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Riding the challenge Annual Review of Finance 2021 Business Group July 2021 A Annual Review of Football Finance 2021 | Section title goes here

The European football market contracted by 13% in 2019/20, the first reduction since the global financial crisis in 2008/09 and the experienced its first ever decline in revenue.

B Annual Review of Football Finance 2021 | Contents

Contents

Foreword 02 Edited by Dan Jones Delivering results worldwide 07 Sub-editor A heavy challenge 08 Chris Wood

Trusted backline 10 Authors Theo Ajadi, Tom Ambler, Sumeet Dhillon, Chris Hanson, ’s premier leagues 12 Zal Udwadia and Izzy Wray

Impact of COVID-19 on investment into football 24 Sports Business Group Telephone: +44 (0)161 455 8787 Premier League clubs 28 The Hanover Building, Corporation Street, M4 4AH E-mail: sportsteamuk@.co.uk The women’s game 40 www.deloitte.co.uk/sportsbusinessgroup

Football League clubs 42 July 2021 NFTs and the iteration of football fandom 50 Player transfers 52

Football and climate – a sporting chance? 54 Please visit our website at www.deloitte.co.uk/sportsbusinessgroup The leading team in the business of 56 to download a copy of the full report.

The critical challenge: How is football tackling 58 Databook price £1,000 (Discounted price for students and educational racism and discrimination? establishments £100).

01 Annual Review of Football Finance 2021 | Foreword

Riding the challenge

Welcome to the 30th edition of the Annual Review of Football Too much pressure Of the ‘big five’ leagues the reported The 2019/20 financial year saw total revenue the smallest fall in total revenue as fixtures were Finance, the publication that remains the most comprehensive fall across each of the ‘big five’ leagues as the completed pre-financial year end meaning the analysis of the financial trends in, and prospects for, the impact of completing seasons behind closed vast majority of broadcast revenue has been doors and rebate payments to broadcasters recognised in 2019/20, and minimal rebates football industry. was felt by clubs. In total the revenue generated were paid to broadcasters. This has led to the by clubs from the ‘big five’ leagues fell by 11% Bundesliga displacing as the second The 2020 edition of the Annual Review of Ghost town to €15.1 billion. It should be noted that aside highest revenue generating league of the Football Finance was published only a few Disruption to the 2019/20 European football from the Bundesliga and , the other ‘big five’ in 2019/20. We do however expect months into the COVID-19 pandemic, at a began in March 2020, initially with ‘big five’ leagues completed their seasons after that La Liga will reclaim this position in the time where its impact on the professional matches being held behind closed doors, before their clubs’ typical financial reporting period next edition. The revenue decrease of 4% in football industry and more importantly the suspensions and in some cases cancellations of and hence a portion of revenue associated with was driven entirely by the decline in socio-economic impact on our day-to-day lives competitions were announced. the 2019/20 season, mainly linked to broadcast matchday revenue as the season concluded was highly uncertain. As we write it is now 16 agreements, will be deferred into the financial without fans in stadia which was slightly offset months after the first raft of suspensions and Across Europe, the 2020/21 season has year ending in 2021. by improved commercial performance. cancellations of European football, and the scale largely been completed behind closed doors, of the financial impact of COVID-19 across the with crowds returning to varying degrees The Premier League, which was won In contrast to revenue from matchday and industry is becoming somewhat clearer. towards the end of the 2020/21 season comfortably by in 2019/20 after a broadcast sources, commercial revenue grew and at the postponed 2020 UEFA European few months pause to end a 30 year drought, in two of the ‘big five’ leagues as agreements The analysis in this report focuses on the Championships played during June and July remains considerably ahead of the other ‘big signed pre-pandemic delivered revenue growth. 2019/20 financial year, and hence covers a 2021. It remains to be seen if fans will take a five’ leagues in terms of revenue generation. It remains to be seen how commercial partners unique season across the 30 year history of the cautious approach to returning to club stadia The gap temporarily decreased between the approach the industry in the coming seasons Annual Review of Football Finance, reflecting across Europe during the 2021/22 season, but Premier League and second placed league from and what level of value they place on being the financial impact of the first few months of based on the evidence from the 2020 UEFA €2.5 billion in 2018/19, a gap of 73% (in EUR), associated with leading European football COVID-19. We have also sought to consider European Championships, it is fair to expect to under €2 billion in 2019/20, a gap of 60%, clubs, particularly if they face their own financial and quantify the future impact of COVID-19, there to be significant pent up demand to due to the impact of COVID-19. Premier League challenges, but we expect this revenue stream to particularly on financial results for 2020/21, attend live matches. We hope that with the clubs’ total revenue fell by 13% from a record be resilient in the 2020/21 season and beyond. which we will cover in depth in next year’s continued roll out of the COVID-19 vaccine the £5.2 billion in 2018/19 to £4.5 billion in 2019/20 edition. We believe that the full extent of the 2021/22 season will see a return of football as matchday and broadcast revenue fell by 12% and Ligue 1 saw declines in revenue of impact may take a of years to become crowds so missed by players, fans, broadcasters and 23% respectively. 18% and 16% respectively in 2019/20. Moreover apparent. and viewers over the course of the pandemic. both leagues have faced significant challenges in respect of their broadcast environment. Serie A

02 Annual Review of Football Finance 2021 | Foreword

spent much of the 2020/21 season in drawn out negotiations with and DAZN in respect of both the impact of COVID-19 on their match calendar and audience and their next domestic broadcast cycle beginning in 2021/22. The new domestic deals have reportedly resulted in a 5% decrease in average annual value compared to the previous cycle. In the turmoil was even greater as Ligue 1 first cancelled their 2019/20 season due to the pandemic and then their domestic rights deal with Mediapro due to missed payments. This triggered an ongoing series of events that has led to a new broadcast agreement with Amazon and legal action being taken against the LFP by long-term partner Canal Plus. In this context the Premier League agreeing to roll over its domestic broadcast rights arrangements with the same partners for the same values for three further years feels like a wise safe harbour amid the tumult caused by COVID-19.

Diversifying revenue sources, particularly through embracing digital technology, has been a focus of leading European football clubs in recent years. The impact of COVID-19 highlighted the importance of this and accelerated some more progressive clubs’ and leagues’ efforts. Clubs across Europe created additional content or initiatives for fans to maintain and strengthen relationships and generate new revenue. The EFL allowed its clubs to stream non-televised

03 Annual Review of Football Finance 2021 | Foreword

games through its iFollow platform which completion of seasons and some financial enabled clubs to both maintain a connection reporting periods we expect that some wage with fans and generate some revenue that costs relating to the 2019/20 season including otherwise may have been lost. The latest trend end of season bonuses may be recognised catching the industry’s attention is Non Fungible in the next financial year and potentially Tokens (‘NFTs’) which the NBA in particular has some temporary pay cuts will be reversed. had significant success with. We explore this Nonetheless it will be interesting to see how further in the article NFTs and the iteration of the balance of wages and revenues develops in football fandom later in the report. 2020/21 and beyond, and whether the hitherto seemingly inexorable growth in wages slows, stops or reverses. (Dawning of a) New Era Given the relatively fixed nature of wage costs in Premier League clubs largely avoided using the the short term across the ‘big five’ leagues and UK Government’s furlough COVID-19 support, the falls in total revenue, it was arithmetically with only a handful of clubs utilising the scheme, inevitable that wage to revenue ratios would and some reversing their initial decision to apply increase considerably in 2019/20. Both the after vociferous public criticism. Premier League (73%) and Ligue 1 (89%) posted their highest ever ratios with La Liga, Serie A The ’s (‘EFL’) clubs and Bundesliga reporting their highest for over are more reliant on matchday revenue than 15 years. those in the Premier League and other ‘big five’ leagues and have been more acutely Behind this immediate headline though is a impacted by COVID-19. League 1 and League potentially more interesting development. 2 both had their 2019/20 season cancelled, In aggregate, clubs across the ‘big five’ have while the Championship was completed behind managed to almost halt the relentless year- closed doors. Thankfully the lost matchday on-year wage increases that have been a revenue was somewhat offset by the start of feature of the last decade with only a handful a new broadcast rights cycle that accounted of exceptions. Serie A reported an 8% decline for a reported 35% increase on the previous in wage costs while the other ‘big five’ reported agreement, although this could not stop increases of between 0.4% and 4% . It should operating losses increasing in the Championship be noted that due to the misalignment of the and League 1.

04 Annual Review of Football Finance 2021 | Foreword

These losses were despite the EFL’s clubs more or release players in order to reduce costs to The summer 2021 extensive use of Government support schemes register new signings, and even to agree for that included the furloughing of staff. The losses its greatest ever player to reportedly halve his has and associated cash challenges reportedly pay. If one of the traditional ‘super clubs’ finds piqued the interest of TPG Capital, who were itself in this position it should act as a stark seen limited activity understood to be considering providing a warning to rest of European club football and £300m injection into the EFL for a share in the act as a catalyst for all to work to exercise the to date, and buyers EFL’s commercial rights. Ultimately this deal necessary control over player costs to ensure did not proceed, but in March 2021 the EFL sustainability. appear to be few and announced it has secured a £117.5m funding package from MetLife Investment Management Aggregate operating losses increased in Serie A far between, as a to supports its member clubs with managing and Ligue 1 by €257m and €269m respectively. the impact of COVID-19. Meanwhile, total operating profits reduced by number of major clubs 60% and 45% in La Liga and the Bundesliga respectively and fell from £837m to £55m in the are in a position where Do nothing Premier League. At a pre-tax level, the Premier Despite the relatively modest increases in wage League clubs reported a collective loss of sales are required costs during 2019/20, there is evidence that a £966m, their largest ever. prolonged period of paying significant wages before purchases can and the COVID-19 driven fall in revenue is These financial difficulties, along with the beginning to impact even the largest clubs. seemingly unshakeable interest in, and appetite be made. for, top level football content as evidenced The summer 2021 transfer window has seen by the historic growth of broadcast and limited activity to date, and buyers appear to commercial revenue, acted as a trigger for the be few and far between, as a number of major unprecedented level of interest we have seen in clubs are in a position where sales are required European football from institutional investors before purchases can be made. over the past 16 months. This interest has also notably been more focused at a league wide FC Barcelona currently finds itself in a position level, rather than the more volatile individual where it is unable to register new players due to club level, than has historically been the norm. being in breach of La Liga’s economic controls around squad cost, requiring the club to sell

05 Annual Review of Football Finance 2021 | Foreword

Over the course of the Some stakeholders have been amenable to collapsed in disarray in just a few days. exploring this interest and see raising additional The importance of solidarity in European recently completed 2020/21 funding through external sources as part of football in securing the sport’s continued season there have been the solution. In addition to the EFL, Serie A, strength has never been more evident or more Bundesliga and La Liga have been subject emphatically stated. numerous cases of racist to approaches from private equity giants. abuse mainly emanating In the case of Serie A and the Bundesliga, the proposed investment was in return for A message to you from anonymous social a stake, and some level of control over, the European football is going through its most media profiles but with some league’s commercial rights, while the proposed challenging time in recent history and is faced investment in La Liga was focused on their with serious uncertainty due to the financial high-profile on pitch and in technology services unit, La Liga Tech. Ligue 1 issues presented by COVID-19, as detailed incidents too. has taken steps to prepare itself for potential throughout this report, but it is also subject to Enjoy yourself investment through the creation of a commercial significant wider social challenges. Finally, I would like to thank my colleagues subsidiary but this still requires approvals from who have contributed to this year’s edition the French government. The potential deals Over the course of the recently completed of the Annual Review of Football Finance in mentioned have not been completed with the 2020/21 season there have been numerous challenging circumstances. I am very grateful Bundesliga clubs ultimately voting strongly cases of racist abuse mainly emanating from for the support we receive in creating this against the proposed investment and Serie A’s anonymous social media profiles but with report from across the football ecosystem and discussions are currently on hold. some high-profile on pitch and in stadium to Henry Wong for his design expertise. As we incidents too. This reached its nadir in the look forward, the next edition will be launched The most seismic financial and structural disgraceful abuse of ’s black penalty months before the 2022 FIFA World Cup after development mooted in European football takers after the final of the 2020 UEFA European what we all hope is a less disrupted European was the ill-judged and unlamented failed Championships. It is vital that clubs, governing football season. Until then, stay safe and well breakaway by some of the richest clubs from bodies, leagues, governments and social media and I hope you enjoy the return to football three countries from the current competition companies work together to educate the public matches and this edition of the Annual Review structure towards a guaranteed place in a and punish those that commit such offences of Football Finance. European . This reflected the and in doing so make it clear that there is desperation of some and the fear of missing out absolutely no place in football, at any level, for Dan Jones, Partner among others. It was remarkable that a project racism or bigotry. www.deloitte.co.uk/sportsbusinessgroup that had been rumoured for over 20 years as a threat hanging over European club football

06 Annual Review of Football Finance 2021 | Sports Business Group

Delivering results worldwide

Deloitte has a unique focus on the sports sector, led from Investment advisory and Financial regulation due diligence advisory services the UK and operating across the world. Our experience, Assisted The Friedkin Group Assistance to FIA and long-standing relationships and understanding of the throughout the lifecycle of Formula E to support the their purchase of AS Roma feasibility assessment, and industry mean we bring valuable expertise to any project including market assessment, subsequent development, from day one. due diligence services and of Financial Regulations for post transaction strategy Formula E. assistance. For more than a quarter of a century, across For further details on how Deloitte can add over 40 countries, we have worked with more value to your project and your business, organisations in sport than any other advisers. visit our website www.deloitte.co.uk/ Consulting services Market analysis and Our specialist Sports Business Group at Deloitte sportsbusinessgroup and contact us on: Support in the assessment benchmarking provides services including: of the financial impact of Supported FIFA in mapping Telephone: +44 (0)161 455 8787 potential changes to the global out the women’s football •• Corporate finance advisory Email: [email protected] calendar. landscape to accelerate the •• Due diligence professionalisation of •• Business planning the game. •• Revenue enhancement and cost control •• Market analysis and benchmarking •• Strategic review Strategy development •• Economic impact studies Assisting World Athletics with •• Venue feasibility and development development of the World Plan •• Sports regulation advice for Athletics. •• Business improvement and restructuring •• Forensic and dispute services •• Digital strategy and transformation Consulting services Assistance with the Sport Deloitte are also audit and tax advisers to Survival Package. many sports businesses.

07 Annual Review of Football Finance 2021 | COVID-19

A heavy challenge – how COVID-19 impacted the 2019/20 European football season

As COVID-19 began spreading across western Europe in The ‘big five’ at a glance Bundesliga the spring of 2020, it quickly became apparent that elite level sport, including the ‘big five’ , would be Date suspended: 13 March 2020 significantly impacted. Date resumed: 16 May 2020 Date completed: 27 June 2020 England Germany 2019/20 matches played in FY21: 0 Serie A became the first of the ‘big five’ to consider. Across this section, we provide a brief EnglanSpaind suspend its season on 9 March 2020 after description of how the initial onset of COVID-19 GermItanalyy Rebate to broadcasters: Minimal SpainF rance an announcement from the Prime Minister affected the ‘big five’ European leagues and how England requiring all sport to be ceased. The remainder it has impacted the reporting and analysis in this Broadcast revenue recognition for France Germany of the ‘big five’ followed within days of the Italian edition of the Annual Review of Football Finance. 2019/20 season: FY20 announcement. Aside from Ligue 1, which was Premier League Italy controversially cancelled on 28 April 2020, (a These potential discrepancies are largely France decision which was challenged but upheld in the driven by two factors. First, the extent of the Date suspended: 13 March 2020 French High Court) the other leagues resumed delay in completing seasons, excluding for the Date resumed: 17 June 2020 behind closed doors and belatedly completed Bundesliga and Ligue 1, meant the seasons the 2019/20 season during the summer of 2020. became misaligned with the majority of clubs’ Date completed: 26 July 2020 La Liga financial reporting periods with a particular In addition to the human and logistical impact in respect of recognition of season long 2019/20 matches played in FY21: 66 Date suspended: 12 March 2020 challenges faced by professional football due revenue, notably broadcasting revenue, and Rebate to broadcasters: Yes – Date resumed: 11 June 2020 to COVID-19, it has become clear that there has wage costs between financial years. Secondly, reported c.£330m shared across been significant financial and administrative rebates were requested by broadcasters for all clubs over the remaining period Date completed: 19 July 2020 burdens placed on clubs, leagues and governing the delay, cancellation or behind closed doors of the broadcast rights cycle bodies. This 30th edition of the Annual Review nature of matches. For example, the majority (end 2021/22) 2019/20 matches played in FY21: 57 of Football Finance has been prepared during of Premier League clubs have a financial year Broadcast revenue recognition for Rebate to broadcasters: Yes – an unprecedented time for the professional ending on 30 June, with a half dozen on 31 May, 2019/20 season: Across FY20 and reported c.€100m spread across all football industry and while we have sought which in an uninterrupted season would allow FY21 La Liga and Segunda Division clubs to maximise the comparability of this edition for the season to be completed. However, as to previous and subsequent editions there the Premier League season in 2019/20 was not Broadcast revenue recognition are a number of potential discrepancies to completed until 26 July 2020, a misalignment for 2019/20 season: Across FY20 and FY21

08 Annual Review of Football Finance 2021 | COVID-19

with the financial reporting period has been The timing differences between financial

UEFA club competitions created, albeit five Premier League clubs chose reporting periods and the season’s completion England to extend their financial reporting period in some leagues as previously outlined has Germany Date suspended: 15 March 2020 to 13 months to 31 July 2020 to capture the raised revenue recognition questions. This is Spain Serie A Italy whole season. further complicated where there are significant Date resumed: 5 August 2020 France Date suspended: 9 March 2020 merit related payments associated with final Date completed: 23 August 2020 league position with clubs choosing a number Date resumed: 20 June 2020 Our approach England of different approaches to recognition. Some Germany England 2019/20 matches played in FY21: 11 As outlined in the graphic, there are numerous of the different approaches taken by clubs Date completed: 2 August 2020 Ligue 1 (UCL), 15 (UEL) Spain Germany potential impacts on club by clubItal yfinancial included recognisingSpain the revenue based on France Italy 2019/20 matches played in FY21: 98 Date suspended: 13 March 2020 Rebate to broadcasters: Yes – reporting due to the disruption caused by the club’s actual league position at its financial France England reported c.€575m spread across the COVID-19 pandemic. In this edition of the year-end, the position the club would have Germany Rebate to broadcasters: Yes – Date cancelled: 28 April 2020 five years Annual Review of Football Finance we have achieved historically with its points total at c.€130m withheld in FY20, paid in Spain Italy sought to keep our reporting as simple as the financial year-end or the lowest position February 2021 Date completed: n/a Broadcast revenue recognition France possible to enable comparability across historic theoretically possible given its points total at the for 2019/20 season: Across FY20 Broadcast revenue recognition 2019/20 matches played in FY21: 0 and FY21 and future editions once the full financial impact financial year-end. for 2019/20 season: Across FY20 of COVID-19 has been realised. and FY21 Rebate to broadcasters: Yes – It should be considered that this edition reported c.€123m A small number of clubs have submitted includes analysis of the 2019/20 season and financial statements considering a 13 month only represents the financial impact of the first Broadcast revenue recognition for 2019/20 season: FY20 period, typically ending 31 July 2020 to capture three to four months of COVID-19 with clubs the full 2019/20 season. We have not made generating matchday revenue for the majority of adjustments to align these numbers to a the season. Next year’s edition along with future 12 month period and the ‘normal’ season as editions will start to reveal the full financial we typically would. Likewise in instances where impact of COVID-19 as clubs feel the impact clubs have reported financial performance of empty stadia throughout the vast majority across a 12 month period, typically ending of the 2020/21 season, and broadcasters and 30 June 2020, we have not sought to extrapolate commercial partners re-evaluate the value of their financial results to ‘fit’ into the extended live football in a post pandemic environment. seasons. Note: For the purposes of this analysis FY21 is considered to begin on 1 July 2020.

