a whole, only increases in Premier League parachute
Diamonds and Pearls payments were able to stop the league from having a
The most obvious threat for these leagues from truly disastrous financial picture. For all the dreams that
England’s increased wealth is in the global arms race for have been turned to reality at Bournemouth, The Football
playing talent. With relatively few barriers to movement League is right to be trying to prevent dreams turning to
for players, particularly within Europe, England’s nightmares at other clubs through overspending.
increased means clearly gives Premier League clubs a
greater purchasing power than ever before.
The Beautiful Experience
There are of course very notable exceptions to this We have previously remarked that “despite the general
broad picture of market leadership for England; while lack of profitability, investors continue to be attracted
the general observation that Premier League clubs have to European football clubs”. The transformation of
greater financial firepower than ever compared with Premier League club profitability reported here will fuel
their continental peers is true, it is still the case that after even greater global investor interest in Premier League
both the 2012/13 and 2013/14 seasons the PFA Player clubs. With significant future revenue growth already
of the Year ultimately left the Premier League for La secured through the recently agreed domestic broadcast
Liga. Therefore the battles for the greatest talents will rights deals from 2016/17 to 2018/19, as well as the
still rage amongst Europe’s elite clubs, but the Premier success of cost control regulations, the risks associated
League’s resources will continue to allow it to have an with investment in Premier League clubs seem to be
unmatched level of strength in depth, as demonstrated diminishing. However, as other investors have found to
by the fact it provided more players than any other their cost, there are no guarantees. It is a fact that 15%
league for the 2014 FIFA World Cup, as we expect it will of Premier League clubs will be relegated each year and
again at both Euro 2016 and the next World Cup. while parachute payments ensure the fall should not be
fatal there is no guarantee of a rapid return to the riches
Despite this, Europe’s other leagues can boast of of the Premier League.
beating the Premier League’s finest where it really
matters. While the Premier League appears in rude
financial health relative to its European peers, this has For You
not been reflected by performances in Europe on the Finally, I would like to thank my colleagues, Henry Wong
pitch by its clubs. 2014/15 is the third consecutive and all those from across the football community who
season in which no Premier League team has featured have helped us compile this year’s report.
in the UEFA Champions League final. Similarly the
competition where the Premier League’s purchasing We hope you enjoy this edition.
power should arguably be of greatest advantage, the
Europa League, has only had one winner and two other Dan Jones, Partner
English finalists in the last ten years. www.deloitte.co.uk/sportsbusinessgroup

Annual Review of Football Finance 2015 Sports Business Group 3

Delivering results worldwide

Tournament financial Economic impact study Feasibility of hosting a Sports media strategy Tender process
review Study regarding the major event Support in developing assessment
Financial review and economic impact of the Feasibility study of Ireland ITN’s strategy within sport. Assistance with the ECB’s
benchmarking of the NFL International series hosting Rugby World design of a tender process
men’s professional tennis on London and the UK. Cup 2023. for the award of Major
tour tournaments. Matches.

Strategic Programme Economic impact study Economic impact study Strategic advice
Management Economic impact study of Economic impact study Support to FIBA on
Assistance to the British the 2014 FIBA Basketball of the Alltech FEI World strategic projects.
Olympic Association in World Cup in Spain. Equestrian Games™ 2014
its preparations for the in Normandy.
Olympic Games in
Rio 2016.

4
 Deloitte has a unique focus on the sports sector, in
the UK and across the world. Our experience,
long-standing relationships and understanding of
the industry mean we bring valuable expertise to
any project from day one.

Stakeholder Organisational Major event For over 20 years we have worked with more sports
consultations benchmarking feasibility study organisations than any other advisers.
Assisting the International Provision of consultancy Financial feasibility study
Cycling Union with its services for FC Zenit of a European Games. Our specialist Sports Business Group at Deloitte provides
wide-ranging stakeholder regarding governance and consulting, business advisory and corporate finance
consultation programme, organisational structure. services including:
“A Bright Future for
Cycling”. • Business planning
• Revenue enhancement and cost control
• Market analysis and benchmarking
• Strategic review
• Economic impact studies
• Venue feasibility and development services
• Sports regulation advice
• Due diligence
• Corporate finance advisory
• Business improvement and restructuring
• Forensic and dispute services

Deloitte are also audit and tax advisers to many

sports businesses.

