Football is the biggest sport in the world and the FA Premier League is the biggest league in the world. Deloitte’s Alex Byars of its sports business group notes while NFL revenues are around $8bn (£5bn), “we estimate that the European football market size, in terms of total revenue, was €16.3bn (£14.1bn) in 2010.” Within this figure, Deloitte estimates the big five European leagues (England, Germany, Spain, Italy and France) contributed €8.4bn – with the English Premier League (€2.5bn) the largest league in revenue terms, well ahead of the German Bundesliga in second place (€1.7bn). Attendances at Premier League matches in 2010/11 were 13.4m and at Football League matches (the Championship, League 1 and League 2) 16.1m. Pete Hackleton, senior tax manager at Saffery Champness says: “It should not be forgotten that the Championship is the fourth best attended league in Europe, outstripping the top leagues in both Italy and France. Byars says “once you include figures from outside the top four divisions, total attendances at English football matches in 2010/11 were over 30m in total. The next best-attended sport in the UK is horse racing, with total attendances of around 6m per year.”
According to Deloitte’s research, Spanish clubs Real Madrid and FC Barcelona lead European clubs in terms of revenues, €438.6m and €398.1 respectively – Manchester United (€349.8), Arsenal (€274.1), Chelsea (€255.9), Liverpool (€225.3), Manchester City (€152.8), Tottenham Hotspur (€146.3) and Aston Villa (€109.4) claim third, fifth, sixth, eighth, eleventh, twelfth and twentieth spots, in Deloitte’s European revenue table. Deloitte concludes “It is testament to the ability of English clubs to capitalise on all revenue streams that they occupy seven Money League positions, the most of any individual country – including six of the top 12 positions.”
In sport, timing is everything. “The excitement of English football generally seems to appeal to the overseas market,” says Hackleton, “the timings are perfect for the key Asian market – 3pm on Saturday and 4pm on Sunday kick-offs are screened in the evening in Asia – whereas evening kick offs in Spain and Italy are after midnight in such markets.”
MONEY, MONEY, MONEY
Top level football has been driven principally by broadcasting revenue. Deloitte’s first Money League in 1996/97 reported that the then leaders Manchester United generated €134m in revenue, of which €19m (14 per cent) related to broadcasting. By 2009/10, the club’s total revenue had grown to almost three times this level, at €350m, but broadcasting revenue, at €128m, has increased to nearly seven times its 1996/97 level and comprises 37 per cent of the total. Because broadcasting rights are distributed on a collective basis, the top English clubs lag behind their top Spanish competitors, which negotiate on a club-by-club basis. Liverpool’s managing director Ian Ayre, wants English clubs to copy the Spanish model – but this is extremely unlikely to pass muster, as it would need 14 of the 20 Premier League clubs to jump on board. Also, even with the collective agreement, English clubs can compete, as David Gill, Manchester United’s chief executive, argued in response to Ayre.
Debt understandably concerns many football fans. People generally don’t mind if most companies go to the wall through overleverage, but football clubs are sacrosanct. However, this doesn’t mean that all debt in football is bad. Karish Andrews, senior associate in the corporate and sports law group at Lewis Silkin says: “There is absolutely nothing wrong with clubs having significant debt, provided that it is serviceable.” He cites the example of Arsenal, which took on significant debt to build the Emirates stadium. Andrews says “no one would argue that has not been a financial success – the increased revenue has allowed Arsenal to pay off its debts and continue to compete at the top.” He is more disturbed by the growing number of clubs that are reliant on a wealthy benefactor to keep the club solvent, saying “it cannot be good for football that a club would be insolvent as soon as its owner decides to call in a loan.”
Many worry about the amount of money players earn, but this is simply a reflection of the amount of money there is in the game. Hackleton believes “the oft mooted salary cap to control ever increasing wage levels in English football is impractical, unless it could be implemented on a global basis.” He says “if English clubs limit the amount they pay out on salaries, then the top players will simply go to Spain or Italy – this will devalue the league, and reduce the value of key broadcast rights.”
English football is certainly strong on paper, but as always, in this funny old game it’s all to play for.