09 Annual Review of Football Finance 2021 | Sports Business Group

Trusted backline Division One clubs’ total revenues of £170m. The first Premier League season kicks off in August, with the first BSkyB becomes This is the 30th edition of the Deloitte Annual Review of TV deal worth President of FIFA. £38m per season Manchester Formation of Football Finance. As we did in 2011 for our 20th edition, United top the Supporters first Deloitte Direct we have set out a timeline capturing some of the most Following the Football Money and the Football , League. France Foundation. significant events over the past 30 years that have shaped all clubs in the wins the World European top two divisions Cup on home Commission today’s football industry landscape. require all-seater soil, becoming challenge against stadia from England hosts the seventh the player 1994/95 season. 96. nation to do so. transfer system. Whilst we addressed and predicted the Producing the Annual Review is a team effort seismic impact of COVID-19 in last year’s which year on year relies on a dedicated 1992 1994 1996 1998 2000 edition, this is also the first Annual Review in pool of not just editors, sub-editors, authors which the profound effects of the pandemic and co-authors but numerous others who on the football industry are reflected in the contribute to the report and its accompanying 1993 1995 1997 1999 2001 historic financial data and trends we report databook. We are also of course always Manchester European Court BSkyB’s United on. None of our team preparing the 20th grateful to the clubs and football bodies that United win of Justice ruling proposed ”living the edition could have foreseen that a decade continue to provide information to enable inaugural on Bosman case. acquisition of dream” up to later a global pandemic would be the cause the report’s production in a timely manner. Premier League, Premier League Manchester Champions and have been streamlined to United blocked. League semi- of a revenue decline across European football. As well as striving to produce interesting champions 12 20 clubs. Richard final. and useful analysis and commentary, we are more times Scudamore Sadly, that is indeed the case but as in all dedicated to serving clients in the business of since. appointed as CEO of Premier previous editions we have continued to sport and will continue to be involved in many 12 stock market League. produce the Annual Review to the same of the significant developments both in the flotations of exacting standards as ever. Our priority football and wider sports industry. English clubs remains to provide the most comprehensive during the 1996/97 season. picture possible of English professional More detail on our team, services and 125 foreign football’s finance, documenting clubs’ clients can be found at www.deloitte. co.uk/ players with business and commercial performance within sportsbusinessgroup. Please contact us if Premier League clubs (1992: 11). the context of the wider European game. you wish to discuss your specific sports business needs. Telephone: +44 (0)161 455 8787 E-mail: [email protected]

10 Annual Review of Football Finance 2021 | Sports Business Group

Record five teams competing in the UEFA Premier League Champions live domestic The Football League help rights sell for drive Premier League and over £1 billion Championship League record per season revenue and two Premier League clubs agree from the A year after COVID-19 Implementation to implement record transfer 2013/14 season, narrowly avoiding windows. pandemic from of UEFA’s club suffer insolvency. financial fair play combined relegation March 2020 sees licensing system. regulations. The FA Women’s ITV Digital Football League Premier League City Super League remainder of the collapses. 10 attendances club revenues wins the Premier becomes fully 2019/20 season Football League reach 50 year exceed £3 billion. League, only the professional. delayed and played clubs enter Manchester high. Approval First season sixth club to do behind closed insolvency in New domestic TV City acquired by of UEFA’s clubs subject so and the fourth doors. European year. Premier deals for Premier Sheikh Mansour. financial fair play to sanctions consecutive Championships League clubs’ League agreed, European Club regulations. resulting from different winner postponed to 2021. revenues exceed worth around Association England lose UEFA FFP for the first time in Liverpool wins its £1 billion for first £650m per replaces G14 bid to host FIFA break even the competition’s first league title time. season. Group. World Cup. requirement. history. since 1990.

2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

2003 2005 2007 2009 2011 2013 2015 2017 2019 2021

FIFA introduce European Deloitte report Premier League Six Premier Liverpool lift the Ongoing player transfer Commission that Premier clubs’ total League clubs in UEFA Champions COVID-19 windows. issue White League clubs’ revenues of 2014/15 each League for pandemic sees Football League Paper on Sport. annual wage £2.3 billion. generated the sixth time. the majority introduce good Opening of the costs exceed The 30th new more revenue of the season governance new Wembley £1 billion for first club stadium than the whole Hotspur’s new across Europe initiatives. Roman Stadium. Michel time. built in England top division stadium opens. played behind Abramovich Platini becomes and since combined did in Premier League Bury FC becomes closed doors. acquires Chelsea. UEFA President. 1992 opens 1991/92. China clubs’ aggregate the first Football Some fans revenue exceeds Glazer family in Brighton. BT invests Media Capital to go return towards £4 billion for the takes control of Trust-owned heavily in its acquire minority out of business the end of the first time and no Manchester AFC Wimbledon rights portfolio stake in City since 1992. 2020/21 season, clubs reported an United. promoted to to launch Football Group. including at the operating loss. Structural review Football League, the BT Sport multi-location of The Football just nine years channel. Sir Alex European Association. after formation. Ferguson retires Championships. as Manchester United manager after 26 years and 38 trophies.

11 Annual Review of Football Finance 2021 | Europe’s premier leagues

Europe’s premier leagues

The European football market FIFA also reacted quickly, establishing a COVID-19 Relief Plan and making $1.5 billion contracted by 13% in 2019/20, available to National Associations, of which as overall revenues fell by $340m had been released in 2020, over half of which was grant funding. €3.7 billion to €25.2 billion. This is the first reduction in Whilst the pandemic affected clubs of all sizes, and in relative terms the impact was greatest revenues since the impact of on those most reliant on matchday revenue, in the global financial crisis was absolute terms the ‘big five’ European leagues bore the brunt of the immediate impact. felt in 2008/09. Combined revenues for the ‘big five’ leagues for the 2019/20 financial year fell 11% to €15.1 billion, yet this still represented a record high share of European football market 60% of the European football market. All parties across European football have been affected by COVID-19, not least UEFA, with its The repercussions of the pandemic can be revenues falling by 21% to €3 billion following seen through the reduced activity in the the postponement of the 2020 European delayed summer 2020 transfer market: a Championships and rebates to broadcast c.40% fall in gross transfer expenditure and commercial partners in respect of UEFA across the ‘big five’ leagues, from c.€5.5 billion club competitions. to c.€3.4 billion, lowering the amounts that would otherwise have been redistributed UEFA worked closely with its Member across other European leagues. Associations, leagues and clubs to manage the initial postponement and subsequent return of One of the positives to take from the pandemic football, and to mitigate the associated financial was the collective response of football bodies, strain. UEFA provided advance payments reacting with pragmatism and agility to to Member Associations and maintained resume play (where deemed safe to do so) distributions to clubs, with repayments to and providing much needed entertainment broadcast and commercial partners staggered and a sense of normality to fans of the sport. over future seasons. The record broadcast audience numbers

12 Annual Review of Football Finance 2021 | Europe’s premier leagues

Chart 1: European football market size – 2018/19 and 2019/20 (€ billion) The noise around the The differing responses from each league, in somewhat overshadowed the announcement terms of recommencement of matches, rebates by UEFA of a major change to the competition to broadcasters, negotiations with commercial 2.7 1.9 9% 8% structure of its club competitions from 2024/25 partners, financial measures to support clubs

2.9 0.7 2.6 0.6 onwards. UEFA believes that the revised ‘Swiss and other domestic leagues, and competition 10% 2% 10% 2% model’ format and increased number of changes, drove the different financial outcomes matches will continue the cycle-on-cycle growth for each league. €28.9 billion €25.2 billion in media and commercial revenues, which 2018/19 2019/20 increased by c.30% in the 2018/19 to 2020/21 Most strikingly, whilst the aggregate revenues 5.6 5.0 20% 17.0 20% 15.1 cycle; and significant uplifts in value have of the ‘big five’ leagues decreased by 11% to 59% 60% been reported in some key territories for the €15.1 billion in 2019/20, total wage costs rights to UEFA club competitions for the period remained flat. This produced one short-term commencing in 2021/22. dramatic impact as the aggregate club wages to revenue ratios for the Premier League and 2021/22 will also see the commencement of the Ligue 1 reached record levels, and the other UEFA Europa Conference League, introduced three ‘big five’ leagues reached their highest upon resumption of football in many countries ‘Big five’ European leagues by UEFA to increase the inclusivity of its levels since the early years of this century. evidenced this appetite from fans. Non ‘big five’ top leagues competitions and foster solidarity amongst Nonetheless, as the influence on revenues of ‘Big five’ countries’ other leagues some of the smaller Member Associations. COVID-19 recedes, the longer-term picture, Yet despite this sense of unity across football FIFA, UEFA and National Indeed, it is this sense of solidarity, so vital in particularly for 2021/22 and beyond, may be of stakeholders, as discussions over the future Associations riding the challenges presented by COVID-19, healthier restraint and improved financial format of European club competitions reached Non ‘big five’ other leagues that will be critical to the longer-term recovery sustainability if wage growth remains under their culmination in April 2021, news broke and growth of the sport. control, as it did in 2019/20. that 12 clubs from across three of the ‘big five’ European leagues had agreed to launch Source: Leagues; UEFA; FIFA; This section focuses on each of the other ‘big a European Super League, in place of the Deloitte analysis. ‘Big five’ European leagues overview five’ European leagues in turn, with the Premier existing midweek UEFA club competitions. Each of the ‘big five’ European leagues was League numbers presented in EUR € terms The strong unanimous negative reaction affected by the COVID-19-enforced for comparability. A more detailed analysis from governments, football governing bodies, postponement to matches in March 2020. of England’s top division can be found in the leagues, clubs, broadcasters, pundits and most However, the financial impact on each league, Premier League section of the report. importantly fans saw the idea flounder, with both in the short and medium term, has varied, nine of the 12 clubs announcing their intention as each league has forged its own path through to withdraw within the week. the crisis. 13 Annual Review of Football Finance 2021 | Europe’s premier leagues

Germany Despite the disruption to the season caused Chart 2: ‘Big five’ European league clubs’ revenue – 2019/20 (€m) by COVID-19, the DFL pressed ahead with 6,000 its tender for domestic media rights for the Matchday Revenue 2021/22 to 2024/25 period. Sky Deutschland 5,134 Broadcasting The Bundesliga was the first major European and DAZN have acquired the majority of live 1,782 Sponsorship/CommercialMatchday 5,000 35% to resume matches following the rights to the Bundesliga for the four-year period, Other commercial pandemic-enforced pause in March 2020, and with total rights values averaging €1.1 billion per Broadcasting 4,000 the only ‘big five’ league to complete its season season, a 5% decrease on the previous rights 3,208 3,117 Sponsorship/Commercial within the 2019/20 financial year. As such, cycle (€1.16 billion per season); a satisfactory 2,669 466 Notes: Commercial revenue is not 3,000 52% 15% 997 total revenues only declined by 4% (€137m) outcome given the economic context, lack of 32% disaggregated into ‘sponsorship’ 889 Other commercial to €3.2 billion, driven by a 30% (€156m) fall in new bidders for the major rights packages and 28% 2,052 and ‘other commercial’ for clubs in matchday revenues as all matches were played the 85% increase in domestic rights values for 2,000 1,711 628 1,598 England, Spain and Italy. 1,489 55% 31% 265 behind closed doors following the competition’s the previous cycle that commenced in 2017/18. 46% 16% 1,190 473 resumption in May 2020. 58% 30% 2019/20 average attendances and 1,000 A failure to agree a deal in the MENA region 364 409 234 690 170 utilisation are up to the point of 683 43% 11% 13% 11% 11% Commercial revenues from advertising and declines in value in Latin America and 13% suspension of each respective and merchandise decreased in 2019/20, across Asian markets (exc. China and Japan) has 0 England Germany Spain Italy France league. a 6% (€30m) drop on the prior year, whilst reportedly seen the value of international rights Average revenue per club (€m) sponsorship revenues actually increased by fall by c.€50m to €200m in 2020/21, despite Source: Leagues; Deloitte analysis. 5% (€43m) due to increases at a number of the league agreeing new deals at improved 257 178 156 103 80 clubs, including those participating in UEFA values in the US and Japan (both from 2020/21). Average match attendance competitions who are not regular qualifiers for Encouragingly, further deals have been those competitions. announced in multiple markets from 2021/22, 39,591 40,444 28,862 26,352 22,546 including in Italy with Sky Italia, and a long-term The 18 Bundesliga clubs reported similar deal with NENT Group across nine European Stadium utilisation (%) aggregate broadcast revenues to 2018/19, as countries, pointing to increased international 98 91 75 66 73 the Bundesliga was able to avoid paying any demand for the Bundesliga. significant rebates to broadcast partners in 2019/20. At €1.5 billion, broadcast revenues In light of the financial challenges caused by represented a record high proportion of 46% of COVID-19 and in an effort to promote stability total Bundesliga revenues in 2019/20. and greater solidarity, in December 2020 the DFL announced a change to the revenue

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distribution model for media rights revenues With the domestic and the majority of for the 2021/22 to 2024/25 period, which will international media rights deals secured for Mutual interests: Private equity across the ‘big five’ see a higher proportion of both domestic and the immediate future, and a positive trend in international revenues distributed equally commercial interest in German football, the European leagues between Bundesliga clubs. Bundesliga appears to have weathered the worst of the COVID-19 storm, helped largely Serie A was the first of the ‘big five’ leagues in May 2021 the Bundesliga and 2.Bundesliga by the collective foundations of economic to publicly announce investor interest in May clubs announced that they would not pursue Wages sustainability that German clubs have built over 2020. Private equity group CVC Capital this further for the time being. The Bundesliga’s wages to revenue ratio rose to the past 20 years. Partners, together with Advent International 56%, with total wages increasing only marginally and Italian state-backed Fondo Strategico LaLiga’s discussions with private equity have (by 0.5%) to €1.8 billion, as Christian Seifert, Italiano, eventually agreed a deal reportedly reportedly been focused on its technology the DFL’s CEO, acknowledged the challenge of The Bundesliga was the worth €1.7 billion for a 10% interest in a new services unit, LaLiga Tech, with private trying to rapidly cut contractually agreed costs. first major European sports company set up to manage the media and equity investors contemplating acquiring up Whilst this represents the Bundesliga’s highest commercial rights of the league. The offer to a 60% interest in the unit, which has a wages to revenue ratio in 20 years, this remains league to resume matches reportedly lapsed in February 2021, and the reported enterprise value of €650m. the lowest across the ‘big five‘ European following the pandemic- deal appears to have stalled amid reports Over the last seven years, LaLiga Tech has leagues and in line with the DFL’s Future Task that the Serie A clubs failed to reach developed various services including Force recommendations for a commitment to enforced pause in March consensus on the deal terms. streaming platform LaLiga Sports TV, a sustainability in German football. 2020, and the only ‘big five’ player performance analysis platform, fan Prior to the COVID-19 pandemic, the German management services and anti-piracy league to complete its DFL had reportedly begun conversations software, that is already used by other Operating profit season within the 2019/20 with private investors regarding a minority rights holders. The 4% fall in total revenues coupled with an equity interest in two newly-created inability to immediately cut costs, saw combined financial year. subsidiaries, including one that would be In December 2020, Ligue 1 and operating profits of the Bundesliga clubs drop granted a license to both the Bundesliga’s clubs approved the creation of a by 45% from €394m to €215m in 2019/20, its and 2.Bundesliga’s international media and commercial subsidiary for the LFP. The lowest level since 2011/12. Nonetheless, the DFL commercial rights, as well as the rights to approval by the clubs, which still requires reports that 16 of 18 clubs recorded positive operate and distribute the Bundesliga’s OTT French government support, stipulated that EBITDA and the Bundesliga remains, along with platform. The opportunity reportedly the LFP must hold no less than 80% of the the Premier League, the only ‘big five’ league attracted interest from over 30 potential capital and voting rights, opening the door to have reported aggregate club operating bidders, but following careful assessment, for potential equity investment. profitability every year for over 20 years.