For further details on how Deloitte can add value to

your project and your business, visit our website
www.deloitte.co.uk/sportsbusinessgroup or
contact Dan Jones.
Telephone: +44 (0)161 455 8787
Email: [email protected]

Due diligence Commercial planning Organisational

Commercial due diligence Assistance with the structuring
to support the acquisition Russian Olympic Assistance with the
and re-financing of Committee’s commercial design of the optimum
Infront Sports & Media. strategy post Sochi 2014. organisational structure
for the Saudi Arabian
Football Federation .

Annual Review of Football Finance 2015 Sports Business Group 5

Distinctive advice to football

Deloitte bring an unparalleled breadth of services,

expertise and experience to support our clients in Our clients
the football business.
Clubs Confederations Sports marketing
businesses
Leagues Investors, owners and
financiers Local and national
National associations government
Sponsors and
Broadcasters commercial partners

Our services
Business planning Benchmarking and best Club licensing and cost Economic impact
and strategy practice advice control regulations studies

Governance and Financial and commercial League and competition Business and venue
organisational design due diligence restructuring feasibility studies

Financial budgets Ticketing and hospitality Advice on the Acquisition, disposal

and projections strategy development of stadia and debt advisory
and training facilities
Customer data analytics
and fan surveys

Their results
Well informed Increased matchday and Competitive advantage
investment decisions non-matchday revenues from better data and
industry insights
Greater commercial Effective league
income structure, operation and Sound broadcast and
competition commercial rights
Improved cost strategies
management Improved governance
and risk management Superior business
Powerful information performance
to influence key Higher ticket sales,
shareholders stadium utilisation and Smooth transition
attendances to new investment
and financing

6
The Wanted

Investors have consistently been attracted to the amount investors may be expected to lose. This is
Premier League football clubs, with two-thirds especially useful during negotiations with players and
of the 2014/15 season’s top flight clubs having agents and in helping to set fans’ expectations of the
had a change of majority ownership in the last owners’ spending.
decade. This attraction has often been based on the
prestige of owning a Premier League football club, Given the increasingly global nature of Premier League
seen by many as a global trophy asset, providing football many of these interested suitors will be investors
enhanced business profile and access to important from overseas. With matches broadcast to 645 million
relationships. However, where potential investors homes across 212 territories, appearances by players Adam Bull
have tried to justify an acquisition with a rational from over 50 countries and the majority of clubs with Senior Consultant
business case, most have been left disappointed, or main sponsors from overseas, it is unsurprising that more
at least reliant on profiting on the sale to another than half of the 2014/15 Premier League clubs have a
investor, as despite the annual record revenues, the majority owner born outside the UK. Improved financial
losses have also continued to grow. results will only serve to increase global interest, so this
number is likely to rise.
It is likely that the list of interested investors, in both
Premier League clubs and Championship clubs with Whilst the attraction for investment is clear, the
aspirations of promotion, will have grown significantly associated risks are often less obvious and recent history
following the announcement that – for the first time in provides many examples of vendors and acquirers
15 years - Premier League clubs generated a collective suffering unpleasant surprises in the process or aftermath
profit in 2013/14. Particularly as this profit was spread of a change in ownership. Given the increasing scale
across the clubs, with all but one making operating of the numbers at stake, not understanding what is
profits and once player trading, net interest charges being acquired and having a clear plan is likely to be an
and the amortisation of player contracts have been expensive oversight.
accounted for, 14 making a pre-tax profit.
The Sports Business Group at Deloitte regularly
Investor interest will have been strengthened further by provides assistance to parties looking to sell or
the knowledge that the factors required for this profit to acquire an English or European football club.
be achieved on a consistent basis are already in place,
both in terms of revenue generation and cost control. The Global Game – 2014/15 Premier League clubs with owners born outside the UK

The 2013/14 profit was predominantly driven by the Club Majority shareholder Place Nationalities Origin of
of in 25 man shirt
first year of the much improved three year domestic
birth playing squad sponsor
and overseas Premier League broadcast contracts.
The next deals will commence in the 2016/17 season, Arsenal Stan Kroenke USA 11 Dubai
with the value of the live domestic element already Aston Villa Randy Lerner USA 13 Philippines
confirmed to be 70% higher than the current deal. Chelsea Roman Abramovich Russia 10 South Korea
This gives investors certainty that this is not a bubble Hull City Assem Allam Egypt 13 Philippines
about to burst; the opposite is true with demand from Leicester City Srivaddhanaprabha family Thailand 13 Thailand
broadcasters continuing to grow. Liverpool John W. Henry USA 11 UK
Manchester City Sheikh Mansour Abu Dhabi 10 Abu Dhabi
Equally important to many investors are the financial Manchester United The Glazer family USA 10 USA
regulations, introduced by UEFA at a European level and QPR Tony Fernandes Malaysia 12 Malaysia
by the Premier League and Football League domestically, Southampton Katharina Liebherr Switzerland 15 UK
which encourage a more substantial balance between Sunderland Ellis Short USA 11 South Africa
clubs’ costs and revenues. Whilst these rules do
allow some overspend on the income generated, and Note: The 25 man playing squads are as at 4th February 2015
actively encourage investment in facilities and youth and exclude Under-21 players.

