English boom set to reassert dominance over Germany

Frank Dalleres
Follow Frank
GERMAN football may be flavour of the month but the Premier League remains by far the richest in the world and is only set to increase its dominance in the next few seasons, according to a new report.

The combined income of England’s top 20 clubs was £2.3bn (€2.9bn) for 2011-12, and is set to rocket through the £3bn mark for the first time during the next 12 months, says Deloitte’s Annual Review of Football Finance, which is published today.

That growth is largely due to the Premier League’s bumper new broadcast contracts, which take effect from August and are worth around £5.5bn over three years – an increase of more than 50 per cent on current deals.

Germany’s Bundesliga has grown in popularity and profile in recent years, and provided both of the Champions League finalists last month at Wembley, where Bayern Munich beat Borussia Dortmund.

It is the most profitable of Europe’s five major leagues – more than 50 per cent more so than its English counterpart – and boasts the highest average attendances by some distance. The German top-flight saw collective income increase seven per cent, compared to the Premier League’s four per cent, and has also renegotiated television contracts that will see its broadcast revenue rise around 50 per cent.

However, while the division’s relative growth compares well with the Premier League, in absolute terms the gap is set to grow wider and England’s financial dominance ever more pronounced.

“The Premier League remains the best league in the world – I honestly believe that – and I don’t think one all-German final changes that,” Dan Jones, partner in Deloitte’s sport business group, told City A.M.

“The German model has huge strengths but it doesn’t enjoy the popularity that the Premier League does. We should take a more balanced view.

“Let’s not forget the two teams involved. One has risen from very difficult financial circumstances – Dortmund were in a parlous state a few years ago.

“But Bayern Munich are so dominant that they are like Celtic and Rangers rolled into one.”

The Premier League’s enduring popularity is highlighted by strong attendance figures. Stadium capacity utilisation has been above 90 per cent for 16 consecutive seasons and in 2011/12 reached a new high of 95 per cent.

Collective debt remained high at £2.4bn, but of that figure only £1bn was interest-bearing loans and interest payments fell 23 per cent to £79m.

English football’s resilience to the recession has surprised even Deloitte’s analysts, with Jones calling the continued growth “pretty remarkable”.

“Think about where we were when the wider economic downturn started,” he added.

“At that point [2009/10] it was a £2bn game; just four seasons down the track it’s going through £3bn.”

There remains considerable room for further growth, Jones believes. BT Sport’s emergence as a pay TV rival to Sky has the potential to create greater competition for rights and therefore even bigger domestic deals.

He also believes that international expansion – in the form of sponsorships, other commercial partnerships and overseas broadcast rights – presents the biggest opportunity for English clubs.

Premier League teams’ biggest challenge remains controlling wage costs, which have traditionally risen dramatically in line with increases in TV revenue – a phenomenon dubbed the “prune juice effect”. However, new so-called financial fair play (FFP) rules, both dictated by European chiefs Uefa and also England’s domestic leagues, offer clubs the opportunity to break the habit and curb salary spending.

The Premier League’s own version of FFP was only agreed by teams earlier this year but Uefa’s is already in operation, and Jones compares its impact to the Bosman ruling, which revolutionised the transfer system.

“Uefa FFP has the potential to be another Bosman,” he said.

“It is one of the most significant changes we’ve ever seen. We think the impact is very substantial. The Premier League’s own version is a lot more in its infancy.”