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Spain to go to market for the next domestic rights cycle towards the end of 2021, with reports that new rights packages will be created to entice Revenue new bidders, and the option to agree deals Aggregate revenues of the 20 La Liga clubs fell beyond the historical three-year term following 8% (€261m) to €3.1 billion in 2019/20, as the the Spanish competition authority’s ruling to postponement of fixtures and extension of the remove this term limit in European markets. season into the 2020/21 financial year resulted in the Bundesliga supplanting La Liga as the Total commercial revenues fell marginally (by second-highest revenue generating league in 3%) to €997m in 2019/20. Whilst over half of the Europe. consistent La Liga clubs recorded an increase in commercial revenues, these were offset by Prior to the pandemic, the first half of the significant reductions for Atlético de Madrid season had seen Spanish clubs report rising (€17m) and Barcelona (€44m). Despite this 11% attendances, with La Liga match goers up 5% on reduction in commercial revenues for Barca, the prior year period. Unfortunately, this trend they, together with Real Madrid, remained the was halted by the suspension of football from top two clubs in the Deloitte Football Money 12 March 2020, and the resumption behind League and continued their commercial closed doors on 11 June 2020 meant La Liga dominance of La Liga, together accounting for clubs’ combined matchday revenues fell by 19% 70% of commercial revenues in 2019/20. from €506m to €409m in 2019/20. Since 2016, LaLiga and La Liga clubs’ commercial Rebates to broadcast partners reportedly revenues have benefitted from the league’s totalling c.€100m (spread over multiple years), internationalisation strategy, which includes along with a deferral of some broadcast commercial joint ventures to grow its profile revenues into the 2020/21 financial year (to through localised content, grassroots initiatives reflect when matches were played), saw total and commercial partnerships. This approach revenues from media rights fall by €133m (7%) to has facilitated better conversations with local €1.7 billion 2019/20, despite this being the broadcasters, and in May 2021, the league first year of new domestic and international took advantage of competition in the US broadcast rights agreements. LaLiga is expected sports media market to secure an eight-year

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Chart 3: ‘Big five’ European league clubs’ revenue – 2017/18 to 2021/22 broadcast rights deal with ESPN for a reported Operating profit (€ billion) €145m ($175m) per season, a 75% increase The combined operating profits of the La in US Dollar terms on the reported value of Liga clubs fell by 60% from €455m to €183m 7.0 England the previously agreed deal, for which LaLiga in 2019/20. Nonetheless, 15 clubs reported 6.1 5.8 Germany bought back the rights from beIN Sports. operating profits despite the impact of COVID-19, 6.0 5.7 Spain England demonstrating the influence on financial 5.4 Germany 5.1 Italy sustainability that LaLiga’s economic controls France Spain Wages have had since their introduction in 2013. 5.0 Italy La Liga clubs’ total wage expenditure rose only France marginally (0.4%) to €2.1 billion in 2019/20. Continued international expansion, sustained 4.0 The league’s economic controls on each club’s demand from domestic and international 3.4 3.4 3.2 3.2 3.1 squad costs encourage sustainability, and likely broadcast partners, and continued financial 3.3 3.1 3.1 3.0 contributed to the significant decreases in responsibility should provide a degree of 3.0 2.5 2.9 2.3 2.3 2.2 2.1 wage expenditure shown by Atlético de Madrid comfort for La Liga clubs as the constraints (down €29m (12%)) and Barcelona (down €55m caused by COVID-19 begin to ease. Nonetheless, 2.0 1.9 (10%)). Excluding these two clubs, total wage given the heavy bias of global fan interest 1.7 1.6 1.6 1.7 expenditure rose by €91m (7%) across the 15 towards, and hence financial dominance of, 1.0 other consistent clubs. This, combined with La Liga’s biggest clubs, continued unity will be Projected the drop in revenues, resulted in the wages to required for Spanish football to benefit from the 0 17/18 18/19 19/20 20/21 21/22 revenue ratio for the league rising to 67%, its foundations that LaLiga has laid. highest level for 17 years.

Source: Leagues; Deloitte analysis. In its attempts to help Spanish clubs manage In its attempts to help Spanish the financial repercussions of COVID-19, clubs manage the financial LaLiga reduced the collective squad cost limits (amounts spent on player wages and transfers) repercussions of COVID-19, by c.24% for the 2020/21 season, to LaLiga reduced the collective c.€2.3 billion prior to the summer 2020 transfer window, working closely with clubs to find squad costs limits by c.24% solutions for long-term sustainability. for the 2020/21 season.

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Italy commercial revenues should remain resilient in Chart 4: ‘Big five’ European league clubs’ revenue and wage costs – 2018/19 and 2019/20 (€m) 2020/21, as the season saw a host of new club sponsorship deals announced, whilst Serie A 7,000 Revenue launched a new commercial strategy that saw Serie A clubs’ combined revenues fell 18% it become the first of the ‘big five’ leagues to 6,000 5,843 (€443m) to €2.1 billion in 2019/20, as Italy create official sponsorship categories for Video became the initial focal point for COVID-19 in Assisted Refereeing and Goal Line Technology. 5,000 5,134 Europe, which halted play on 9 March 2020. Temporarily withheld broadcast payments The behind closed doors return of football in (reportedly worth c.€130m and repaid in 4,000 3,741 Italy on 20 June 2020 resulted in a €50m (18%) February 2021) and the deferral of payments 3,579 3,345 3,378 3,208 drop in matchday revenues to €234m, but given into the 2020/21 season saw aggregate 3,000 3,117 the historic lack of investment into Italian stadia broadcast revenues fall by €273m (19%) to 2,495 (and therefore relatively low matchday revenue), €1.2 billion in 2019/20. Much of the focus has 2,094 2,102 2,052 2,000 1,902 1,598 in absolute terms the decrease in matchday been on the new domestic and international 1,798 1,807 1,757 1,610 revenues was almost half that reported by rights deals from 2021/22. After a protracted 1,389 1,416 Revenue the Premier League and La Liga, and one third tender process, domestic rights deals with 1,000 Wage costs of the fall in Bundesliga matchday revenues. DAZN and Sky Italia have been secured for a

A ‘stadium fund’ was reported to be part of combined average value of c.€928m per season, 0 18/19 19/20 18/19 19/20 18/19 19/20 18/19 19/20 18/19 19/20 Wages/revenue ratio the proposed private equity investment into 5% lower than in the prior rights cycle, albeit the England Germany Spain Italy France the league (see Mutual interests box) but any league will also reportedly save €50-60m per Average club wages Wages/revenue ratio (%) such investment will take time to bear fruit, season in commission payments previously particularly given the repeated struggles to made to the Infront agency. Serie A international 61 73 54 56 62 67 70 78 73 89 progress major Italian football stadium projects. media rights values dropped more markedly, to a reported c.€196m per season from 2021/22 to Average club wages (€m) Serie A clubs’ total commercial revenues 2023/24, with the MENA region unsold at 179 187 100 100 105 105 88 81 69 71 fell €120m (16%) to €628m in 2019/20, with present. With incumbent MENA broadcast Internazionale’s commercial revenue decrease partner beIN Sports apparently declining to take alone representing almost half of this amount, part in the initial rights tender, the league seems Revenue Wage costs Source: Leagues; Deloitte analysis. as profiled in the 2021Deloitte Football Money unlikely to make up the shortfall. League. Despite the ongoing challenges,

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Wages Operating losses The Italian top flight was the only ‘big five’ league Serie A clubs’ combined operating losses to reduce total wage expenditure in 2019/20, significantly worsened in 2019/20, from €17m with aggregate wages falling €147m (8%) to to €274m, their worst result since 2001/02. It €1.6 billion. Nonetheless, the reduction in should be noted that the combined operating revenues caused by COVID-19 resulted in losses of AC and AS Roma accounted for the wages to revenue ratio rising to 78%, the almost two thirds of this amount. The road back highest level in 16 years, as three clubs spent to collective profitability in future seasons looks more on wages than they earned in revenues. challenging for all the reasons described above. The 2020/21 outturn for a season played almost entirely with no fans in stadia will also A truly collaborative effort across the Italian be challenging, but if wage restraint persists football ecosystem will be required to arrest then the 2021/22 season may present a more this trend, and promisingly, in May 2021, the encouraging balance between wages and Italian Football Federation created a working revenues. group including all Serie A and clubs to address the financial crisis facing Italian football, In response to this situation and to assist including an option to explore a return to an 18 clubs in exercising better financial discipline, team Serie A from 2023/24. the Italian Football Federation is reportedly seeking to introduce financial regulations to encourage clubs to reduce wage costs The Italian top flight was the over the coming years, with those looking to only ‘big five’ league to reduce increase expenditure required to provide bank guarantees to demonstrate the sustainability of total wage expenditure in any investments. 2019/20, with aggregate wages falling €147m (8%) to €1.6 billion.

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France instalments. The LFP subsequently agreed a Aggregate commercial revenues for Ligue 1 deal with Canal Plus for the rights previously clubs fell by 8% (€62m) to €738m in 2019/20, held by Mediapro, which meant that the total as the cancellation of the season and Revenue value of Ligue 1 and Ligue 2 domestic rights postponement of other events hit ticketing, Ligue 1 clubs’ total revenues fell 16% (€304m) to for the 2020/21 season was reportedly c.€670m, catering, merchandising and the clubs’ ability to €1.6 billion in 2019/20, more than €450m behind a 42% reduction on the €1.15 billion per season fulfil commercial agreements. PSG’s commercial their nearest ‘big five’ rivals (Serie A), as Ligue 1 that domestic rights for the 2020/21 cycle revenues of €299m were over six times more became the only top flight European league to had originally been sold for, and similar to the than the next highest (Marseille), according cancel its season in response to the pandemic. average annual value in the 2008/09 cycle. to the financial information presented by the As a result, matchday revenue decreased by DNCG, emphasising the disparity in revenue 15% (€31m) to €170m in 2019/20, albeit the After lengthy discussions and legal challenges, generating potential among Ligue 1 clubs. financial impact on this revenue stream of the rights to the eight weekly Ligue 1 matches cancellation is obviously not materially different originally held by Mediapro were awarded to Wage costs to continuing behind closed doors. Amazon for the 2021/22 to 2023/24 period, for Despite Ligue 1 clubs’ total wage expenditure a reported €250m per season (compared with increasing at its slowest rate for five years, by Rebates to broadcast partners reportedly the €780m per season agreed with Mediapro). 2% to €1.4 billion, the huge revenue reduction totalling c.€123m (between domestic and This prompted Canal Plus, the league’s long- resulted in the wages to revenue ratio increasing international rights holders) contributed to term partner, to take legal action against the to 89% in 2019/20, the second-highest level ever aggregate broadcast revenues falling 23% from LFP and to announce it intends to pull out of recorded across the ‘big five’ European leagues. €901m to €690m in 2019/20, as Ligue 1 remains its commitment to show two Ligue 1 matches Worryingly for the sustainability of French the only ‘big five’ league whose clubs earn less per match week, reportedly worth €332m football, only two clubs had a wages to revenue than €1 billion from this revenue source. To per season through to 2023/24. Canal Plus ratio below 70%, and six clubs spent more on help its clubs mitigate against these losses, the sublicenses these rights from beIN Sports, as wages than they earned in revenues. Following LFP secured government guarantees which are part of a five-year distribution deal between the termination of the broadcast rights deal repayable within five years and will be offset the two broadcasters. At the time of writing it with Mediapro, the LFP and France’s National against future broadcast rights income. appears that the sale to Amazon of the majority Union of Professional Footballers encouraged of Ligue 1 rights, including the top ten matches players to consider accepting wage reductions French football was further destabilised by the per season, has triggered yet further problems to “save professional football”. cancellation of the domestic rights deal with for Ligue 1 and its clubs’ financial futures. Mediapro in December 2020, following the agency’s failure to pay scheduled rights fee

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Operating profits Chart 5: ‘Big five’ European league clubs’ profitability – 2010/11 to 2019/20 (€m) Ligue 1 clubs reported their 13th consecutive 1,400 UEFA FFP Start of FFP Start of break-even Enhanced version COVID-19 year of combined operating losses, which regulations break-even compliance monitoring of FFP regulations pandemic England Italy increased to €575m in 2019/20, an unwanted first approved requirement 1,208 Germany France all-time record for a ‘big five’ league, as the 1,200 Spain curtailment of the football season took its toll. 979 Only one club, Brest, reported an operating 950 1,000 profit in 2019/20. Ten clubs reported operating Note: The operating result is the losses of more than €20m and pre-tax losses net of revenues less wage costs 739 will have been further affected by the fall in 800 721 and other operating costs. The England player transfer revenue, which has historically 681 operating result excludes player been a key part of some French clubs’ business 600 trading and certain exceptional models. 455 455 items. Aggregate operating results 397 373 Spain 347 for Spanish clubs were not available 400 316 394 With the French regulatory body reportedly prior to 2013/14. 264 250 343 215 Germany imposing strict requirements on clubs to 190 260 284 171 226 balance their books, and reports in the French 200 104 96 183 Source: Leagues; Deloitte analysis. 81 59 press of the sizeable losses facing Ligue 1 clubs, 30 (3) 63 (40) the LFP has announced a reduction in the size (67) 0 (97) Italy (53) (140) (35) (43) (17) of Ligue 1 from 2023/24, with a return to an (98) (143) (133) 18-team as was the case between (149) (160) -200 (306) 1997 and 2002. What influence this will have (274) France on domestic broadcast rights discussions, and (298) whether this change will be sufficient, and soon -400 enough, to reduce the likelihood of further (575) financial problems for clubs, remains to be seen. -600 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20

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Other European leagues As highlighted in UEFA’s recent European Club The Portuguese Primeira League has focused Footballing Landscape report, the impact its attention on addressing the revenue of COVID-19 has been felt throughout the distribution imbalance caused by the league’s Due to challenges in timeliness of composite European football ecosystem, and has the existing individual sales model for broadcast reporting of clubs’ results, some of our analysis potential to exacerbate the financial polarisation rights, which enables major clubs – such as for other European leagues reflects their in European football, as broadcast and Benfica – to generate an estimated 15 times financial year ending in 2019 rather than 2020 commercial partners may focus budgets on more in domestic broadcast rights revenues and hence is unaffected by COVID-19. those larger properties that are seen to deliver than the lowest earning clubs. In January 2021, the greatest returns. the Portuguese Football Federation and the The consolidated its league body announced plans to address position as the sixth-richest football league In response to this threat, some European this imbalance through a memorandum of in Europe, with total revenues increasing by leagues have sought more radical methods to understanding to centralise the sale of domestic 17% to €877m in the financial year ending in grow exposure and generate extra revenue rights from 2027/28. Creating a solution that is 2019. The Portuguese Primeria Liga (FY2019 in the long term. In June 2021, the European appealing enough to ’s big three teams, results) was the only other league to record Leagues umbrella body initiated a request whose dominance – on and off the field – is double-digit percentage revenue growth as FC for proposal process to solicit interest in tied to the individual sales model, will be key to Porto’s and Benfica’s UEFA Champions League the international media rights to nine of its the Primeira’s desire to replicate the success performances in 2018/19 drove revenue growth member leagues – including the Danish, Polish, that their Iberian counterparts at La Liga have of 19% to €525m. Norwegian and Swiss leagues profiled on had in centralising domestic and international the following page. The collective approach broadcast rights. Revenue movements for the financial year to the sale of these rights mirrors that taken ending in 2020 for the Austrian, , by the European Leagues for some member Amid the noise of the European Super League, it Danish, Dutch, Scottish and Swedish leagues leagues’ data rights since 2017. Nonetheless, may have been easy to overlook talks of another were all affected by COVID-19, with the Swedish unpicking existing rights deals and agreeing cross-border league: the BeNeLiga, which would and down 26% (to appropriate revenue distribution models will be feature the leading clubs from Belgium and the €108m) and 18% (to €162m) respectively. The a complicated process, and it will be interesting . The concept of a combined league Belgian ProLeague and Austrian Bundesliga both to see whether there will be sufficient interest between the leading clubs from these countries registered an increase in revenues in 2019/20, to create a meaningful revenue source for the has been around since the mid-1990’s, but has driven by the performance of their clubs in participating leagues in the future. gained traction over the last 20 months, and European competitions. in March 2021 further exploration received unanimous support from the Belgium Pro League clubs. The idea has been reinvigorated

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with the aim of narrowing the financial and Chart 6: Selected other European league clubs’ revenue – 2019/20 (€m) sporting gap to the ‘big five’ European leagues, 877 900 in the hope of becoming “Europe’s sixth 174 Matchday competition”. Broadcasting 800 Sponsorship/Commercial These examples highlight the proactive Other commercial approach taken by some other European 700 508 670 leagues to mitigate against the polarisation 45 evident both within domestic leagues and 204 Note: This chart includes a sample more broadly in European football, and to help 600 of other countries ranking below 530 525 address the financial instability that has been fifth in terms of average top 101 43 exacerbated by the COVID-19 pandemic. What 500 division club revenues based on 103 is clear in each case, is that a collaborative, the most recent available financial coordinated approach to discussions provides 343 186 information. Figures for Portugal, 400 357 the best platform for meaningful change. 320 , and 114 related to FY2019. Figures in respect Matchday 300 266 of and related to 68 229 221 Broadcasting The impact of COVID-19 has 158 155 the year to December 2019. Figures 35 65 Sponsorship/Commercial in respect of and 200 81 68 162 been felt throughout the 134 147 Other commercial 51 133 relate to the year to December 51 38 108 59 66 European football ecosystem, 83 47 50 28 2020. The wages to revenue ratio 100 105 85 88 31 in respect of Belgium is based on 78 67 47 and has the potential to 61 59 59 42 33 34 5 17 20 16 player payroll. exacerbate the financial 0 Russia Turkey Netherlands PortugalBelgiumSAustria Switzerland cotland Denmark Norway Poland Sweden polarisation in European Average revenue per club (€m) Source: Leagues; Club accounts; UEFA; Deloitte analysis. football. 55 37 29 29 22 22 23 18 12 9 8 7 Wages/revenue ratio (%)

68 74 63 69 62 57 70 75 76 57 67 86

Number of clubs

16 18 18 18 16 12 10 12 14 16 16 16

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Impact of COVID-19 on investment into football

The permanent loss, and/ Introduction – two new trends in football Private equity investment into sport Partners and Bridgepoint taking on Moto GP in One impact of this financial challenge has been Deloitte Sports Business Group’s recent 2006 and remaining invested ever since. Other or deferral of, key revenue greater alignment between the ambitions research paper – Long-term partnerships sports have taken more time to engage but streams for sports rights of private equity funds and the needs of and International Federations – an inevitable sizeable private equity deals have been agreed professional sport stakeholders, which match? – summarised four broad types of since 2018 in Rugby, Volleyball and Tennis. holders due to COVID-19 has resulted in more frequent partnership commercial partnership observed in recent deal resulted in acute cashflow discussions. making between third parties and International Prior to COVID-19, Europe’s ‘big five’ leagues had Sports Federations: not seen private equity investment feature as a problems and rising pressure This has led to a significant influx of private a) Long-term license agreement – all high priority item, but the events of the last 12- on key stakeholders in the investment into sport. A recent market study commercial rights are granted exclusively to 18 months have prompted a significant increase reported that between January 2020 and a third party; in appetite and activity to explore how such a sports industry including February 2021 the investment inflow into US and relationship could be beneficial. team owners, leagues and European sports properties totalled €7.8 billion b) Joint venture – a formal joint venture (JV) is – approximately a 50% increase relative to 2019. established with selected rights assigned to Governments to provide a JV; Why has European football embraced access to emergency funding We have seen two particular themes emerge private equity interest? regarding sport’s relationships with private c) Equity investment – direct equity investment From 2009/10 to 2018/19 aggregate revenue and liquidity. equity funds (and institutional investors): is made by the third party; of Europe’s ‘big five’ leagues roughly doubled, increasing by c.€8.4 billion to almost €17 billion. i) Federations and Leagues – long-term d) Strategic partnership – a long-term business Demand from broadcasters seeking to secure commercial partnerships; and relationship is established with a partner premium content soared and clubs became (can also include direct equity investment by increasingly successful in leveraging European ii) Individual clubs – private equity/ the partner). football’s reach to develop global sponsor institutional investors exploring club portfolios. ownership to enhance, or create, their The partnership types listed above may be with portfolio of sports assets. traditional sports marketing agencies, private The commercial success of European football equity funds or other external investors had meant that private equity partnerships Here we explore some of the driving forces (e.g. financial institutions). were less likely to have been considered a behind these two themes and consider strategic necessity for both leagues and clubs, potential reasons why we are yet to see a Motorsport was a relatively early recipient of but the impact of COVID-19 has proved a private equity fund finalise a deal with one of institutional equity investment, with Formula 1 turning point. Europe’s ‘big five’ football leagues. following MotoGP partnering with CVC Capital