development, they also provide some limitations on

Annual Review of Football Finance 2015 Sports Business Group 7

Highlights

Europe’s premier leagues

• Cumulative revenues of the ‘big five’ European
ND GERMA
leagues rose by 15% to €11.3 billion in 2013/14, with
ENGLA NY
€2.3
€b3illi.o9n
all five leagues reporting record revenues for the third ITALY

€1.7
successive year, driving the total European football
market beyond €20 billion. billio n
+13% billio
n
+32%
• A revenue increase of 29% (£735m) in 2013/14 saw +1%
FRAN
the Premier League further extend its lead as the CE
SPAIN
highest revenue generating league in the world. €1.5
• In 2013/14 Premier League clubs’ broadcast revenues €1io.9
n
bill
billio
+15%
n
alone were worth €171m more than the total revenues
of the member clubs of La Liga, €405m more than +3%
Serie A clubs and €606m higher than Ligue 1.

• Bundesliga revenue increased by 13% (€257m),

consolidating second place amongst the ‘big five’ • In May 2015, the Spanish Ministry of Sport Top division clubs’
leagues. A key driver of this growth was the new set announced by Royal Decree that from 2016/17, revenue 2013/14
of domestic broadcast rights contracts, yet the value the rights to domestic Spanish football will be sold
of these rights remains the lowest across the on a collective basis, with the hope that this will
‘big five’ leagues. generate at least €1 billion from the sale of league
broadcast rights.
• La Liga clubs collectively grew revenue by €65m (3%)
in 2013/14. All of this growth was attributable to the • A marginal €22m (1%) increase in total revenue
two Madrid clubs, with the other 18 clubs’ aggregate for Serie A clubs in 2013/14 masked significant
revenues down on the prior year. movements in the financial performance of Italy’s
more illustrious clubs, which were all greatly impacted
Top division clubs’ total wages and ratio by the extent of their participation in European
to revenue 2013/14 competition, evidence of the reliance on broadcast
revenue inherent in Italian football.

E N G L A N D €2.3+9bi%llion
58%

• Total revenue for Ligue 1 grew by €201m (15%), led

by PSG’s revenue growth of €75m. Total revenue from
I TAL Y
70%

€1.2 billion sponsorship and other commercial sources rose by

S PA I N +0%
€223m (42%), driven by the commercial revenues of
€1.2 bil lion
60%

+9% PSG and Monaco.

G E R MA N Y
49%

€1.1 billion
+9% • The gap between the ‘big five’ leagues and other
F R AN C E leading European leagues continued to widen in
€1 .0 billion
64%

+11% 2013/14. A number of leagues have entered into

longer term arrangements with broadcast partners,
to support the development of competitions and to
provide more financial certainty for clubs.

8
 • For the first time since 2006/07, each of the ‘big five’
European leagues reported a wages/revenue ratio at
or below 70% and on average, less than one-third of
revenue increases in 2013/14 went towards wages. £5.1 billion
• The overall wages/revenue ratio fell to 59% across the Total live domestic rights value for the
‘big five’ leagues, it’s lowest level since 1999/00. Premier League from 2016/17
to 2018/19, a 70% increase
• The wages/revenue ratio for the Bundesliga fell below
50% for the first time since 2006/07 and remains the
only league to have done so since 1996/97.

• La Liga’s wages/revenue ratio increased to 60%.

Whilst wage costs for the ‘big two’ Spanish clubs
grew less than revenues, many of the other clubs Revenue and profitability
recorded a sizeable increase in wages in excess of • In 2013/14 the total revenues of the 92 clubs in the
revenue growth. top four divisions of English football fell just £23m
short of £4 billion.
• The Premier League’s operating profit of £614m
was almost treble the previous record set by the • The 2013/14 season saw the most remarkable
Bundesliga in 2012/13, which was the only other turnaround in the profitability of Premier League clubs.
‘big five’ league to report an operating profit. The new broadcast deal, coupled with the impact
of financial regulation, drove significantly improved
profitability at operating and pre-tax levels.

