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European football market grows by €1 billion as football proves recession resilient

The European football market grew by €1 billion to €14.6 billion in 2007/08. This was primarily due to a €0.7 billion increase in the ‘big five’ European leagues’ revenues to €7.7 billion and the staging of UEFA Euro 2008.

New improved broadcasting deals strengthened the English Premier League’s position as the highest revenue generating league in world football.  Its clubs generated revenues of €2.4 billion in 2007/08 (up 26% in Sterling terms), extending the gap to its nearest rivals to more than €1 billion, despite Sterling’s 15% depreciation against the Euro.

Dan Jones, Partner in the Sports Business Group at Deloitte, commented: “The continuing revenue growth of Real Madrid and Barcelona, the world’s highest and third highest revenue generating football clubs respectively, helped La Liga to draw level with the Bundesliga in the close battle for second place (both €1,438m), with Serie A only marginally behind (€1,421m).  We expect Barcelona’s victory in the UEFA Champions League to have contributed to La Liga taking second place on its own in 2008/09.”

In a sign of football’s resilience to the economic downturn, Deloitte expects Europe’s top clubs will continue to grow revenues in 2008/09 and 2009/10, albeit at a slower pace.

“The acid test of the ‘big five’ leagues’ ability to withstand the challenging economic times will come in 2009/10 when season ticket and sponsorship renewals in particular will underpin revenue performance.  However, it is encouraging that total 2008/09 attendances across the leagues increased by 2%.  The Bundesliga, Ligue 1 and the Premier League and the major clubs in La Liga also have secure long term broadcasting deals in place which deliver significant proportions of total revenue.  The greatest challenge may come in maintaining commercial revenues and higher priced corporate hospitality ticketing, while also addressing wage and cost inflation.”

The majority of the increased revenue in 2007/08 has been spent on player wages and transfers.  Wage costs for the ‘big five’ leagues increased by €588m (14%) to €4.8 billion, with all the ‘big five’ experiencing significant growth.

Alan Switzer, Director in the Sports Business Group at Deloitte commented: “Lower rates of revenue growth in forthcoming seasons mean clubs will have to focus on improving cost control – both wages and other operating costs – and ensure their cost base is sufficiently flexible to deal with any revenue reductions.”

Other key findings of the Deloitte Annual Review of Football Finance 2009 include:

• Serie A achieved the largest absolute and relative revenue growth of the ‘big 5’ in 2007/08, with revenue increasing by €357m (34%) to €1,421m - assisted by the return of Juventus to the top league. Serie A wages increased by €250m (35%) to €972m.
• Ligue 1 had the lowest revenue growth of the ‘big five’ leagues of €17m (2%) to €989m. Wages grew rapidly, by €84m, taking the wages/revenue ratio of Ligue 1 to 71%. The highest of any of the ‘big five’ leagues.
• Bundesliga revenues increased by €59m (4%) to €1,438m in 2007/08.  Commercial and matchday revenue growth was responsible for this overall increase growing by €35m (6%) and €28m (9%) respectively. Matchday revenues in the Bundesliga benefit from its continued status as the best attended of the ‘big five’ leagues with average league matchday attendances of 42,600 in 2008/09 – the highest since the Bundesliga was formed in 1963.
• Bundesliga has the lowest wages/revenue ratio (50%) of any of the ‘big five’ despite wage costs increasing by €105m (17%) to €725m in 2007/08.
• La Liga enjoyed revenue growth of €112m (8%) placing it in joint second place with the Bundesliga.  Real Madrid and Barcelona contributed 47% of the total league revenue emphasising the financial polarisation in La Liga. Wages went up 8% to €900m.
• The Scottish Premier League clubs experienced revenue growth of 14%, in Sterling terms, to €252m, partially as a result of Celtic and Rangers competing in the Champions League group stage in 2007/08 and Rangers reaching the UEFA Cup Final.
• The Premier League returned record operating profits of €234m in 2007/08, and reclaimed its position as the most profitable league, from the Bundesliga (€136m) which it lost temporarily in 2006/07.
• France’s Ligue 1 joined Serie A in recording operating losses.