24 Annual Review of Football Finance 2021 | Sports Business Group

The pandemic heightened uncertainty regarding Considerations between league and club Examples of institutional investment into European football future growth of revenue from sources that had investment? previously surged (broadcast and commercial European football is a premium content Belgium in particular) as well as removing near term generating machine – delivering a steady stream • Club Brugge: Orkila Capital (minority) matchday revenues entirely. This has been a of live, unscripted, appointment-to-view drama catalyst for league discussions with private to global audiences – and as such has some England equity funds, who could help address both attractive business fundamentals for private • Leeds United: 49ers Enterprises (minority) the short term financial cashflow crisis as well equity investors. The resilience shown by • : ALK Capital (majority) as bring technical capabilities and financial / consumer demand for this content during the • (incl. Liverpool: RedBird (minority) human capital to support them in delivering on pandemic has strengthened the commercial • : Silverlake (minority) their strategic objectives. proposition that the ‘big five’ leagues offer. France: Since March 2020, three of Europe’s ‘big five’ Third party investment into football clubs is • Bordeaux: King St Capital (majority) have been widely reported to be engaged in not a new phenomenon but the nature of • Toulouse: RedBird Capital (majority) discussions with private equity funds regarding investors associating themselves has certainly • Paris Saint-Germain: Bahrain Sovereign long-term commercial partnerships. Serie A, evolved. In the last decade, some more Wealth Fund (minority) Bundesliga International and LaLiga Tech (the traditional owners of football clubs (often high digital and technology arm of LaLiga) have all net worth individuals) have sold shareholdings Germany explored the potential for investment, but to to sovereign wealth funds and, more recently, • Hertha Berlin: Tennor Holdings date, no deals have been agreed. private equity funds. (minority)

To date the only successful partnerships Football clubs are often referred to as “trophy Italy announced have been limited to traditional assets”, with investment motivated by non- • : Oaktree Capital (minority) institutional lending rather than sale of equity financial reasons, rather than the belief • AC Milan: Elliott Management (majority) in a league (or a set of specified commercial from a new owner that they can expect to rights). MetLife Investment Management’s generate sustained financial return (i.e. annual Spain agreement to provide a reported £117.5m debt profitability). Non-financial factors often cited • Atlético de Madrid: Ares facility to the English Football League is the include an individual’s passion for football Management (minority) most high profile deal of this type completed. and the desire to enhance personal notoriety J.P. Morgan had planned to be a financier for and business and social connections through the proposed European Super League and owning a football club. UEFA was reported to be exploring financing discussions with Centricus Asset Management. 25 Annual Review of Football Finance 2021 | Sports Business Group

Whilst this perspective remains valid for certain •• Disruption from COVID-19 has placed a club owners, the landscape of European football greater burden on many traditional club has evolved such that investors with greater owners to bridge cash shortages at a time focus on financial return, including through long when their wider business interests may have term growth in a club’s equity value, appear also been suffering financially. more comfortable than ever in exploring ownership (or providing secured debt). Two significant (and related) risks associated with club ownership have made investment Trends that have engaged a new breed of club discussions with leagues more appealing to investor include: some investors:

•• Track record of sustained growth in broadcast i) and commercial revenues; European club football’s system of promotion and relegation brings both •• Introduction of financial regulation by UEFA opportunity and risk for investors. The value and national league / federation bodies to of football as an entertainment product promote financial sustainability; (particularly to broadcasters and fans) is enhanced by this jeopardy, but protection of •• Increased profitability / reduced losses an owner’s investment is not. prior to COVID-19 due to of revenue growth and cost control; ii) Reputational risk A strong correlation exists between club •• A larger cohort of owners unwilling to act in a on pitch performances, perceived quality financially irrational manner hence reducing of player transfers, media narrative, and the competitive pressure driving losses; the response of fans and ultimately the perception of owners. For private equity •• Potential value creation from multi-club player funds with a lower risk appetite for factors development strategies; and outside their control, the potential to have to manage this complex stakeholder relationship could make club investment less attractive than league opportunities.

26 Annual Review of Football Finance 2021 | Sports Business Group

Despite such barriers a handful of private i) Involvement of the minority investor in clubs would need to be convinced that the Deloitte’s Sports Business Group has equity funds have been comfortable in taking league governance decisions; same, or potentially greater, distributions unrivalled experience of advising European football club ownership positions and The quality of a league’s product is would be made available to them as stakeholders on sports-related investments. managing these investments - but the last 12-18 intrinsically linked to its commercial value. participant clubs despite a private equity The Group has acted as lead advisers on months has shown that league opportunities Multiple drivers of product quality exist, fund also taking their share. sporting transactions for more than 20 appear to be attracting most interest from the but examples typically fall under sporting years and has worked on more than 100 largest private equity funds. factors (e.g. participation of the world’s successfully completed deals across multiple most supported/followed clubs, presence of A majority of clubs are yet to accept private sports and countries. Our wide-ranging the world’s best players, quotas on foreign equity entry into commercial rights ownership. client base includes international sports Why have we not seen ‘big five’ league players) and business factors (e.g. matchday Bundesliga clubs chose to end the prospect of federations, leagues, clubs and investors on private equity league deals close yet? experience, perceived quality of broadcast a private equity deal for international rights and both buy and sell side projects. Generally, league investment discussions production). Serie A clubs are, at the time of writing, yet to have assumed that a private equity fund approve a deal with CVC Capital Partners after would acquire a minority shareholding in the Investors wanting to improve financial lengthy negotiations. centralised commercial rights of leagues - returns may want to be involved in decision typically broadcast, sponsorship and other making that could alter sporting factors, With many of the ‘big five’ recently or currently underexploited or nascent digital assets (e.g. but leagues and clubs may be reluctant to in the process of finalising or negotiating the esports leagues, NFTs). add an outside non-sporting participant next cycle of their respective broadcast rights stakeholder to these conversations. deals, the immediate potential window for In return, private equity would underwrite private equity entry may be closing, especially existing commercial rights values to deliver ii) Member club support; if clubs and leagues agree deals close to existing financial resources for leagues to distribute and Historically, league bodies have been rights values. If private equity deals do not close provide stability to clubs at a much-needed delegated responsibility to maximise the in 2021 it will be interesting to see if the ‘big five’ time, as well as human capital and technical value derived from commercial rights. choose to revisit this topic as they plan their capabilities to attempt to drive more value from The majority of this revenue generated approach to mid to long-term commercial these rights in the future. is distributed back to clubs, and a small rights strategies. portion is retained centrally by the league to Whilst the concept appears straightforward no cover running costs. deals have completed to date. Aside from the legal complexity of integrating a new investor Private equity investment introduces a third into ownership of a league’s commercial rights, stakeholder to share in revenue generated. two major barriers to completion have included: For a deal to be ratified, it is expected that

27 Annual Review of Football Finance 2021 | Premier League clubs

Premier League clubs

Clubs’ total revenue decreased by well saw this revenue stream fall by 23% to Chart 7: Premier League clubs’ revenues 2017/18-2021/22 (£m) £2.3 billion, accounting for 52% of total revenue over half a billion pounds (£648m, 13%) (compared to 59% in the prior year). 7,000 Projected in 2019/20 to £4.5 billion as the average The seven Premier League clubs competing in 6,000 revenue per Premier League club 5,450 UEFA competition in 2019/20 generated 46% 5,150 5,115 4,819 1,650 reduced by £33m to £225m. This was of total broadcast revenue. While COVID-19 1,418 1,600 30% 5,000 28% 4,502 was undoubtedly the major cause of the fall in 1,305 31% the first drop in total revenue in Premier 27% 1,563 broadcast revenue, worsened performance 35% by Premier League clubs in Europe across 4,000 League history and the lowest total 3,049 3,100 both UEFA competitions (following both UEFA 2,844 59% 3,500 57% 69% 59% revenue level since 2015/16, with the competition finals featuring only Premier 3,000 2,340 financial impact of COVID-19 felt by League clubs in 2018/19) was also a factor in 52% lower broadcast revenue generation. UEFA 2,000 all clubs. distributions to Premier League clubs fell by 18% (€90m) to €395m despite an extra Including the three newly promoted clubs, English team competing in the UEL group stage 1,000 670 683 599 15 700 whose revenue increased by a combined ( Wanderers) compared to 14% 13% 13% 0.3% 13% £266m, the average revenue decrease across 2018/19 and the additional revenue received 0 2017/18 2018/19 2019/20 2020/21 2021/22 Premier League clubs was 13%, with the largest by Liverpool and Chelsea for competing in the Average revenue per club (£m) relative declines seen at AFC Bournemouth and UEFA . West Ham United (both 27%). 241 258 225 256 273 UEFA reported reductions in distributions as a As detailed in our introduction and throughout, result of COVID-19 of €13m to Premier League broadcast revenue has been significantly clubs for the 2019/20 season, accounting for Matchday Broadcasting Commercial Source: Deloitte analysis. impacted by COVID-19 with reported rebates only 14% of the total €90m reduction reported of £330m agreed between the Premier League by the clubs in the financial year 2019/20 and broadcasters due to the disruptions. highlighting that the majority was as a result of This, and some 2019/20 season broadcast worsened performance and revenue deferrals revenue being recognised in the 2020/21 into 2020/21. financial statements due to matches being played after the scheduled end of the season

28 Annual Review of Football Finance 2021 | Premier League clubs

and perceptions around marketing spend. While Following the return of some fans to stadia there are potential challenges to established late in the 2020/21 Premier League season, Premier League clubs’ commercial income sources (although appetite the European Championships and other expenditure on stadia for football seems impressively resilient), sporting events throughout the summer, it was and other facilities consumer habit changes accelerated by announced that the 2021/22 Premier League COVID-19 and technological advances have season would commence with no restrictions created potential new revenue streams such on fan attendance. This important milestone, £636m as non-fungible tokens (‘NFTs’) and digital fan and the confidence shown by ongoing stadia 2018/19 engagement opportunities that clubs will be developments of clubs such as Everton and actively exploring and which may become more Fulham provide optimism for future matchday prevalent in the coming years. experiences and revenue generation. £254m With the confirmation of a new Premier 2019/20 League domestic broadcast deal for 2022/23 Matchday revenue decreased by £84m (12%) to to 2024/25 on similar terms to the current £599m, accounting for 13% of total revenue. As Capital expenditure deal, commercial revenue is reaffirmed as a expected, matchday revenue was significantly Premier League clubs’ capital expenditure key focus area for Premier League clubs if they impacted by COVID-19 as stadia closed to more than halved from its record 2018/19 level are to achieve revenue growth. In 2019/20, fans from gameweek 30 in March 2020 and of £636m, falling 60% to £254m. This drop It was announced that the commercial revenue fortunes were mixed, remained closed once matches resumed to was driven by the completion of Tottenham 2021/22 Premier League increasing by £145m (10%) overall, with 13 clubs conclude the season in the summer of 2020 Hotspur’s stadium in 2018/19, with the club’s reporting an increase. The fastest commercial after many clubs’ financial year ends. With capital expenditure being £435m lower than in season would commence revenue growth among the consistent the 2020/21 Premier League, domestic and the prior year. with no restrictions on fan Premier League clubs was at Everton (104%), European competitions played almost entirely driven by a significant stadium behind closed doors (with the exception of Excluding Tottenham Hotspur, capital attendance. agreement. In contrast, Leicester City (21%) some matches in late 2020, the last two rounds expenditure rose 32%, from £167m to £220m and Wolverhampton Wanderers (15%) suffered of Premier League matches, one FA Cup semi- despite only six of the other consistent Premier the heaviest declines. The commercial revenue final and both domestic cup finals), matchday League teams from the 2018/19 season impact of COVID-19 was limited in 2019/20 as revenue will be close to nil for Premier League increasing expenditure. This was driven primarily deals were in place for the season, but there clubs in 2020/21, causing a hole of well over half by Leicester City (following the construction of could be further fallout in the 2020/21 season a billion pounds in club finances. its new training ground) increasing its capital and beyond, as partners suffer the effects in expenditure by £59m to £77m. their own businesses and may be cautious with deal values due to both financial constraints

29 Annual Review of Football Finance 2021 | Premier League clubs

The Premier League and The average revenue generated by a ‘big six’ club While the economic dominance of the Premier the ‘big six’ on this measure (Arsenal, £142m) fell 13% to £437m, while the gap between the League ‘big six’ remains strong, with these in 2019/20. As commercial partners readjust its clubs have previously lowest-revenue generator of the ‘big six’ (Arsenal clubs accounting for 58% of total revenue, to changing market conditions and habits in experienced undisrupted in both 2018/19 and 2019/20) and the highest COVID-19 has hit these clubs hard financially light of COVID-19, further polarisation may arise revenue generator of the remaining clubs (West both in absolute and proportionate terms. The should partners continue to gravitate towards revenue growth year-on-year Ham United in 2018/19 and Everton in 2019/20) ‘big six’ saw their revenue fall by 13%, a slightly the ‘big six’ for fan and customer engagement since inception. While many decreased to £154m from £200m. Whether this lower rate than the decrease suffered by the opportunities. creates more realistic opportunities for non-‘big remaining consistent Premier League clubs clubs have experienced six’ clubs to bridge the gap on a consistent basis (15%), representing an average fall of £63m for The virtuous circle of greater revenue the joy of promotion, the remains to be seen. the ‘big six’ clubs and £24m for the other clubs generation and playing squad investment by present in the Premier League in both 2018/19 the ‘big six’ over an extended period remains anguish of relegation and the and 2019/20. The average revenue gap between one that is hard for others to emulate, although accompanying revenue rises Premier League clubs’ revenue levels the ‘big six’ and the remaining consistent the likes of Leicester City and Everton continue The financial impact of COVID-19 has been felt Premier League clubs reduced by £39m as a to challenge and explore opportunities to and falls, this is the first time all across the football landscape, so despite result. On the pitch, the challenge to the ‘big breach the dominance of their rivals on and that Premier League ‘main- the first ever fall in Premier League clubs’ six’ was led by Leicester City which finished off the pitch. Everton’s strategy is centred aggregate revenues they still all once again in the top six (fifth) for the first time since its around a new stadium at Bramley-Moore stays’, and in particular the ranked in the top 50 revenue generating clubs famous title win in 2015/16 and Wolverhampton Dock, with construction approval obtained in ‘big six’ have seen a significant in the world. Manchester United is still the Wanderers which finished seventh (only failing February 2021, while Leicester City has built highest ranked English club (4th overall), to qualify for the UEFA Europa League due to a new training complex costing a reported adverse financial result not with Liverpool, Manchester City, Chelsea and Arsenal’s FA Cup win). £100m which it hopes will enhance sporting driven by their sporting Tottenham Hotspur all making the top ten of performance. the Deloitte Football Money League published Finishing in the top four and achieving UEFA performance. earlier in 2021. Champions League qualification is the obvious Excluding the ‘big six’, the revenue of the 11 route for non-‘big six’ clubs to reduce the other consistent Premier League clubs from Following the controversy of the aborted revenue gap, but the commercial appeal of the 2018/19 fell by 15% to £1.5 billion. Compared to European Super League, the increasing ‘big six’ is strong and deep rooted and will be the ‘big six’ a greater proportion of their revenue emergence in the Premier League and beyond challenging to overcome, as these clubs account was generated via matchday and broadcast, of “mini-leagues” in respect of revenue for 78% of Premier League clubs’ aggregate which were the hardest hit by COVID-19. The generation is a more pertinent and recognised commercial revenue. The largest commercial largest relative revenue decreases, of 27%, were topic than ever. revenue generator outside the ‘big six’ (Everton, suffered by both West Ham United and AFC £76m) earned £66m less than the smallest of Bournemouth.