The increase in wage • Record Premier League revenue of £3.26 billion

costs for La Liga represented a £735m (29%) increase on that recorded
outstripped the 3% in 2012/13. Within the Premier League total, revenues
(€65m) rise in total ranged from £433m (Manchester United) to £83m
revenues (Cardiff City).

• The significant increase in revenue is due to 2013/14

being the first year of the current broadcast rights
packages, totalling £5.6 billion. 78% (£569m) of the
revenue increase from 2012/13 was attributable to
broadcast revenue.
Manchester United recorded the largest operating
profit (£117m) • Broadcast revenue reached £1,760m in 2013/14,
accounting for 54% of the league’s total revenue –
the highest proportion from any revenue stream in the
history of the division.

• Commercial revenue increased by £135m to £884m,

comprising 18% of the total increase. The four
UEFA Champions League clubs plus Liverpool and
Tottenham Hotspur contribute 78% of the Premier
League’s commercial revenue.

Annual Review of Football Finance 2015 Sports Business Group 9

• Matchday revenue increased by 5% to £616m, and • Pre-tax profits of £187m were the first since 1998/99
for the first time in the history of the league made and almost four times the previous record of £49m
up less than fifth of total revenue. The change in in 1997/98.
composition of clubs in the division contributed to
a 2% rise in average attendance. Average matchday • Manchester United recorded the largest operating
revenue per attendee increased marginally, from profit (£117m), and Tottenham Hotspur the largest Record Premier League
£35 to £36. pre-tax profit (£80m). Both were the highest ever operating profit of
recorded in the division.
• The value of the domestic rights for the next £618m
broadcast cycle, which will cover the 2016/17 to • Championship revenue increased by £54m (12%) to
2018/19 seasons, was announced in early 2015, a record of £491m. This was driven by an increase
totalling over £5.3 billion. Overseas rights are yet to of £57m in parachute payments, due mainly to their
be announced but if they rise as anticipated the total values increasing but also in part to the number of
value for the three year agreement is likely to exceed clubs receiving such payments rising from seven
£8 billion. If the increase matched that of the live to eight.
domestic rights (70%) the total value would exceed
£9 billion. • For the 18 clubs in the Championship in both 2012/13
and 2013/14, matchday and commercial revenue
• Operating profits increased by £532m (649%) to increased by a combined £6m. However, it has clearly c.£9m
£614m – smashing the previous record by nearly been challenging for Football League clubs to grow or
£430m. 19 of the 20 clubs recorded an operating maintain revenue from these sources. Average loss per
profit, 13 clubs recorded their highest ever Championship club
operating profit. • The slight (7%) reduction in Championship
clubs’ operating losses to total £222m in no
way obscures the fact that they remain a
significant issue. Pre-tax losses were £247m
in 2013/14, an average per club of £10m.

• League 1 revenue rose by £28m (24%)

Record Premier League to £148m, the second highest level in
revenue of £3.26 billion the division’s history, boosted by over £19m of
represented a £735m parachute payments to Wolverhampton Wanderers.
(29%) increase on that League 2 revenues declined to £78m (9%), largely due
recorded in 2012/13 to the change in composition of clubs in the division.

10
Visionary leadership

The sheer size of the Premier League’s new three The benefit of the new deal for the wider English game
year £5.136 billion domestic live rights deals is substantial, with the Premier League announcing that
surprised many, focussing attention on the League’s £1 billion will be redistributed to the wider game. For a
remarkable growth story. In 2016/17, the first year club, the already substantial financial rewards are set to
of the new deals, Sky and BT will pay a combined increase. Even in the current cycle, the lowest earning
£1.7 billion a season, an increase of over £1.1 billion Premier League club (Cardiff City: £58m (2013/14))
compared to just four years previously. earns more from central broadcast distributions, than
all bar five European clubs – Real Madrid, FC Barcelona,
Austin Houlihan The Premier League is not the only sports competition to Juventus, and the two Milan clubs – do from their
Director secure substantial rights fee uplifts. Rival ‘big five’ European corresponding domestic league deals. Under the new
leagues, the UEFA Champions League, and major US sports deals, the lowest earning club will likely earn over £85m
leagues, have all recently secured substantial double digit (€120m), surpassing the total revenues earned from all
percentage increases. In an increasingly fragmented media sources by such storied European clubs as Ajax.
landscape, broadcasters recognise that premium sports
content is unique in drawing live, loyal, social audiences. So what of the future? Commentators continue to
speculate on whether technology companies such
Rights fee uplifts (%) as Netflix, Apple, and Google will emerge as serious
competitors for live rights. This threat has yet to emerge.
200% 180

