Soccer enters new era with huge TV deals

Income outpacing spending on players for first time, report finds

Real Madrid celebrates winning the Uefa Champions League final in May.  Photograph: Getty Images

Real Madrid celebrates winning the Uefa Champions League final in May. Photograph: Getty Images

 

Record revenues for Europe’s biggest football leagues have created a “new era of profitability” at the continent’s top clubs, where income is outpacing spending on players for the first time.

The combined revenues for clubs in the top divisions in England, Spain, Germany, Italy and France were €14.7 billion in the 2016-17 season, an increase of 9 per cent compared with the previous year, propelled by the escalating value of television rights deals.

According to the annual review of European club finances by the consultancy Deloitte, the English Premier League retains its position at the top of football’s financial table, with its 20 clubs generating €5.3 billion in income from broadcasting rights, sponsorship deals and ticketing.

Revenues at Premier League clubs are up 25 per cent year on year, with wage growth of only 9 per cent.

Though huge sums were spent on transfer fees to acquire star footballers, no Premier League team made an operating loss over the 2016/17 season, suggesting such fees are now within their means.

Dan Jones, partner at Deloitte’s Sports Business Group, said the figures marked a “financial revolution”.

A decade ago, 60 per cent of Premier League clubs were loss-making, with clubs spending the vast majority of income on players. But wealth generated from TV rights deals, alongside so-called financial fair play regulations designed to make clubs break even, have changed the finances of clubs.

“It is an extraordinary transformation in football finance that we have seen in the past five years,” said Mr Jones.

La Liga

A similar picture has emerged at other the leagues. A new TV rights deal for Spain’s La Liga helped its clubs generate a combined €2.86 billion in revenues over the 2016/17 season, overtaking Germany’s Bundesliga as the second-highest earning league in Europe.

In England, Spain, Italy and France, the amount clubs spent on players wages fell as a proportion of revenue, while the combined operating profits of clubs in each of the continent’s top five leagues increased.

Top teams in these divisions are further boosted by their domination of continental competitions. Distributions – which include prize money and broadcast revenue – from Uefa, European football’s governing body, for competing in tournaments such as the Champions League and Europa League, increased 3 per cent to €1.8 billion, with teams in the top five divisions receiving 67 per cent of this money.

Meanwhile, in England, a battle over how cash is split among top clubs is set to flare up. On Thursday, owners of Premier League clubs will discuss proposals to allow the richest teams to take a greater share of the £3 billion (€3.4 billion) received in overseas rights deals.

This revenue is split evenly across the 20 clubs but the wealthiest six teams – Manchester United, Manchester City, Chelsea, Liverpool, Arsenal and Tottenham Hotspur – want a proportion of overseas money to be distributed on “merit” or performance in the division instead.

Last year, an effort to change the model was rebuffed by smaller clubs but the proposal is back on the agenda at the upcoming club owners’ meeting.

International rights

The Premier League projects that future revenue growth will come from international rather than domestic rights deals. Broadcasters Sky and BT won the rights this year to continue screening matches in the UK, paying £4.46 billion (€5 billion) for games held between 2019 and 2022 – significantly less than the £5.1 billion (€5.7 billion)achieved in the previous rights auction.

The Premier League took the unusual step of holding back the sale of some matches that did not attract strong interest from the broadcasters.

– Copyright The Financial Times Limited 2018