30 Annual Review of Football Finance 2021 | Premier League clubs

Chart 8: Premier League and Championship clubs’ average revenues – 2019/20 (£m) The three promoted sides in 2019/20 all earned a sizeable uplift in revenue, seeing revenue 500 Commercial rise by 246% in total compared to an uplift in

444 Broadcasting 2018/19 of 343%. While the revenue rise was 450 Matchday diluted by the impact of COVID-19, two of the 200 three sides remained in the Premier League for 2020/21, while relegated City bounced 400 Notes: UCL clubs comprised back on the first attempt to return for 2021/22. Chelsea, Liverpool, Manchester City 350 327 and Tottenham Hotspur. Promoted to the Premier League at the end 148 of 2019/20 for 2020/21 were Leeds United, 300 UEL clubs Cocomprisedmmercial Arsenal, Fulham and Albion. Despite Manchester United and being in the Championship, Leeds United’s WolverhamptonBroadcas Wanderers.ting other commercial revenue of £33m was higher than 250 178 11 Premier League teams in 2019/20. Leeds ChampionshipBroadcas clubs tingwith parachuteUEFA United will be optimistic that after a 15-year 200 payments comprised absence from Premier League football and 118 City, Fulham,Broadcas Huddersfieldting PL Town, centra l comfortably maintaining its Premier League 141 150 Stoke City, City and West status for 2021/22, it will be able to benefit from 28 112 BromwichMatchday Albion. its fan base and history to increase commercial 100 15 revenue and invest appropriately to retain and 100 89 Source: Premier League; UEFA; enhance its Premier League standing. 52 Deloitte analysis. 66 61 8 50 20 39 8 7 13 8 5 5

0 UCL clubs UEL clubs Premier League Premier League Championship Championship (other) (relegated) with without parachute parachute

31 Annual Review of Football Finance 2021 | Premier League clubs

While COVID-19 significantly Premier League clubs’ wage costs Chart 9: Premier League clubs’ revenues and wage costs – 2018/19 and 2019/20 (£m) While the wages to revenue ratio has increased impacted revenue in the last two years, the increase from 61% generation, Premier to 73% is the largest year-on-year in Premier 2019/20 Revenue League history, driven by the fall in revenue and Wage costs League clubs’ wage costs the inability to significantly influence the wage £4.5bn Wages/revenue ratio (%) 6,000 only increased relatively bill between the onset of COVID-19 and the end Average wage costs per club 5,157 x,xxx of the financial year. While Premier League clubs’ 73% 164 5,000 marginally (4%) to £3.3 billion, revenue fell by £648m, they spent an additional Revenue the smallest rate of increase £126m on wages compared to 2018/19, with £3.3bn Source: Deloitte analysis. only six of the 17 consistent Premier League Wage costs 4,000 since 2004/05. Nonetheless clubs (AFC Bournemouth, Arsenal, Chelsea, the unprecedented fall in Manchester United, and West Wages/revenue ratio 3,000 3,155 x,xxx Ham United) reporting a reduction in wages. 2018/19 revenue worsened the wages Average wage costs 2,000 to revenue ratio to its highest The ‘big six’ clubs on average decreased wages £5.2bn per club by 2%, while the remaining consistent Premier level in Premier League League clubs increased wages by 7%, as those Source: Deloitte analysis. 1,000 61% 158 history (73%). clubs attempting to battle the ‘big six’ for European qualification or achieve survival spent 0 2018/19 2019/20 to try and secure on pitch advantage. While £3.2bn Wages/revenue ratio (%) there is a sizeable gap between the revenue of the ‘big six’ and the rest, the wages gap is 61 xx significantly smaller. For example, the gap from Tottenham Hotspur (lowest wages among the £2.2 billion Average club wages (£m) ‘big six’) and Everton (the highest wages among Contributed by English 158 xxx the remainder of the league) was almost halved professional football to £10m in 2019/20 (from £19m in 2018/19), to Government in reflecting the ambition to ‘bridge the gap’. There taxes in 2019/20. was a notably larger gap within the ‘big six’ than to the remainder of the league, with £50m and £53m gaps between the 4th and 5th and 5th

32 Annual Review of Football Finance 2021 | Premier League clubs

and 6th highest wage spenders (Manchester United, Arsenal and Tottenham Hotspur). The Under pressure ‘big six’ accounted for 51% of Premier League wage spending in 2019/20 compared to 58% of The vast majority of Premier League club wages are revenue generated. incurred on players, and although clubs have actively looked to defer or reduce this remuneration (in agreement The promoted sides prepared for Premier with players) in response to the effects of the COVID-19 League returns by increasing wage costs by 45% pandemic to avoid staffing cuts elsewhere, there have (55% in 2018/19) on average as they strived to been non-playing staff redundancies made by some avoid an immediate return to the Championship. Premier League clubs. The promoted clubs had mixed success, Aston Villa and United (relegated in 2020/21) The nature and role of playing staff means redundancies avoided immediate relegation, while Norwich and other cost cutting measures are at best difficult and at City finished bottom. Norwich City’s relatively worst impossible options in professional football. This modest expenditure of £89m (the second course of action has however unfortunately been applied lowest wage bill in the 2019/20 Premier League), to non-playing staff. The furlough scheme was also set the club in good stead financially and may accessed by a number of clubs for non-playing staff, with have contributed to its immediate return, having some clubs subsequently reversing these decisions and secured the Championship title in 2020/21. retaining staff on full pay due to negative publicity. While it is likely promoted side wage cost rises will be lower in 2020/21 than for previous The economic and social impact on people’s lives of seasons as clubs count the cost of COVID-19, it COVID-19 has been profound and widespread. With remains to be seen whether this more cautious Premier League clubs and football in general being an financial approach will be adopted in the integral part of how many communities and individuals longer term, with the pressure of the drive for define themselves, the impact these clubs can have on fans Premier League survival and success a constant and stakeholders, is as important a consideration as ever inflationary pull to take greater financial risks in business decisions made by clubs. around cost control.

33 A year of financial uncertainty led to Correlation between wage costs and league position 14 Premier League clubs reporting The Spearman’s rank correlation coefficient, wages to revenue ratios at or in which measures the relationship between league position and total wage cost rank, excess of UEFA’s recommended decreased from 0.82 in 2018/19 to 0.66 in threshold of 70%, significantly 2019/20, indicating a weaker correlation between final league position and total wage higher than the eight reported in cost in the 2019/20 season. 2018/19. AFC Bournemouth (113%) At the top of the table there continues to be a and Leicester City (105%) became strong relationship between league position the first Premier League clubs since and total wage costs, with five of the top six wage spenders (Arsenal being the exception) Queens Park Rangers in 2012/13 finishing in the top six league positions in the (129%) to record a wages to revenue 2019/20 season, with only Tottenham Hotspur’s finishing position (sixth) exactly correlated to its ratio of over 100%, while eight clubs wage costs. recorded wages to revenue ratios of Sheffield United, the lowest wage spending club, 90% or more (compared to none in belied its wage ranking by finishing in 9th place. 2018/19). This was the worst set of Its success was short-lived however, with the Blades unable to replicate this performance wages to revenues ratios in Premier in the 2020/21 season, finishing bottom. Also League history, reflecting the unique with a wage ranking in the bottom three was Wolverhampton Wanderers, finishing 11 places and significant impact of COVID-19 higher in the Premier League (7th) than its on clubs’ financial sustainability for wages ranking. the 2019/20 financial year.

34 Annual Review of Football Finance 2021 | Premier League clubs

Norwich City was relegated with the second Chart 10: Premier League clubs’ revenues and wage costs – 2019/20 (£m) lowest wages in the Premier League, while AFC Bournemouth and were both relegated 700 despite incurring the 14th and 15th highest wages in the league respectively. 600

As is typically the case, across the rest of the 500 509 division (7th to 17th) there was significantly 490 482

less correlation between league position Tottenham Hotspu r 400 412 and total wage cost. Only three teams in that 391 h Revenue cohort (Arsenal, Brighton & Hove Albion and 351 340

326 y Southampton) finished within three places of 300 a 284 287 Wage costs Averag e their wage ranking, indicating that the Premier Everto n Newcastle United Watfor d League mid-table continues to be a competitive 234 225 186 Leicester Cit y Sheffield United Crystal Palace West Ham United Burnle y Southampto n Wolverhampton Wanderer s Watfor d

200 Brighton & Hove Albion Norwich Cit Aston Vill 157 AFC Bournemout and unpredictable environment. 181 171 142 141 164 127 120 115 150 144 135 110 108 133 134 133 119 114 109 100 100 95 105 103 95 79 89 Liverpool At the top of the table there Manchester United Manchester Cit y Chelse a Arsenal continues to be a strong 0 relationship between league Wages/revenue ratio (%) position and total wage costs. 56 66 73 70 46 69 73 92 105 55 93 95 74 71 90 87 75 90 99 113

Revenue Wage costs Note: Newcastle United data is unavailable as the club is yet to publish its financial statements.

Source: Deloitte analysis.

35 Annual Review of Football Finance 2021 | Premier League clubs

The financial impact of The revenue shortfall and inability to reduces already underway, potentially signifying a need The three promoted sides in 2019/20 reported wages quickly led to aggregated pre-tax losses for greater cost controls as revenue growth an aggregate operating profit of £14m COVID-19 is especially evident of nearly one billion pounds across the 20 slowed. This is especially pertinent with the compared to an equivalent £98m profit in in profitability, almost wiping Premier League clubs (£966m) – the highest largest source of Premier League clubs’ revenue, 2018/19. This was largely due to Aston Villa ever recorded and a deterioration of £801m broadcast rights, remaining at current per reporting the second highest operating loss in out the collective operating from the prior year with 15 clubs reporting annum values domestically for the forthcoming the Premier League of £32m in 2019/20. profit of £837m recorded pre-tax losses. Chelsea was the leading light three-year cycle and overseas growth also now for profitability in 2019/20 following the club proving harder to achieve in most markets. by Premier League clubs record sale of which contributed in 2018/19. A reduction to a pre-tax profit of £43m. In contrast, Everton The ‘big six’ saw a substantial decline in Testing times recorded a pre-tax loss of £140m, the second operating profits of 69% to £178m in 2019/20, of £782m saw combined successive year of pre-tax losses in excess of with Manchester United accounting for 64% The lack of profitability for Premier League operating profits of £55m £100m for the club. of this operating profit. Four of the ‘big six’ clubs was already evident in 2018/19, and sides (excluding Chelsea and Manchester City) the fragile and highly operationally geared reported for 2019/20, with remained profitable at the operating level nature of club finances built on an over half of the Premier Premier League clubs’ operating in 2019/20 despite the impact of COVID-19, inflexible fixed cost base was exposed by profitability showcasing their financial resilience, but this the revenue losses caused by COVID-19, League’s clubs (11) reporting The Premier League recorded the lowest was not the case for the remaining consistent resulting in record pre-tax losses in an operating loss, up from combined operating profit (which excludes Premier League sides. These clubs saw an 2019/20. This will have hurt owners’ profit/loss on player trading, amortisation of operating profit of £185m in 2018/19 transform finances across the league and may lead four in 2018/19. player transfer fees and finance income/costs) into an operating loss of £137m, a £322m to increased investment activity such as since the start of the century (1999/00) due to a swing, with these clubs being unable to Burnley’s takeover by new owners with combination of wage cost growth and significant weather the financial impact of COVID-19 on many further reports of other clubs being reductions in revenue driven by COVID-19. profitability. Despite this, the average decrease potentially up for sale. This follows falling operating profitability in in profitability (£29m), was less than half the recent years, with a high of just over £1 billion in decline suffered by the ‘big six’ (£65m), which 2016/17 followed by reductions in the following were far more profitable before the outbreak of two seasons. While the temporary collapse COVID-19. in operating profit is driven by the adverse financial impact of COVID-19 on revenue, a more gradual trend of declining profitability was

36 Annual Review of Football Finance 2021 | Premier League clubs

Chart 11: Premier League clubs’ profitability – 2015/16-2019/20 (£m) Premier League clubs’ pre-tax losses the other side to report a pre-tax profit, was Even prior to the outbreak of COVID-19, Premier recently purchased by American investors, with 1,200 Profit/(loss) before tax League clubs had reported aggregate pre-tax the financial resilience of the club a likely factor 1,038 16 Operating profit/(loss) losses of £165m in 2018/19. The impact of in this decision. As more professional investors 42 1,000 Clubs generating operating COVID-19 saw a record level of combined look to football as an attractive proposition 867 20 837 profit/pre-tax profit pre-tax losses of £966m, driven by the £648m there may be increasing pressure to achieve 52 19 Average club operating loss/ revenue reduction and worsened by the £126m profitability at clubs, rather than a reliance on 800 17 Operating profit/(loss) pre-tax loss 43 increase in wages. Player trading impacts capital appreciation to compensate for annual 25 wereProfit/(loss) more beforemuted, tax with a £115m increase in losses as has formerly been the case. 600 528 amortisation of player registrations negated by 509 427 Note: The operating result is the a £117m increase in profit from sale of players. The ‘big six’ recorded a combined pre-tax profit 18 400 8 net of revenue less wage costs of £15m in 2018/19. Fortunes were significantly 26 13 and other operating costs. The Everton (£140m) reported the largest pre-tax different in 2019/20, reporting a combined 3 21 operating result excludes player loss among 2019/20 Premier League clubs, pre-tax loss of £277m, with Manchester City 200 55 trading and certain exceptional with pre-tax losses of over £100m for the representing nearly half of this total. The items, which are included in the second successive season. Manchester City remaining consistent Premier League clubs 0 pre-tax result, along with other (£125m) was the only other club to report reported pre-tax losses of £611m, up from

(115) costs such as financing costs. pre-tax losses of over £100m, although 12 £165m in 2018/19, with seven out of the 11 clubs -200 (165) teams reported pre-tax losses of more than reporting pre-tax losses of over £50m. 12 Source: Deloitte analysis. £50m compared to only two in 2018/19. Only 11 (6) four clubs (Burnley, Chelsea, Norwich City -400 (8) and Sheffield United) reported pre-tax profits Chelsea recorded the highest compared to 11 in 2018/19. Chelsea recorded pre-tax profit of £43m, driven -600 the highest pre-tax profit of £43m, driven by 4 the sale of Eden Hazard to Real Madrid which by the sale of Eden Hazard to contributed significantly to the club’s profit on -800 (48) Real Madrid which contributed player sales of £143m. Two of the promoted (966) sides, Norwich City and Sheffield United, were significantly to profit on player -1,000 2015/16 2016/17 2017/18 2018/19 2019/20 still able to report a pre-tax profit despite the sales of £143m. impact of COVID-19, but Aston Villa reported the third highest pre-tax loss of £99m, the highest ever recorded for a promoted side. Burnley,

37 Annual Review of Football Finance 2021 | Premier League clubs

The cumulative net debt Eight clubs increased bank borrowings in 2019/20, with Tottenham Hotspur (£173m) and held by Premier League Liverpool (£147m) the most significant as both clubs reached record levels looked to recover from the impact of COVID-19 and current or recently completed stadia work. of nearly £4 billion at the Tottenham currently hold the most bank debt of end of the 2019/20 financial any Premier League side at £831m following the financing of its new stadium, with construction year, up from £3.5 billion completed in April 2019. This includes the club’s in the summer of 2019. utilisation of the Covid Corporate Financing Facility (CCFF), obtaining £175m of short-term funding from the Government in May 2020 Strengthening the reserves (which has since been repaid). Significantly This represented 88% of total revenue, up increased bank borrowing was also seen at With many club owners suffering the The terms of CCFF are for a maximum of 12 from 67% in 2018/19, as clubs required Southampton and West Ham United, with financial effects of COVID-19, several clubs months so will not feature as a long-term greater external funding to support them increases of £79m and £42m respectively. have sought external financial support, presence on club balance sheets. It is worth during the adverse financial results discussed with increased bank borrowings seen in noting that one of the criteria for eligibility above. Unlike previous years, the rise was Soft loans – a club’s borrowings on interest-free 2019/20 (and likely 2020/21) and some is “making a material contribution to predominantly driven by an increase in bank terms typically from their owners – decreased clubs utilising government funding economic activity in the ”, loans, rather than cash injections from club slightly by 1% (£26m) in 2019/20. This is a schemes (such as the Covid Corporate highlighting that football is not only valued owners. sharp change from the increases seen in Financing Facility (CCFF)) to assist their based on its significant social value, but 2018/19 (£338m) and 2017/18 (£679m), with the recovery from COVID-19. also its economic contribution. Other changing club mix resulting in a net outflow of considerations for the scheme suggest only Premier League clubs’ net debt £68m of soft loans. 2020/21 FA Cup winners While bank borrowing has long been an a limited number of the largest clubs in the The financial stress since March 2020 resulted Leicester City’s soft balance increased by avenue utilised by Premier League clubs, it Premier League would be eligible, primarily in a number of Premier League clubs exploring 250% to £68m, the largest growth amongst the is unusual for it to drive net debt increases, due to perceived/assessed investment funding options to get through this challenging consistent Premier League clubs in 2019/20, with club owner injections usually the grades. period. Bank borrowings were the main driver whilst at the other extreme Crystal Palace primary source of funding. of increased net debt in 2019/20, rising 58% reduced its soft loan balance by 45% to £25m. (£481m), representing 96% of the increase in Chelsea continue to hold the largest owner net debt. borrowings balance in the Premier League

38 Annual Review of Football Finance 2021 | Premier League clubs

(£1.4 billion), representing 56% of total owner Chart 12: Premier League clubs’ net debt – 2020 (£m) borrowings held by Premier League clubs. 400 373 Net cash/bank borrowings Other loans were relatively flat in 2019/20, Other loans increasing by 2% (£19m). Net finance costs rose 200 Soft loans Net cash/bank by £15m to £121m in 2019/20, representing 52 Net debt 17 2 (48) (24) (3) 3 (15) (51) borrowings more than double clubs’ aggregate operating Net finance costs 0 profits. (71) (86) (126) (128) (91) (44) Other loans (66) (68) (10)

The aggregate cash balances of the league’s -200 (304) (362) Note: Crystal PalaceSo netft debt loan s clubs remained relatively stable at c.£1 billion, Watfor d calculated using Palace Holdco Net debt with 12 clubs reporting an increase in their UK Limited. -400 Liverpool (530) cash balances. Significant decreases for both Leicester Cit y

(604) AFC Bournemout h Manchester City (£112m) and Manchester Source: Deloitte analysis. -600 West Ham United United (£256m) were offset by increases (21) (389)

seen elsewhere. Both Liverpool (£112m) and Wolverhampton Wanderer s Total Total -800 2020 2019

Tottenham (£103m) reported increases in Brighton & Hove Albion excess of £100m in their cash balances as a

Manchester United (298) 212 result of bank borrowings. -1,000 Other clubs Tottenham Hotspur The increase in bank borrowings and relatively (1,205) (1,186) -1,200 stable cash balance has resulted in a combined Chelse a net cash positive position of £212m in summer (2,469) (2,495) 2019 transforming into a net bank borrowings -1,400 (1,378) position of £298m in summer 2020, a £510m swing. Again, this highlights the financial stress (1,361) (625) (478) (302) (185) (178) (129) (125) (106) (105) (378) (3,972) (3,470) and restructuring forced by COVID-19. 15 (43) (26) (3)(3) (8)(8) (5)((6) 5) (29) (121) (106)

39 Annual Review of Football Finance 2021 | Sports Business Group

The women’s game

In 2019/20, the stakeholders in women’s football took Professionalisation of the game For example: Relatively poor conditions of player welfare •• The Spanish Primera División was postponed action to reduce the barriers to entry, striving to increase associated with low wages, lack of regulation for a game week due to a players’ strike calling professionalisation, provide viable opportunities for and the amateur or semi-professional nature of for a collective agreement to improve their some leagues can risk inhibiting the growth of work conditions; participation and improve player welfare across the globe. the women’s game. •• After an Italian government ruling, the Italian Serie A Femminile announced its intention 2019/20 – review headlines In international competitions, UEFA secured Throughout the 2019/20 season, stakeholders to fully professionalise from 2022. The ruling The 2019/20 season saw significant commercial major sponsorship arrangements for its in women’s football came together to take removes the current and allows investment in women’s football, as leagues Women’s Champions League and Women’s actions towards reducing the barriers to entry, teams to pay their players a higher wage. The capitalised on the elevated global profile of the European Championships with Just Eat (2021 striving to increase professionalisation, provide senate of the Italian parliament has reportedly sport following the 2019 FIFA Women’s World through 2025) and PepsiCo (2020 through viable opportunities for participation and to allocated €11m to allow semi-professional Cup. New premium title sponsors included: 2025). UEFA also secured landmark broadcast improve player welfare across the globe. clubs to make the transition; •• ’ three-year deal with English Women’s deals for Women’s Euro 2022 as Canal Plus •• The Saudi Arabian Football Federation Super League (WSL), worth a reported £10m and TF1 secured broadcast rights in France for Commercial (SAFF) launched its first women’s league, the partnerships (including a £0.5m contribution to prize €13m and BBC paid a reported £10m for the Women’s Community Football League; money – the first time this would be paid in rights in the UK. Improves Money •• Concacaf announced plans to create on pitch 1 inflows and the league). The bank also became the lead product exposure a women’s Champions League-styled partner of the grassroots FA Girls’ Football Commercial partnerships not only deliver competition in 2023 or 2024; and 7 2 School Partnerships; and cash but also drive increased exposure •• The Brazilian football federation confirmed •• Chemicals company Arkema committing to through greater activation opportunities. We the women’s national team was to be paid French Division 1 Féminine for the three-year expect this increased funding to also feed the same as the men’s team (for their period to 2021/22 for an undisclosed fee, with into greater professionalism in many areas Regulation, international duties). the league known commercially as D1 Arkema. including improved regulation, governance and Increase governance, 6 talent welfare 3 welfare standards. As in all professional sport, pool standards Increased professionalisation can also be Major broadcast deals were also agreed: increased revenue will also fuel higher player achieved through improving regulation and •• The Spanish Primera División partnered with earnings (and hence more numerous and viable governance. Adequate and appropriate Mediapro for a reported €3m per season career opportunities), in turn broadening and regulation and governance is essential to 5 4 between 2019/20 and 2021/22; and deepening the talent pool and improving ensure that leagues operate in the interest •• WSL will partner with Sky and the BBC for a the on-pitch product. This can in-turn drive More viable career Higher of their members and players. Any changes reported c.£8m per season between 2021/22 further revenue growth and propagate a truly opportunities wages to regulation and governance need careful and 2023/24. virtuous circle. consideration and buy-in from key stakeholders.