In Europe, relatively short term rights cycles, coupled

100% with escalating rights fees mean a viable business model
70 60
30 20 14
for live rights has perhaps yet to be identified for such
0 players. Indeed, established pay platforms are embracing
NBA Premier NFL UEFA CL Ligue 1 Serie A
(2016/17) League (2014) (2015/16) (2016/17) (2015/16) new technology through multi-platform delivery of
(2016/17)
Rights fee per head of population (£) content, whilst telco operators such as BT have emerged
7.5 26.5 14.7 1.4 8.1 11.1 to compete for sports content as a means to drive their
multi-platform services. In the US, leagues have tied
Note: Season in brackets is first season of new rights cycle for each themselves to lucrative long-term network deals. The
property. Source: Competition organisers; Deloitte analysis. NFL’s core deals run to 2022, and the NBA’s until 2025.

The Premier League has now exceeded £10m per game Yet such new media platforms play an increasingly
in domestic live rights fees, well above that of rival important role, augmenting live coverage and
European leagues, which make all games available for distributing additional content, such as highlights and
live broadcast. Yet even this is dwarfed by the £18m per special features, as well as match coverage where a
game generated by the NFL. The popularity of NFL in the traditional broadcast partner is not available or desired.
US, the scale of the domestic market, and the limited With established pay platforms or US networks paying
number of matches (267), drives such a premium fee. ever increasing rights fees to secure premium sports
content, there is no obvious sign of disruption to the
It is its attractiveness in international markets that sets existing rights model. Indeed, we see no sign of the
the Premier League apart from both other European premium live sports media rights market cooling.
and US leagues. England’s top-flight currently generates
around £750m per season (c.€1 billion) from international The Sports Business Group at Deloitte provides
(non-domestic) markets, substantially higher than the next media strategy, benchmarking, and due diligence
highest European league, La Liga, at c.€200m per season. advice to sports rights owners, broadcasters,
agencies and investors.
In the new cycle, growth is expected in a number of
markets. Securing over £1 billion a season (or €1.4 billion)
is within sight, which could surpass the total broadcast
revenue generated by the Champions League in its new
cycle from 2015/16.

Annual Review of Football Finance 2015 Sports Business Group 11

Wages and transfers • The wages to revenue ratio was at 105%, the second
• Total Premier League wages rose by £119m to £1.9 consecutive season with a ratio of over 100%, and
billion in 2013/14. This represented a 7% increase on only the third occasion that this has been recorded in
2012/13, despite a revenue increase of 29% (£735m). English football.
It is the first time since 2007/08 that wage costs have
increased at a slower rate than revenue. • Almost half the clubs in the Championship had wage
costs greater than revenue and only three clubs had a
• For the first time in 2013/14 clubs were subject to the ratio below 70%.
Premier League’s Short Term Cost Control measure
and some clubs were also subject to UEFA’s Financial • League 1 wages increased by 14% to £124m, but the
Fair Play break-even requirement. It appears that these division’s wages to revenue ratio decreased by seven Clubs were subject to
new regulations have had a dampening effect on the percentage points to 84%, the second consecutive the Premier League’s
wage costs at some clubs. season of the ratio decreasing. Short Term Cost Control
mechanism for the first
• Six Premier League clubs had total wages above the • League 2 wages decreased by 2% to £58m, but with time in 2013/14
average of £95m, and all finished in the top seven revenues decreasing by 9% the wages to revenue
positions in the table. ratio for the division rose by five percentage points
to 74%.
• The wages to revenue ratio fell dramatically from 71%
to 58%, the lowest level since the 1998/99 season. • Total transfer spending across all 92 English league
13 of the 20 Premier League clubs had wages to clubs in 2013/14 rose by £209m (25%) to exceed £1
revenue ratios at 60% or lower, in 2012/13 only one billion for the first time, exceeding the previous record
club was below 60% and 11 clubs were above 70%. of £830m of 2010/11.

• With the UEFA Financial Fair Play requirements • Premier League clubs spent a combined gross total of
continuing and the Premier League’s Short Term Cost £964m, a 34% increase on the £722m of 2012/13; £1.9 billion
Control measure currently in force for 2014/15 and with a record spend across the two transfer windows
2015/16, the wages to revenue ratio should remain in the summer of 2013 and January 2014. This record
close to or below the 60% threshold. will not last for long however, given the activity in the Total Premier League
summer and January transfer windows of 2014/15. wages in 2013/14
• We believe that in years to come 2013/14 will be seen
as a turning point in Premier League club finances, not
a blip. The continuation of cost control regulations
beyond the 2015/16 season will help to ensure that this
is the case.

• Total Championship wage costs exceeded £500m for

the first time; rising by £56m to £518m in 2013/14, a
12% increase. Over the same period revenue rose by
£54m to £491m (12%),

£1 billion+
Total transfer expenditure for
the 92 English League clubs
in 2013/14

12
Club financing and investment • 2014 represented the first calendar year since 1996 in
• The combined level of debt of all clubs in English which there were no insolvency events in the Football
football’s top two divisions has fallen marginally, by League, an indication that – helped by financial fair
less than 1%, since 2013. play regulations – clubs are now becoming more
accustomed to ‘living within their means’.
• Premier League clubs’ aggregate net debt reduced
by £148m (6%) to £2.4 billion in 2014, with record • 2013/14 was the first season since 2004/05 in which
levels of cash now present in balance sheets. This is no new stadia were opened by Premier League or
thanks, in large part, to the Premier League’s new Football League clubs. In spite of this, the overall level
broadcast deals. of expenditure on capital facilities by England’s 92
professional clubs in the season, of £280m, was the
• Soft loans – clubs’ borrowings from their owners on highest of all time.
interest-free terms – of £1.7 billion (2013: £1.6 billion) £2.4 billion
remain the largest component of Premier League • Capital investment by Premier League clubs totalled Aggregate net debt
clubs’ net debt, accounting for 74% of the total. £212m in 2013/14, the highest annual spend since for the Premier
the Premier League began, and an increase of £76m League clubs
• Nine Premier League clubs improved their net debt/ (56%) on 2012/13. Spending was led by Manchester
funds position over the course of the 2013/14 season, City (£94m) on the expansion of the Etihad Stadium
most notably Arsenal, Aston Villa and Tottenham and the City Football Academy project, with
Hotspur who, together, reduced net debt by £205m. Southampton’s new training ground and Tottenham
Hotspur’s ongoing stadium redevelopment project
• Aggregate net annual finance costs totalled £71m delivering a further £37m in capital expenditure.
in 2014 (2013: £118m), and were covered almost
nine times by aggregate operating profits of £614m.
The equivalent ratio last season was 0.7. This statistic
is the starkest illustration of the transformation of
Premier League clubs’ credit-worthiness in 2013/14.
2014 was the first
• Chelsea became the first club to record net debt of calendar year since
over £1 billion, with an increase of £57m in soft loans 1996 in which there
owed to Roman Abramovich during the 2013/14 were no insolvency
season. events in the
Football League
• Championship clubs’ aggregate net debt increased
by 12% to £1.1 billion at summer 2014. This is
equivalent to more than twice the aggregate revenue
of the clubs for 2013/14 and, as at summer 2014,
only Blackpool were in a net funds position.

Annual Review of Football Finance 2015 Sports Business Group 13

Sphere of influence

One of football’s most appealing and valuable

characteristics is its unpredictability, and two
decades ago no-one foresaw its current riches.
Nonetheless, we offer some hostages to fortune
below. We will report back in future editions.

European football
market size to exceed
€25 billion
in 2016/17

Combined global
broadcast rights fees
to the ‘big five’
leagues to surpass
La Liga to overtake
the Bundesliga
€7.5 billion Combined
in 2016/17 revenue across all
as the second highest
92 clubs to exceed
revenue generating
league by £5 billion
in 2016/17
2016/17
International broadcast
rights fees to the Premier
League to exceed

Premier League
£1 billion Premier
per season from League clubs’
clubs’ aggregate
2016/17 operating
attendances
profits to exceed
to exceed
15 million £1 billion
in 2016/17
by 2019/20

14
It’s just not cricket

India is a country with a population in excess of Average attendance of ISL and selected global
1.2 billion, and a football team that in early May leagues (000s)
2015 ranked 147th in the world – just ahead of
60
Curaçao. Such statistics are on occasion used to

Championship
make the case that India is ‘not a football country’. 42.6
40 36.7

Cricket is India’s biggest sport, and India cricket’s biggest 26.0 25.3 23.0

Premier League
21.1 19.1
market. By definition this makes the Indian Premier League 16.6

Bundesliga
20
Richard Battle (IPL), an eight team Twenty20 cricket tournament launched

Ligue 1
Serie A
La Liga

MLS
Consultant to much fanfare in 2008, a unique proposition. In terms

ISL
0
of its profile, its commercial scale and the stature of the
players it attracts it is unquestionably the world’s biggest Note: ISL and MLS attendances are for the 2014 season; other
annual cricket competition. attendances are for the 2013/14 season.
Source: IMG; ESPN; Deloitte analysis.