40 Annual Review of Football Finance 2021 | Sports Business Group

Regulations such as collective bargaining professionalising the women’s game is through top 20 revenue generating clubs in world earlier rounds). Similarly, it was announced agreements (CBAs) increase the likelihood of a regulation in the men’s game. For example: football now have a women’s team. Women’s that sponsorship rights would be unbundled league having minimum wage regulations •• The Chinese announced football is becoming further embedded into a from the men’s game and partially centralised (as we found in our collaboration with FIFA, that establishing a professional women’s club’s strategy, which we expect to lead to an from the Group stage onwards. UEFA also ‘Setting the Pace, FIFA Benchmarking Report: will be one of the access acceleration in the professionalisation of the announced a change in its Women’s Champions Women’s Football’). Indeed, the USA’s National conditions for the men’s Chinese Super game, as more resources are channelled to the League distribution model. Partly subsidised Women’s Soccer League (NWSL) are in League clubs; and women’s team and clubs begin to realise the by the men’s game, €24m will be distributed negotiations with the players association about •• The Brazilian Football Association (CBF) associated benefits, including: directly to clubs with 23% of the total paid to introducing a CBA ahead of the 2021 season, announced that in order for each club to play •• Improved brand perception – as clubs become non-competing clubs in a bid to support the which would likely govern a range of terms and in the men’s Campeonato Brasileiro Série A more diverse and inclusive, they can attract a further development of the sport across the conditions of employment including player they must have an affiliated women’s team greater breadth of partners; pyramid. Meanwhile, FIFA issued a tender compensation, benefits, travel and health and playing in the same name and in the same •• Appealing to a wider fan base – women’s for the unbundled media rights of the 2023 safety issues. colours. football can engage a wider population, Women’s World Cup, the first time rights for this increasing a club’s popularity and driving competition were sold separately to the men’s The 2019/20 season saw a trend in leagues There are mutual benefits that can be shared viewing figures and attendances; and . expanding in size (or announcing their intention between the women’s and men’s games •• Revenue growth - through the continued to). The English WSL increased to 12 teams (from (knowledge and personnel sharing, access to professionalisation and development of As the approach to marketing is optimised, we 10), and the Chinese Women’s Super League shared training facilities and infrastructure, leagues and the consequent uplifts in expect rights values across women’s football to and Spanish Primera División announced that increased marketing and activation potential broadcast and commercial values, which can grow. Deloitte’s TMT predictions expects that each will have an additional two teams from etc.), and we expect the two to continue to lean lead to greater earnings and other positive women’s sport will be worth more than 2021. If well executed, league expansions on, and learn from, each other in the future outcomes as noted previously. $1 billion in the years ahead, and as the revenue can help generate interest, TV audiences and whilst not inhibiting the ability of the women’s in the women’s football increases, the game’s attendances, particularly if teams are added game to define its own identity and achieve its At a broader level, UEFA and FIFA continue virtuous circle will continue to strengthen. in areas without an existing competing team, own targets. to stimulate growth in the women’s game, making the sport more accessible to a wider fan which will undoubtedly increase the level of The Sports Business Group at Deloitte base. Those teams that enter the league must professionalism. In 2019, UEFA announced its understands the business of football. be of a certain level of professionalism on and Outlook for 2020/21 and beyond intention to centralise the media rights to the We regularly work with the game’s key off the pitch, or there is a risk of discrediting The profile of women’s football continues to Women’s Champions League (from the Group stakeholders to develop strategies, optimise or weakening the league. Wide gaps in ability grow at pace. Recent seasons have seen elite stage onwards) in the 2021/22 cycle, moving operations and organisational structures between teams can lead to one-sided matches, clubs incorporate and invest in their women’s away from its previous offering of centralised and facilitate investment in the sport. reducing the excitement and interest of these teams. As noted in our 2021 edition of the rights to the Final only (clubs were responsible games. One of the levers that has been used in Deloitte Football Money League, 18 of the for home game broadcast rights sales in

41 Annual Review of Football Finance 2021 | Football League clubs

Football League clubs

In 2019/20, the three EFL divisions (Championship, League 1, League 2) reported a combined reduction in revenue of 13% to £943m, leading to aggregate operating and pre-tax losses of £498m and £565m respectively. All three divisions have been significantly negatively impacted by COVID-19, with rebates to broadcasters, matches cancelled or played behind closed doors and the deferral of some revenue to the 2020/21 financial year reducing both broadcast and matchday revenues for the EFL clubs as a whole.

Whilst we expect a further significant reduction in matchday revenue in 2020/21 following the majority of matches being played without fans, there are early signs of a more determined approach to cost control with wage costs falling in all three divisions in 2019/20.

42 Annual Review of Football Finance 2021 | Football League clubs

Football League clubs’ revenue The reduction in total revenue of 14% is Chart 13: Football League clubs’ revenues – by relegated clubs each receiving £41.8m in Following six successive seasons of revenue slightly masked by the impact of the clubs 2018/19 and 2019/20 (£m) parachute payments (Cardiff City, Fulham, growth, the 2019/20 season saw a 14% fall in being promoted/relegated into/out of the Town) from the Premier League. 800 Championship clubs’ revenue to £679m, with Championship. Considering consistent clubs 786 broadcast and matchday revenues significantly only (i.e. the 18 clubs in the Championship in Fulham reported the highest revenue (£58m) impacted by COVID-19. The EFL’s new broadcast both 2018/19 and 2019/20), the financial impact 700 with a significant portion of this being the 679 contract which commenced in 2019/20 of COVID-19 is much greater, with revenue of parachute payment received from the Premier (reportedly a 35% increase on the prior deal), these 18 clubs falling by 24%, from an average League. Leeds United reported the next highest 600 and the change in clubs in the league in 2019/20 of £35m in 2018/19 to £26m in 2019/20. This revenue (£57m), driven by strong commercial compared with 2018/19, reduced the scale of was driven by a reduction in broadcast revenue (£33m) and matchday (£15m) revenues, both the overall fall in revenue of the Championship. (down by an average of 35% (£7m) to £13m per 300 the highest of any Championship club by a club) particularly as parachute payments ceased significant margin; 72% (commercial) and 84% Championship broadcast revenue fell 10% (Hull City, , Queens Park Rangers) 200 198 (matchday) higher than the next best achieved, (£42m) to £383m in 2019/20. This was or decreased (Stoke City, Swansea City, West 166 reflecting the club’s strong fanbase and predominantly due to: i) the deferral of some Bromwich Albion) as these clubs spent another commercial appeal. 100 96 98 revenue to 2020/21 as the majority of the year in the Championship since relegation from matches following the recommencement of the the Premier League. The 18 consistent clubs’ Following curtailment of its season, League 1 league in June occurred in the 2020/21 financial matchday revenue also fell by an average of 0 2018/19 2019/20 revenue fell 16% to £166m as clubs lost out on year; and ii) a reduction in parachute payments 25%, (£1.7m) to £5.1m per club. Average revenue per club (£m) matchday revenues from the average of nine – down £9m to £228m as fewer clubs (seven in gameweeks that were not played. This reduction 33 8 4 28 7 4 2018/19 versus six in 2019/20) were in receipt of The stark difference in the decrease in is slightly lower if Bury is excluded from the parachute payments. It has also been reported broadcast revenue of all clubs in the division analysis - the club was expelled from the that the EFL agreed a £7m rebate with domestic compared with consistent clubs (present across Championship League 1 League 2 Football League following a financial collapse. broadcaster , although this is not both 2018/19 and 2019/20) only is due to the Excluding Bury, average revenue fell 13% (£1.1m) expected to impact club distributions until the variation of clubs in the league. Consistent to £7.2m. Contrasting to League 1 and the 2021/22 season at the earliest. The EFL’s new clubs reported an average broadcast revenue Note: 2019/20 League 1 average revenue per club Championship, League 2 revenues increased broadcast contract reduced the scale of the of £20m in 2018/19 versus an average of £11m excludes Bury as the club was expelled from the 2% to £98m in 2019/20. Whilst League 2 clubs overall decline in broadcast revenue. for clubs either promoted or relegated in Football League following a financial collapse. suffered from the curtailment of the league 2018/19. In 2019/20, the consistent clubs saw and subsequent loss of matchday revenue, the Matchday revenue fell 30% (£49m) to £117m their broadcast revenue fall to £13m whereas Source: Deloitte analysis. new EFL broadcast agreement with Sky Sports as matches were played behind closed doors the new clubs entering the Championship that commenced in 2019/20 is thought to have following recommencement of the season. reported an average of £25m. This was driven softened the overall financial impact.

43 Annual Review of Football Finance 2021 | Football League clubs

For the first time since 2003/04, wage wage decline. The misalignment of the end of the Chart 14: Football League clubs’ revenues and wage costs season and the majority of financial reporting – 2018/19 and 2019/20 (£m) costs of Championship clubs fell periods will mean that some wage costs related compared with the prior year (down to the 2019/20 season will be included in the 900 next financial reporting period, while the impact 839 813 3% to £813m). This was primarily driven of COVID-19 specific measures such as the use 800 786 by club mix (consistent clubs’ wages of furlough and temporary wage cuts will also have reduced wage costs in 2019/20. 700 increased 4% to £35m on average 679 per club), in particular with respect Similarly to 2018/19, the Spearman’s rank coefficient (0.65) was higher than the previous 600 Revenue to the clubs moving between the long term average for the Championship, with Wage costs Championship and the Premier League. those clubs spending most on player wages 200 198 166 typically finishing near the top of the league 148 table. Four of the five clubs paying the highest 133 Wages/revenue ratio 100 96 98 Football League clubs’ wage costs wages (Leeds United, Fulham, West Bromwich 74 65 In 2018/19, average wages of promoted clubs Albion and Swansea City) finished in the top six Average wage costs were £64m (Aston Villa, Norwich City, Sheffield places in the league with three of these four 0 18/19 19/20 18/19 19/20 18/19 19/20 per club United) compared with an average wage bill clubs promoted to the Premier League. Stoke ChampionshipLeague 1League 2 of £46m in 2019/20 for the three clubs newly City were a notable exception to this trend, Wages/revenue ratio (%) relegated from the Premier League (Cardiff ranking fourth in terms of wage costs but only 107 120 75 80 77 66 City, Fulham, Huddersfield Town). Town placing 15th in the league, highlighting that

(wages of £19m in 2018/19), also contributed higher player wages alone do not guarantee Average wages per club (£m) to this reduction following their relegation on-pitch success, particularly when that higher to League 1 with a significantly higher wage wage bill is in part a legacy of contracts signed 35 34 6 6 3 3 bill than the three clubs promoted into the whilst in the Premier League. Championship. Revenue Wage costs Note: 2019/20 League 1 average wages Considering only the clubs that finished 7th to per club excludes Bury as the club was It should be noted that in addition to club mix 21st, the Spearman’s rank coefficient is much expelled from the Football League having an impact on Championship wage costs lower (0.23). This is perhaps driven by the following a financial collapse. there are a number of other COVID-19 related relatively similar wage levels between these factors that may have contributed to the overall clubs, with 10 of the 15 clubs reporting wages Source: Deloitte analysis.

44 Annual Review of Football Finance 2021 | Football League clubs

between £20m and £40m. This compares to the last day of the season, relegating Charlton a £53m wage average for the top six placed Athletic who finished 22nd. clubs. Given relegated clubs average below this mid table range, this may indicate why In 2019/20, League 1 and League 2 wages fell Championship clubs are reticent to lower their 10% and 12% respectively compared with the wage bills, even though for 16 of the 21 clubs prior year, significantly breaking the trend of in the Championship who reported their wage wage growth over recent years. Excluding Bury, expenditure, wages exceed revenues. in 2019/20, League 1 average wages per club fell slightly less (6%). Whilst the impact of COVID-19 Given the adverse impact of COVID-19 on on revenue resulted in the wage to revenue 2019/20 revenue, it is unsurprising that the ratio of League 1 clubs increasing by five ratio of wages to revenue reached a record percentage points to 80%, this is still the second high of 120%, up from 107% in 2018/19 which in lowest ratio recorded for a decade. Despite Moneyball by the Thames itself was a record for Championship clubs and COVID-19 and contrastingly to the top divisions indicating the inflexible and stretched cost base of English football, the wage to revenue ratio of Defying the conventional wisdom that Championship for the 2014/15 season. Prior of these clubs. A clear majority of the consistent League 2 clubs decreased to 66%, the lowest Championship clubs need to pay high to becoming ’s owner, Matthew clubs reported higher wages in 2019/20 than recorded since 2010/11. This relatively good wages to reach the heights of the Premier Benham, set up Smartodds, a company 2018/19 with Leeds United (+70%), West control on wage expenditure is likely a direct League, recently promoted Brentford has providing statistical research and sports Bromwich Albion (+43%) and Brentford (+37%) result of the Salary Cost Management Protocol achieved this feat via an alternative model. modelling services to professional reporting the highest increases, albeit this may which governs both divisions. With a mid table, below average, wage bill in gamblers. Through data analytics and include promotion bonuses for the first two of 2019/20 (£26m), the club finished third, utilising complex statistics such as the these clubs who also extended their financial narrowly missing out on promotion in the number of chances a defender provides to year end to July to capture the full season. Given the adverse impact play-off final to Fulham. Fast forward 12 the attackers, Brentford has been able to of COVID-19 on 2019/20 months, the club found themselves in the identify players that they consider to have Only five clubs reported wage to revenue same position, this time beating Swansea high performance potential whilst being ratios of less than 100%. Of these clubs, three revenue, it is unsurprising that City in the play-off final. more affordable to acquire. A number of (Cardiff City, Huddersfield Town, Swansea the ratio of wages to revenue other clubs have tried, so far less City) were in receipt of parachute payments The club has consistently outperformed its successfully, to imitate these methods and from the Premier League. The other two clubs reached a record high. wage bill ever since promotion to the emulate Brentford’s achievements. ( and Charlton Athletic) were involved in a relegation battle with Barnsley just avoiding relegation, finishing 21st following a win on

45 Annual Review of Football Finance 2021 | Football League clubs

With total wage costs only edging Football League clubs’ losses Chart 15: Championship clubs’ losses – 2015/16 to 2019/20 (£m) Similarly to revenue, the extent of the worsening slightly down from 2018/19 levels, and club losses is masked by the change in clubs 100 2015/16 2016/17 2017/18 2018/19 2019/20 total revenues falling significantly due in the Championship. Considering consistent clubs only, operating losses worsened by 61% 0 to COVID-19, it is unsurprising that (60) to an average of £22m per club. This compares 5 to an average operating loss of just £6m for the 2 Championship clubs reported record -100 (9) 6 six clubs that entered the Championship in the (3) (208) total operating losses of £434m in 2019/20 season. (11) -200 4 2019/20 (£18m per club on average), (262) 2019/20 champions Leeds United reported Clubs generating operating (253) (13) 1 worsening by 16% compared with the the largest operating loss (£54m) and second -300 (289) (358) 1 Average club operating loss/ highest pre-tax loss (£62m). Fellow promoted 5 (18) pre-tax loss prior year. (361) clubs, Fulham and West Bromwich Albion, also (11) (373) (434) -400 (12) recorded significant operating and pre-tax 3 3

losses. Together the three clubs accounted for (15) (16) 26% of both Championship clubs’ operating -500 (508) losses and pre-tax losses, further highlighting 3 the willingness of owners to absorb significant -600 (21) losses in the push for promotion. Huddersfield Town was the only club to report an operating -700 profit, driven by a combination of parachute payments following relegation from the Premier League in 2018/19 and a significant reduction Profit/(loss) before tax Note: The operating result is the net in wages (down 52% to £30m), reducing their Operating profit/(loss) of revenues less wage costs and other total wage bill to a mid table level among Clubs generating operating operating costs. The operating result Championship clubs. profit/pre-tax profit excludes player trading and certain Average club operating loss/ exceptional items, which are included Pre-tax losses worsened by 94% to £508m pre-tax loss in the pre-tax result, along with other (£21m per club) with only three clubs (Hull City, costs such as financing costs. Town, Swansea City) reporting a pre-tax Source: Deloitte analysis.