The IPL’s dominance has not stopped competitions of

a comparable format being introduced in other sports, The road ahead
and nor should it. Whilst it is a vanishingly remote The above is testament to the scale of the opportunity
possibility that another sport could match or overhaul for football in India, and will serve to place the
cricket’s supremacy in India in any foreseeable future, tournament and its franchises in a strong position as
such is the scale of the market that being in second they head into year two.
place could nevertheless prove very valuable.
Short term focus for some may be on driving
A new dawn commercial values following a successful year one, but
One such competition, The Indian Super League (ISL), was the medium to long term growth of the league will be
launched in 2014. From October, when the tournament dependent on a strategic approach to facilities, player
kicked-off in front of a stadium packed with 65,000 recruitment and engaging with local and national
fans, to December eight teams played a round robin markets.
tournament before the top four progressed into semi-
finals. Atlético de Kolkata were crowned champions with a In 2014 some clubs established partnerships with
1-0 win over Kerala Blasters in the final in Mumbai. European football clubs, as they sought to import
football-specific skills and knowledge from Western
The competition is a venture between IMG, Reliance and Europe. The opportunity and incentive to seek expertise
Star. The involvement of Bollywood stars and cricketing from abroad remain; the success of such ventures will
icons in the ownership and management of franchises depend on the ability of ISL clubs to align their longer
served to mitigate any risk that football was not culturally term interests, be they sporting or commercial, with
significant enough to capture the imaginations of the those of their European counterparts.
Indian population. Names such as Sachin Tendulkar,
MS Dhoni and Ranbir Kapoor coupled with those of We anticipate that in due course the market for the
Alessandro Del Piero, David Trezeguet and Elano provided world’s biggest sport in the world’s second most
sufficient stardust to ensure the competition got the populous country could support a commercially strong
coverage it required. competition of more than eight teams. Expansion is
likely to come with time, but for the immediate future
As was the case for IPL, the inaugural season exceeded the focus will be building on the existing foundations.
expectations. Total attendances reached almost 1.6m, at
an average per match of 26,030. The tournament, which The Sports Business Group works closely with
was broadcast in five different languages in India, was Deloitte member firms and clients around the world.
reportedly watched by 426m individual viewers.

Annual Review of Football Finance 2015 Sports Business Group 15

The Academy rewards?

A strong youth system helps a club to achieve the areas of strength/weakness within the academy can
its desired categorisation under the Elite Player be identified, and it can support succession planning
Performance Plan (“EPPP”) and to attract talent and recruitment needs, the effectiveness of which can
and develop Home Grown Players for the benefit of also be better understood.
the first team. It can also provide a financial return,
something which is always welcome at a football club. Measuring financial performance
Given the growing investment made by clubs into their
Since the Premier League introduced EPPP in 2012, clubs academies, it is becoming increasingly important to
Andy Shaffer across the four English divisions have invested significant be able to assess whether the academy is contributing
Consultant amounts in youth development. We estimate that value to the wider club, i.e. delivering a return on
Premier League clubs spend on average c.£5m each year investment. It is commonly accepted that transfer and
on the academy, making it the second largest cost centre loan fees generated by academy products are one
for most clubs, behind senior player costs. The multi- measure of this, but analysis rarely stretches beyond
disciplinary approach which EPPP encourages has driven comparing these with overall academy expenditure.
clubs to implement best practice across all areas of the
academy. However, measuring the success of these inputs It is also pertinent to consider, as some clubs do, the
on the progression of players already in the academy, net cost of academy products once they make the first
and the ability to recruit the right players to supplement team in comparison to the net cost of players recruited
the squads, remains a challenge. We believe that there from elsewhere and to do so in the context of their
is scope to supplement the progress brought about by respective contributions to first team performance.
EPPP with an additional framework, which can help to As well as transfer and loan fees paid/received, this
form the basis of discussion on the overall and on-going approach can also incorporate the wage costs of
performance of the academy within the academy academy players compared with those of players
management team and with senior management from recruited from elsewhere, and in doing so, provides a
the wider club beyond the training ground. more accurate assessment of the financial value of an
academy. The analysis can be extended to incorporate
Measuring sporting performance the overall running costs of the academy, such that they
Each academy will have a ‘productivity’ aim, e.g. to are effectively spread across the small proportion of
produce players who have a career in professional academy products that reach the first team.
football. Whilst this is rightly the ultimate measure of an
academy’s success, it is inherently backward-looking. If Our experience
players of the right standard do not emerge at around Our recent work with clubs has been to develop a range
the age of 18, by then it is too late to act. The core of of club specific key performance indicators to measure
that group of players is likely to have been their respective academies’ performance across the areas
at the academy for many years. outlined above, which can be used as the basis to report
progress and performance to a club’s Board.
Productivity
It is therefore important to find
a ‘lens’ into the academy It provides a platform for academy managers to
Transition to first
team football to inform and support articulate the success of their academy, and for senior
Squad composition
recruitment and management to provide constructive challenge. It can
(Expectations and performance) retention decisions, also help to focus and direct investment into particular
Player progression Recruitment
and provide areas of the academy such that they generate better
accountability. returns, i.e. identify areas with the greatest potential to
Education Coaching Sports Science Performance This includes achieve more value through incremental investment.
& Welfare & Medicine Analysis
a better understanding of the
players at each age group, The Sports Business Group at Deloitte has provided
including squad composition and expected outcomes assistance to Blackburn Rovers and Everton in the
for each player, as well as their progress through the development and implementation of a framework to
academy and transition to the first team. By doing so, monitor the performance of the academy.