46 Annual Review of Football Finance 2021 | Football League clubs

profit. All of these clubs reported operating losses with pre-tax profit driven by net profits COVID-19 – a tipping point for distributions reform? from player trading. Ever since we first published our Annual The EFL has stated that reform is needed, Championship clubs generated a profit on Review of Football Finance almost thirty “It is our strong view that parachute payments player transfers of £261m with five clubs years ago, Championship clubs have are not a form of solidarity and instead (Brentford, City, Fulham, Hull City, consistently reported operating and pre-tax provide a reward for relegation while West Bromwich Albion) each reporting profits losses, and those losses have increased distorting competition”. of over £22m from this source, together even as revenues have increased, with accounting for 49% of profit on player transfers record operating losses reported each year The average revenue of the three relegated for the league. This was more than offset by since 2014/15. COVID-19 has further clubs in 2019/20 was £52m compared with amortisation of players’ registrations (£316m), highlighted the financial struggles of these an average of £25m for all other clubs. A creating a net loss from player trading (after clubs with all-time high operating losses counter argument is that parachute amortisation) totalling £55m for all clubs, (£434m) and pre-tax losses (£508m) payments are necessary to give promoted including 11 individual clubs reporting a net loss reported in 2019/20. Even without the clubs the confidence to invest and secure on that activity. impact of COVID-19, the structural reasons players when they make it to the Premier for such significant losses are clear: League with the necessary financial cover to In 2019/20, operating losses worsened for handle the impact of relegation – an League 1 (up 5% to £45m). On a per club level i) the rewards for reaching the Premier average £75m (or 59%) decrease in revenue and excluding Bury, League 1 operating losses League are so high that clubs (and their for those same three clubs. A reformed are slightly worse (up 11% to an average of £2m owners) are willing to take substantial redistribution mechanism to all clubs across per club). On average, pre-tax losses per club financial risks to secure them; and the English Football League has been (excluding Bury) improved by 19% to £1.7m. suggested as a possible solution, but unless Contrastingly to the top divisions of professional ii) there is intense competition and it is accompanied by strong, effective cost English football, League 2 operating losses inevitably most aspirants fail in their control measures, it is unlikely to make any (improvement of 14% to £19m) and pre-tax objective with only three clubs out of 24 meaningful impact on stemming the flow of losses (improvement of 10% to £18m) improved achieving promotion each season. red ink in Championship clubs’ accounts. compared with the prior year.

47 Annual Review of Football Finance 2021 | Football League clubs

At the end of the 2019/20 to be a less common form of financing for Championship clubs (who collectively actually financial year, total net debt had net cash at the bank of £75m at the end of the Championship clubs of the 2019/20 financial year), the EFL itself secured a £117.5m funding package from increased by 18% (£201m) to MetLife Investment Management in March 2021 £1.3 billion, the highest level to assist its member clubs with managing the financial impact of COVID-19. since 2016/17 (£1.4 billion).

Capex on stadia and facilities Football League clubs’ net debt In 2019/20, capital expenditure of the 72 EFL This was predominantly driven by the 18 clubs increased by 60% (£44m) to £117m. The consistent clubs which saw a cumulative majority of this expenditure was incurred by increase in net debt of 15% (£153m) with 14 the 24 Championship clubs, representing 69% of these clubs reporting greater net debt in (£81m) of the total. Almost 80% of this spend 2019/20 compared with the prior year. Five was attributed to Fulham (£29m), Championship clubs (Barnsley, Fulham, Luton City (£12m), Reading (£12m) and Brentford Town, Swansea City, West Bromwich Albion) (£10m). Fulham’s expenditure was primarily recorded net funds at the year-end rather than related to the continued redevelopment of the net debt. Riverside Stand.

Soft loans (typically representing funding from League 1 clubs spent £24m (21% of the the owner(s)) increased 18% to £1.2 billion as total) and League 2 clubs spent £12m (10% clubs required financial support following the of the total). AFC Wimbledon accounted postponement of the league in March 2020 for approximately 70% of League 1 clubs’ due to COVID-19 and the subsequent loss of expenditure, following the construction of their revenue. Soft loans accounted for (87%) of net new stadium () located in the club’s debt and continue to be overwhelmingly the geographical roots in South-West . largest contributor to Championship clubs’ net debt. Whilst traditional bank loans continue

48 Annual Review of Football Finance 2021 | Football League clubs

Chart 16: Championship clubs’ net debt – 2020 (£m) Community and authenticity 100 Net cash/bank borrowings – a unique selling point? 73 Other loans Soft loans As highlighted in the feature article Impact of COVID-19 on 50 Net cash/bank 8 Net debt investment into football, in recent years, there has been a 3 1 3 1 (1) 2 1 borrowings Net finance costs significant influx of private investment in sport, including 0 (18) (1) (12) into Premier League clubs. The potential benefit of this for (14) Other loans clubs concerned is the likelihood of increased investment (62) (60) (57) -50 (55) (71) Source: Deloitte analysis. that these wealthy owners often bring. There are multiple (83) Soft loans (31) reasons why an individual or organisation would want to (94) -100 (116) purchase a Premier League club (e.g. growth potential of y Net debt Brentfor d

h the industry/club, marketing asset, status symbol). Whilst (141) (158) Bristol Cit y some motivations to purchase EFL clubs may be similar to -150 (166) Cardiff Cit y those for Premier League clubs, to attract new owners/ Sheffield Wednesday Forest investment, EFL clubs could emphasise their unique selling Birmingham Cit -200 Middlesbroug points – community and authenticity. Readin g Stoke Cit y

Total Total -250 2020 2019 EFL clubs can be purchased for a lower initial price, Rover s although due to lower revenues and the loss-making 75 (29) nature of many EFL clubs, it is commonplace for owners to -300 commit significant ownership funding in pursuit of on field success. EFL clubs are authentic community assets, each

Other clubs (247) (116) -350 with their own rich history and while typically smaller they (281) have a physical community asset – the stadium – at their (1,158) (984) -400 heart. Average stadium capacities in 2019/20 of Championship clubs were c.26,000, with c16,000 in League (163) (155) (150) (116) (105) (90) (72) (72) (58) (57) (291) (1,330) (1,129) 1 c.11,000 in League 2. This ability to enjoy an authentic experience and contribute to a community may be an attractive proposition to the right potential owners. (0) (1) 0 (1)(1) (2)(0) (1)0(0) (8) (14) (15)

49 Annual Review of Football Finance 2021 | Sports Business Group

NFTs and the iteration of football fandom

Non-fungible tokens (NFTs) In the first half of 2021, news and social media portraits; photocopying for magazines; cassette applicable indefinitely. This contract may include intrigue as they blend new focused on NFT’s positives: the surge in sales tapes for music and the list goes on. a commission on trades, enabling a share of all volume, instant riches, the involvement of transactions to flow back to the platform owner. technology, speculation celebrities, and an intrinsic association with Technology has enabled media to become and abstraction of existing blockchain. The second half may see increased increasingly fungible, that is replaceable or For fans, NFTs offer a digital upgrade to printed discussion of more negative factors: a decline substitutable by something identical. Coins, sports cards that have existed for decades. behaviours. They are novel, in sales, potential environmental impact, common shares and brand-new smartphones The most coveted of these have sold in recent tantalisingly lucrative, yet the opportunity for fraud and a reliance on are perfectly fungible. Technology has enabled months for millions of dollars per card and it is blockchain. fungibility at ever-lower marginal cost; copying, worth noting that the most valuable cards have accessible to everyone. sharing and distributing content is low-friction little intrinsic value aside from their scarcity. When the dust settles, a process which may given the calibre of devices available today. In the US, eBay alone reported sales of all take a couple of years more, NFTs are likely to cards were up 142 percent in 2020, four million In 2021, NFTs have been associated primarily become regarded as an important application A 30 second video of an iconic sporting moment more than in the prior year. For the wealthiest with two industries: art and sports. In March of technologies that, overall, enhances the – such as a Messi dribble past five defenders collectors, sports memorabilia form part of their 2021, the art world was enthralled by the business of sports and embellishes the sports ending in a goal – captured by an array of 4K portfolio of assets, alongside more traditional biggest ever sale price of a digital artwork: fan experience. Within that period, say by 2023, cameras operated by highly skilled camera financial assets, art or classic cars. $69.3m for a digital collage, sold at Christie’s, it is likely that most major football leagues in people – can be replicated and shared within thus placing NFTs firmly at the centre of the Europe will have launched multiple NFT related seconds by a fan at home. Acquiring a sports NFT confers ownership, traditional art establishment. products. But as of mid-2021, NFTs are still in but typically does not include copyright. The their infancy for almost all sports, with only the NFTs, conversely, enable the application of owner of the NFT could display the content The immensity of this price further cast the NBA having a comprehensive offering. scarcity, to digital as well as analogue content. publicly, but not generate revenues from its spotlight on the Top Shot phenomenon – the In a sports context, the major application of display. So, for sports leagues, or individual NFT-enabled digital makeover of NBA sports Understanding the appeal of NFTs to the NFTs so far has been to enable scarcity in video teams or athletes (at any stage of their career), collectibles – which saw $219m in sales in sports industry requires a quick primer on the clips of sporting moments. A fan could become NFTs represent a potential additional source February, and a further $200m in March. As historical impact of technological progress the unique owner of a thirty-second dribble, of revenues at a time when one major revenue of mid-2021, most of the NFT activity in sports on media assets. Technology has enabled or for a lower price, one of a hundred. The NFT pillar, matchday attendance, has been largely has been driven by the NBA’s NFT platform; the creation of increasingly complex and contains price, ownership (including number of shut down by COVID. In the short term, football has yet to experience an equivalent sophisticated media. It has also facilitated copies) and a link to the media file. Each NFT is revenues will be predominantly from the sale marketplace, but the NBA’s success is driving a commoditisation of a widening array of media unique in the same way that each limited run of of new content generated by each week’s rush of interest from participants in the game content with increasing degrees of fidelity. The prints is individually numbered yet otherwise games. In the long-term, as the stock of NFTs including clubs, leagues and players. printing press enabled the manufacture of identical. The NFT is fully tradeable, but will steadily increases, trading volumes should rise, replicas of books; photography did the same for likely include a contract, whose terms are generating rising revenues from commissions.

50 Annual Review of Football Finance 2021 | Sports Business Group

For fans, the success Similarly, a benefit of owning digital sporting Italy’s Serie A has also dipped its toe into NFTs. of NFTs relies on their collectibles in the form of sporting moments is Various NFT collectibles were made available to willingness to value the that they can be shown off – on a smartphone, celebrate the final of the with the specific type of uniqueness a zoom background, or an online album – and highest value achieved being €3,500, indicating that ownership confers. that they may confer a degree of status, or that there is some way to go before football There appears to be a even a sense of belonging. That benefit, as well reaches NBA levels of success in monetising NFTs. paradox in that a NFT of as the possibility of making a profit, has been the build-up to a goal, sufficiently alluring to convince 500,000 fans to NFTs can also be applied to other aspects of purchased for, say, £10,000, have started their NBA Top Shots collection as of sports. E-tickets could be sold as an NFT, with offers ‘ownership’ of a clip May 2021, up from 4,796 at the start of the year. programmable features that could stipulate that that anyone could watch on a percentage of any resale value flow back to the their own device, or indeed Football has the biggest fan base of all issuing club. This approach is being considered which the royalty owner sports, and NFTs and football could be a very by the Dallas Mavericks NBA team, as way of could license to any TV compelling combination. As of early-July, the capturing a share of resold tickets broadcaster or social media most extensive digital collectible platform in platform. Europe was Sorare, which had signed up over NFTs could also be applied to physical elements, 140 football clubs around the world, including starting with collectibles. A major challenge But whilst this type of ownership may a few Premier League teams. Sorare offers with memorabilia is authentication. NFTs can be feel unfamiliar to those used to physical a mash-up of collecting cards and fantasy applied to physical collecting cards, match balls ownership, tens of billions of dollars per football, and as such may appeal to fans that and other mementoes, using techniques year are now spent on virtual currencies enjoy building teams within environments like pioneered for the art market. Over time within video games which are then used to EA’s FIFA 2021. It is worth considering that the range of applications of NFTs should purchase artefacts and capabilities which only NFTs are likely to become fantasy football is a major industry already, and steadily grow. exist virtually, and of which there is typically regarded as an important NFTs could readily be incorporated into a new infinite stock. These include weapons, seeds, or existing league. As of July 2021, whilst there The 2021/22 season could be the first in which clothing, dance moves and doubled points for application of technologies had been sporadic high-value sales of individual NFTs start to make a major mark, from a video games. Many of these digital assets can that, overall, enhances the cards, usage of Sorare remained modest (c.1500 revenue perspective, on the football market. be used to enhance a player’s performance, sales over the course of July 6), and it may And if the experience of early adopters proves but clothing and dance moves are often only business of sports. require entire leagues to join before take-up positive, the market should continue to grow, ornamental, with the reward to the owner starts to soar. and be part of the digitisation and hence including the reaction from others. globalisation of the fan experience.

51 Annual Review of Football Finance 2021 | Section title goes here

Player transfers

The 2019/20 season saw a Premier League clubs’ transfer activity The value of Premier League clubs’ transfers in second successive decrease during 2019/20 slightly declined by 4% to £1.8 in transfer spending by billion, the second successive annual decline in expenditure since the record high was set English clubs, in what were in the 2017/18 season (£2.4 billion). Despite the final two transfer windows this decline, an active competitive market to acquire on-pitch playing talent remained, with before the onset of the Premier League clubs completing 150 transfers COVID-19 pandemic. Premier (excluding loans) into their playing squads during the season (153 in 2018/19). League clubs’ transfer spend fell to £1.8 billion, a 4% Transfers in from overseas clubs continued to account for the majority of expenditure (56%) reduction from the 2018/19 in 2019/20, as Premier League clubs continue season (£1.9 billion). The to be the world’s highest spenders on acquiring on-pitch talent. Despite this, the proportion of player transfer market was transfer spending involving recruitment from understandably more muted other English clubs increased markedly to 29%, to a total of £512m in 2019/20. in terms of both value and volume of transfers in the The average transfer expenditure per club of the 17 consistent clubs in the Premier League 2020/21 season as clubs in both the 2018/19 and 2019/20 seasons sought to navigate the decreased by £7m to £90m. The three newly promoted clubs committed to average transfer financial turbulence caused expenditure of £80m, which together with the by COVID-19. accompanying committed wages and salaries cost will have accounted for the vast majority of their revenue increase attained through promotion as they sought to retain Premier League status by investing in on-pitch talent.

52 Annual Review of Football Finance 2021 | Player transfers

The ‘big six’ clubs continue to constitute a Chart 17: Premier League and Football League clubs’ player transfer payments significant proportion of Premier League clubs’ – 2019/20 (£m) Future player movement transfer expenditure. In spite of Chelsea’s transfer ban, 46% of total spending in 2019/20 Note: Arrows represent the flow Next year’s edition of our review will was by the ‘big six’ clubs compared to 45% £1,003m of transfer payments, with players analyse the summer 2020 and January in 2018/19. Both Manchester clubs and moving in the opposite direction. 2021 windows. These two transfer Arsenal each spent in excess of £180m and Premier League clubs The estimated fees in respect of the windows saw the continued trend of Within PL clubs Tottenham Hotspur saw the greatest increase £286m £298m transfer of player registrations refer reduced player transfer volumes, with 143 in expenditure across the 17 consistent Premier Non-English to amounts committed in 2019/20, Premier League transfer-in (excluding Premier League total clubs League clubs, spending £136m in 2019/20 £1,778m rather than actual cashflows. The loans) occurring during the 2020/21 compared to £22m in 2018/19. sources for the amounts in the season compared to the average of 179 chart relate to periods that are not across the previous five seasons’ windows. Payments to player agents edged up slightly to a necessarily coterminous. Clubs exercised relative caution amid the £226m £34m £63m new record high of £263m, despite the decrease highly uncertain environment created not in overall spending, representing a remarkable Source: Premier League; Football only because of the COVID-19 pandemic, £263m £63m 15% of total transfer expenditure. League; Football Association; but also coinciding with the closing Football League Deloitte analysis. of the January transfer window. clubs Within FL clubs In order for British clubs to sign a foreign Football League clubs’ transfer activity Agents £86m Football League clubs’ combined gross transfer player post December 2020, the player £54m Football League total expenditure in 2019/20 was £266m, a slight £266m must satisfy a points based system that decline of £10m (4%) when compared to the considers a number of factors including 2018/19 season. Intra Football League club the number of international appearances transfers continue to account for the highest and their country’s FIFA ranking at the proportion of transfer spend (32%) with Championship clubs seeking promotion to the time of the transfer. The implementation payments to overseas clubs for the transfers Premier League continued to invest heavily in of the new points based system for in of players representing 24% of total spend, their on-pitch talent. The three promoted sides overseas players has the potential to up from 18% in 2018/19. Payments to agents in 2019/20 spent an average of £15m, nearly reduce the number of international remain significant, accounting for 20% of total twice as much as the average of clubs retaining transfers and further heighten the transfer spend. their position in the Championship (£8m) and likelihood of reduced transfer spending over 4.5 times the average transfer spend of the for future transfer windows. three relegated clubs (£3m).

53 Annual Review of Football Finance 2021 | Sports Business Group

Football and climate – a sporting chance?

In last year’s Annual Review The last year has seen the football industry •• Fans – As the ultimate consumer of the sport contribute positively to issues affecting wider fans are a vital stakeholder, who through their we noted that post-COVID-19 society including through the campaign for collective power can have a significant impact there may be an even greater racial equality and justice, and the COVID-19 if they believe clubs and other organisations pandemic response, with use of stadia as are not taking relevant action. emphasis on addressing testing or vaccination centres. There is also climate change to shape a the opportunity for football to play a similarly •• Players – Social and digital media content impactful role on climate change. from individual players is a more direct means greener recovery. Despite of communication than official club channels, the pandemic’s impact on and can have a greater ability to generate a Stakeholder expectations sustainable mindset and influence climate- professional football globally As we noted in last year’s edition several leading specific actions. being deeper and more organisations in the sport, including FIFA and UEFA, are already signatories to the UN-led •• Clubs – Clubs will increasingly expect players, longer lasting than hoped for Sports for Climate Action framework which partners and suppliers to act sustainably a year ago the emphasis on seeks to move the sports sector to a low carbon to meet the expectations of fans and wider economy. Indeed, football has many of the society. long term societal change and characteristics required to influence change; football’s contribution to that climate change being a global problem that •• Broadcasters and media – The increasing requires the whole of society to collaborate acknowledgement of environmental causes has only grown. and coordinate to find solutions. by the media is also being accompanied by the adoption of more sustainable production Across society there are expectations for principles. individuals and organisations to take a more conscious approach to climate action and •• Leagues and competitions – As climatic wider sustainability. Football is no exception to conditions impact the viability of live outdoor this, with roles for key stakeholders within the sport, leagues and competitions are industry including: increasingly acknowledging the importance of efforts to mitigate climate change.