16
Basis of preparation

Basis of preparation In relation to estimates and Limitations of published Wage costs

Our review of the financial projections, actual results are information The published financial
results and financial position likely to be different from those In some cases we have made statements of clubs rarely split
of English football clubs, and projected because events and adjustments to a club’s figures wage costs between playing
comparisons between them, circumstances frequently do not to enable, in our view, a more staff and other staff. Therefore,
has been based on figures occur as expected, and those meaningful comparison of the the great majority of references
extracted from the latest differences may be material. football business on a club by in this publication to wages
available company or group Deloitte can give no assurance club basis and over time. For relate to the total wage costs
statutory financial statements as to whether, or how closely, example, where information for a club/division, including
in respect of each club – which the actual results ultimately was available to us, significant playing and non-playing staff.
were either sent to us by achieved will correspond to non-football activities or
the clubs or obtained from those projected and no reliance capital transactions have been
Companies House. In general, should be placed on such excluded from revenue. Exchange rates
if available to us, the figures projections. For the purpose of our
are extracted from the annual Some differences between international analysis and
financial statements of the legal clubs, or over time, are due comparisons we have converted
entity registered in the United Availability of financial to different commercial all figures into euros using the
Kingdom which is at, or closest information regarding arrangements and how the average exchange rate for the
to, the ‘top’ of the ownership football clubs transactions are recorded in year ending 30 June 2014
structure in respect of each club. For the 2013/14 season there the financial statements; or (£1 = €1.1958).
were several Football League due to different ways in which
Our review of the financial clubs for which financial accounting practice is applied
results and financial position statements were not available such that the same type of
of clubs in various European to us at June 2015. transaction might be recorded
leagues, and comparisons in different ways.
between them, has been based Divisional totals have been
on figures extracted from the ‘grossed up’ to represent an The publication contains a
company or group financial estimate of the full divisional variety of information derived
statements or from information total for comparison purposes from publicly available or other
provided to us by national (from year to year or between direct sources, other than
associations/leagues. divisions). Where necessary, financial statements. We have
the aggregate divisional totals not performed any verification
Each club’s financial for European leagues have work or audited any of the
information has been been ‘grossed up’ in a similar financial information contained
prepared on the basis of manner. in the financial statements or
national accounting practices other sources in respect of each
or International Financial club for the purpose of this
Reporting Standards (“IFRS”). publication.
The financial results of some
clubs have changed, or may in The aggregated results shown
the future change, due to the in this publication for the
change in basis of accounting clubs in the top four divisions
practice. In some cases these of English football are not a
changes may be significant. true consolidation exercise
because transactions between
clubs, such as the transfer of
player registrations, are not
eliminated.

Annual Review of Football Finance 2015 Sports Business Group 17

Contacts

Sports Business Group

Dan Jones, Paul Rawnsley, Alan Switzer, Austin Houlihan and Adam Bull
Telephone: +44 (0)161 455 8787
PO Box 500, 2 Hardman Street, Manchester, M60 2AT, UK
E-mail: [email protected]
www.deloitte.co.uk/sportsbusinessgroup

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Deloitte LLP is the United Kingdom member firm of DTTL.

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© 2015 Deloitte LLP. All rights reserved.

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