54 Annual Review of Football Finance 2021 | Sports Business Group

•• Governing bodies – Safeguarding the future 2. Implement climate action roadmaps to Deloitte’s Sustainability Services give clients of the sport they run is a key objective for deliver on your stated ambitions with the capability and confidence to drive real governing bodies, which can be achieved the required investment, innovation and change, build competitive advantage and through encouraging positive climate action collaboration. to make climate-smart choices, so that by the sport’s stakeholders. •• Take steps to achieve net zero, engaging they can succeed in a low-carbon future. with key stakeholders across the value Our team is at the cutting edge, supporting •• Commercial partners – An association with chain to encourage climate action across clients across industries to make clear players, athletes and sporting organisations transport, merchandise, ticketing and choices for a sustainable future. that act responsibly can benefit the game’s other aspects of football operations. commercial partners, in turn generating Deloitte Sustainability and the Sports consumer goodwill and brand loyalty. •• Develop a sustainable culture, working Business Group recently collaborated to with employees and other stakeholder produce an insight paper on The role of sport groups to improve understanding in mitigating climate change. What can the football industry do? of the importance and relevance of Football’s impact on climate change can be sustainability. improved through enhanced coordination of organisations educating themselves on the 3. Ensure climate action continues issues and investing resources effectively. over time, with progress monitored A potential course of action for stakeholders is and tracked through a culture of outlined below: transparency, oversight, rigour and continuous improvement. 1. Set out an ambitious vision for climate •• Mandated, industry-wide reporting action, setting targets and embedding of carbon emissions increases the them into all aspects of your operation. transparency of operations and •• Set public targets and commitments, encourages organisations to take more articulating clear goals to achieve net zero urgent action. carbon emissions across operations. •• Workshops to educate fans and players, •• Promote climate action messages raising awareness of climate change can e.g. via social media campaigns to raise help and empower a large stakeholder awareness and activism amongst fan base to act and continuously improve. bases.

55 Annual Review of Football Finance 2021 | Sports Business Group

The leading team in the business of sport

Improve your strategy and governance

Working together with our clients, We help deliver effective Deloitte’s unique experience, governance, strategies, insights, robust evidence-based operations, competitions and advice, and credibility in sport impact analysis for sports Business Economic impact Strategy Governance and Restructuring Business Economic impact Strategy Governance and Restructuring helpsplanning build a strong casestudies and revieworganisations and toorganisational build their of competitions planning studies review and organisational of competitions consensus for change amongst developmenintegrity, credibility,t desig quality,n youthand calendar development design and calendar key stakeholders and enables player development, popularity our clients to positively influence and value. and react to their wider political, economic and social environment.

Optimise your revenues

Deloitte bring experience, We give our clients a competitive information, insights and leading advantage by delivering solutions practices to help our clients to to help engage their fans, grow analyse and grow their revenues attendances, promote their and profitability. brand, build value from new Commercial Market analysis Ticketing and Benchmarking Media rights Commercial Market analysis Ticketing and Benchmarking Media rights markets and accelerate growth. development and development hospitality and best practice analysis development and development hospitality and best practice analysis strategies strategies

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Advice on the Financial and Business and Targeting, Major event Advice on the Financial and Business and Targeting, Major event development of commercial venue market acquiring and feasibility, bid development of commercial venue market acquiring and feasibility, bid stadia and other due diligence feasibility studies disposing of a support and stadia and other due diligence feasibility studies disposing of a support and facilities sports business advisory services facilities sports business advisory services

Risk Audit and Club licensing Investigatory and Sports tax Risk Audit and Club licensing Investigatory and Sports tax management compliance and cost control dispute services advisory management compliance and cost control dispute services advisory regulations regulations

Digital strategy Data Business agility Mobile and Content and Digital strategy Data Business agility Mobile and Content and and planning transformation and ways of e-commerce campaign and planning transformation and ways of e-commerce campaign working implementation strategy working implementation strategy Business Economic impact Strategy Governance and Restructuring planning studies review and organisational of competitions development design and calendar

Commercial Market analysis Ticketing and Benchmarking Media rights development and development hospitality and best practice analysis strategies

Advice on the Financial and Business and Targeting, Major event development of commercial venue market acquiring and feasibility, bid stadia and other due diligence feasibility studies disposing of a support and facilities sports business advisory services

Business Economic impact Strategy Governance and Restructuring planning studies review and organisational of competitions development design and calendar Business Economic impact Strategy Governance and Restructuring planning studies review and organisational of competitions development design and calendar Risk Audit and Club licensing Investigatory and Sports tax management compliance and cost control dispute services advisory regulations

Annual Review of Football Finance 2021 | Sports Business Group

Unlocking digital revenue

Commercial Market analysis Ticketing and Benchmarking Media rights Deloitte help our clients move Deloitte focus on putting smaller, development and development hospitality and best practice analysis strategies beyond ad-hoc, siloed, digital more tightly scoped offerings initiativesCommercial to create Market a coherent analysis Ticketinginto the and market Benchmarking quickly and Media rights development and development hospitality and best practice analysis end-to-end transformation that successfully,strategies to incrementally Digital strategy Data Business agility Mobile and Content and combines emerging technology achieve a re-imagined business and planning transformation and ways of e-commerce campaign and human-experience led ambition. working implementation strategy design.

Make informed investment decisions

Deloitte has an extensive track- We utilise our experience, industry record of delivering tailored value- knowledge and global networks Advice on theadding Financialservices andto a wideBusiness range ofand to provideTargeting, independent Major and event development of commercial venue market acquiring and feasibility, bid stadia and otherinvestors, due owners diligence andfeasibility financiers studies trusteddisposing advice of a to helpsupport our clients and facilitiesin respect of various sports assets understandsports business the commercialadvisory service s Advice on the Financial and Business and Targeting, Major event around the world such as clubs realities of their proposed development of commercial venue market acquiring and feasibility, bid stadia and other due diligence feasibility studies disposing of a support and and sports marketing companies. investments, and plan successfully facilities sports business advisory services for the future.

Ensure financial integrity

Deloitte brings to clients an Our clients benefit from our unrivalled depth of understanding expert review, advice and reports of sports’ regulatory requirements, to manage their risks, comply with how the business of sport works in statutory requirements, resolve Risk Audit and Club licensing Investigatory and Sports tax practice, and the wider economic, disputes, and implement effective management compliance and cost control dispute services advisory accounting and legal environment sport regulations. regulations in whichRisk a sport operates.Audit and Club licensing Investigatory and Sports tax management compliance and cost control dispute services advisory regulations

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Digital strategy Data Business agility Mobile and Content and and planning transformation and ways of e-commerce campaign working implementation strategy Digital strategy Data Business agility Mobile and Content and and planning transformation and ways of e-commerce campaign working implementation strategy Annual Review of Football Finance 2021 | Sports Business Group

The critical challenge: How is football tackling racism and discrimination?

The last year has been These events have placed critical demand To date, there is limited data underpinning stakeholders, including sports teams, fans, on tackling the prevalence of racism and any assessment of the success of efforts by media organisations, technology companies, emotionally draining for a discrimination in our society. While there have football stakeholders to combat the under governments and businesses work together with variety of well-documented always been initiatives around these issues, representation of individuals from ethnically a of eradicating racism in football. they have evidently not yet been effective in diverse backgrounds in non-playing roles within reasons. The murder of delivering sufficient progress. football. We hope that in the coming months Department for Digital, Culture, Media and George Floyd sparked and for future editions of the Annual Review of Sport (DCMS) anti-discrimination review: Sport, and football specifically, has a huge Football Finance, this will no longer be the case. In July 2019, the FA, the Premier League and the reflection across businesses, part to play given the profound societal EFL collectively wrote to the Minister for Sport communities and wider society influence it wields. Football has come together following discussions about anti-discrimination powerfully on the pitch through kneeling Strength in numbers initiatives in English football between the three on racism and discrimination. in support of racial equality with the aim of As the response to the European Super League organisations and DCMS in an effort to further ending the social issues facing many ethnically showed, the impact fans, clubs, governing work on tackling issues affecting ethnically diverse communities. Unfortunately, the social bodies and other key sporting stakeholders diverse people in English Football. media boycott undertaken by many sporting can have on a shared passion is monumental. stakeholders and the apparent lack of effective Whilst this had a rapid impact on the planned action since (as demonstrated by the continued breakaway, progress in the fight against racist abuse aimed at players on social media racism and discrimination and for diversity As a firm, Deloitte has published and disgraceful toxic aftermath of England’s and inclusion has not been as successful or its Black Action Plan – five key Euro 2020 defeat) shows there is still plenty to immediate. commitments that align to the be accomplished. firm’s global shared values of The hope remains that collaboration between inclusion and taking care of each Across the football industry – including Deloitte stakeholders can achieve much more than other – but we acknowledge that and its Sports Business Group – leaders and individual efforts. Recognising and achieving we have work to do still. teams are examining and reflecting on their real, meaningful change requires everyone to position and challenges as they consider how think and act differently, building on some of to proceed and effect meaningful change. As an the collaborative initiatives highlighted below advisor to many of these stakeholders, we have that are designed to tackle discrimination in a part to play in highlighting and acting on these the sport. The impact of all of these initiatives issues. We have chosen to use these pages to – and others not included here – will be detail the current landscape, and what initiatives bigger than the sum of their parts, but this stakeholders are undertaking to enact change. can only be achieved when all of football’s

58 Annual Review of Football Finance 2021 | Sports Business Group

Social media boycott: In response to the The code has the following targets: The Premier League – The Equality, ongoing and sustained discriminatory abuse Diversity and Inclusion Standard (PLEDIS) received online by players and many others Senior Leadership and Team Operations The Premier League launched PLEDIS in 2021 to connected to football, and the perceived lack •• 15% of new hires will be Black, Asian or of build on the Premier League Equality Standard, of intervention by social media companies, Mixed-Heritage or a target set by the club which was created in 2015. The standard (FA), Premier based on local demographics; and provides a framework to help clubs progress League, English Football League (EFL), FA equality, diversity and inclusion across all areas Women’s Super League (WSL), FA Women’s •• 30% of new hires will be female. of their business. Championship, Professional Footballers’ Association (PFA), League Managers Association Coaching: Men’s professional clubs All Premier League clubs, and some EFL clubs, (LMA), Professional Game Match Officials •• 25% of new hires will be Black, Asian or of are working towards achieving the Preliminary, Limited (PGMOL), Kick It Out and the Football Mixed-Heritage; and Intermediate and Advanced levels of the Supporters Association (FSA) united for a social Standard. media boycott from 30 April 2021 to 3 May 2021. •• 10% of new senior coaching hires will be Black, Asian or of Mixed-Heritage. Note: The Premier League also has initiatives run across other societal issues such as Stay Well Coach placement scheme: For the 2020/21 The Football Association (FA) – Football (wellbeing), No Room for Racism (race) and Rainbow season, the Premier League, PFA and EFL Leadership Diversity Code (FLDC) Coaching: Women’s professional clubs Laces (LGBTQ+). launched a new coach placement scheme aimed In October 2020, the FA launched its FLDC with •• 50% of new hires will be female; and at increasing the number of ethnically diverse over 40 clubs across the Premier League, EFL, players transitioning into full-time coaching Barclays FA Women’s Super League and FA •• 15% of new hires will be Black, Asian or of roles in the professional game. The scheme Women’s Championship committing to tackle Mixed-Heritage. will provide up to six coaches per season with inequality across senior leadership positions, 23-month intensive work placements within EFL broader team operations and coaching roles. Recruitment clubs. It is jointly funded by the Premier League •• Shortlists for interview will have at least one and the PFA, with bursaries provided to each The Code focuses on increasing equality of male and one female Black, Asian or of Mixed- participant via the placement club. opportunity with hiring targets – rather than Heritage candidate, if applicants meeting the quotas – to encourage recruitment from across job specifications apply. Note: These pages detail a selection of initiatives being society. As part of the initiative, the FA has run by key football stakeholders and is by no means released a careers platform to assist signatories Note: The FA also has initiatives focused on disability, exhaustive. These stakeholders also run a number of Asian inclusion, LGBT inclusion, women’s football, in reaching a more diverse audience with their initiatives to promote diversity, equity and inclusion, faith and mental health, partnering and collaborating including but not limited to age, anti-racism, disability, vacancies. with over 20 inclusion partners. faith, gender, socio-economic and sexuality. More details on these initiatives can be found on stakeholder websites.

59 Annual Review of Football Finance 2021 | Sports Business Group

FIFA – Looking towards the future UEFA – #EqualGame The League Manager Association (LMA) Kick It Out As the governing body for global football, #EqualGame is UEFA’s campaign to promote The LMA has been vocal in its support of various Kick It Out is English football’s primary equality FIFA’s actions need to lead the way. In 2016, its vision that everyone should be able to enjoy initiatives undertaken by the FA, Premier League and inclusion organisation, running a number FIFA created an annual award to recognise an football, regardless of who they are, where they and EFL. While supportive of the FA’s Diversity of campaigns aimed at tackling racism, outstanding organisation, initiative or football are from or how they play the game. Code, The LMA has vocalised that integrating discrimination and inclusion issues. These have personality that stands up for diversity and such a code into the club licensing of English included: anti-discrimination in football at national or Note: Through its Football and Social Responsibility Football may enhance efforts made by clubs to unit and UEFA Foundation, UEFA partners with a international level and on a sustained basis. comply and tackle the issue. •• Industry leading research on these issues; number of organisations to tackle social issues.

More recently in 2019, FIFA introduced the The LMA’s charity works with a number of •• Raise Your Game (RYG): RYG is Kick It “three-step procedure” at their : a selected charity partners, linking the LMA Out’s unique programme which provides mechanism that allows referees to go as far as The English Football League members directly with important community opportunities for people who aspire to work to abandon a match in case of discriminatory The EFL and its clubs run the ‘Not Today or Any and grassroots programmes. within the football industry. RYG has been incidents. To date, this has not led to any high- Day’ campaign that brings together a range of running for over 10 years; profile abandonments despite a number of anti-discrimination work carried out by the EFL recent accusations of racist actions on the pitch. and with its Clubs, partners and stakeholders. The Professional Footballer’s Association •• Sky Documentary: Sky has announced a new (PFA) programme to air on Sky Documentaries in Further, as part of its 2020-2023 Vision, In June 2016, the EFL introduced regulations The PFA operates an equalities department November, investigating the alarming rise of FIFA has created a new human rights and aimed at tackling the under-representation aimed at tackling all areas of discrimination, racism in English football directed at players anti-discrimination department. It has also of ethnically diverse managers and coaches bigotry and prejudice. and fans and the sport’s response to the committed to investing significant funding into employed by clubs. The regulations require recent political movements tackling racism; women’s football and its communities. clubs to formally advertise any position in their The Equalities departments runs a number and, Academy that require the employee to hold a of schemes for its players such as Diversity Note : The FIFA Foundation aims to harness the UEFA A or B licence. training and coaching placements, while •• Take A Stand: A call to action initiative, unique power of football to create a sense of conducting research on areas such as racial encouraging people across the football reconnection in society, to promote and support mental health awareness, to empower and inspire In addition, clubs are required to shortlist at abuse and discrimination. community to take an action or make a people to use football for healthy minds and bodies least one suitably qualified BAME candidate pledge, in the fight against discrimination. and most importantly, to instil a sense of healing and for interview as part of a formal recruitment Note: The PFA runs initiatives across age, anti-racism, unity through the beautiful game. disability, faith, gender and sexuality, working with its process. social and community partners to enact change.

60 Annual Review of Football Finance 2021 | Section title goes here

Basis of preparation

Sources of information This publication contains a variety Each club’s financial information has operations and the global economy. Operating profit/loss is the net of Bank borrowings is debt advanced The financial results and financial of information derived from publicly been prepared on the basis of national Deloitte can give no assurance as to revenue less wage costs and other by lenders in the form of term loans, position of English football clubs for available or other direct sources, other accounting practices or International whether, or how closely, the actual operating costs, excluding amortisation overdrafts or hybrid products, net of 2019/20, and comparisons between than financial statements. Financial Reporting Standards (“IFRS”). results ultimately achieved will of player registrations and other any positive cash balance. Other loans them, has been based on figures correspond to those projected and intangible assets, profit/loss on player includes securitisation and player extracted from the latest available We have not performed any verification The financial results of some clubs no reliance should be placed on such disposals, certain disclosed exceptional finance monies, bonds and convertible company or group statutory financial work or audited any of the financial have changed, or may in the future projections. items, and finance income/costs. loan stock, intercompany loans and statements in respect of each club – information contained in the financial change, due to the change in basis of loans from related parties that are not which were either sent to us by the club statements or other sources in respect accounting practice. In some cases Pre-tax profit/loss is the operating otherwise soft loans. Soft loans includes or obtained from Companies House. of each club for the purpose of this these changes may be significant. Key terms result plus/minus amortisation amounts from related parties with no In general, if available to us, the figures publication. Revenue includes matchday, broadcast, of player registrations and other interest charged. are extracted from the annual financial The number of clubs in the top division sponsorship and commercial revenues. intangible assets, profit/loss on player statements of the legal entity registered of each country can vary over time. Revenue excludes player transfer and disposals, certain disclosed exceptional in the United Kingdom which is at, or Comparability In respect of the ‘big five’ leagues for loan fees, VAT and other sales related items, and finance income/costs. Exchange rates closest to, the ‘top’ of the ownership Clubs are not wholly consistent with 2019/20, each division had 20 clubs taxes. For the purpose of the international structure in respect of each club. The each other in the way they record and except for Germany (18 clubs). Under UK GAAP and IFRS, the costs analysis and comparisons we have vast majority of English clubs have an classify financial transactions. In some Matchday revenue is largely derived to a club of acquiring a player’s converted the figures for 2019/20 into annual financial reporting period ending cases we have made adjustments to The figures for some comparative from gate receipts (including registration from another club should using the average exchange rate in May, June or July. For 2019/20, some a club’s figures to enable, in our view, years have been re-stated compared general admission and premium be capitalised on the balance sheet for the year ending 30 June 2020 English clubs have reported financial a more meaningful comparison of the to previous editions of this report due tickets). Broadcast revenue includes within intangible fixed assets and (£1 = €1.14); for years prior to 2019/20 statements for a 13 month accounting football business on a club by club to changes in estimates arising from distributions received from subsequently amortised to zero comparative figures as extracted from period due to the impact of the basis and over time. For example, additional information available to us participation in domestic league residual value over the period of the previous editions of this report; and COVID-19 pandemic. We have not made where information was available to and/or due to the actual restatement and cups and from European club respective player’s contract with the the figures for years since 2019/20 any adjustments to these figures and us, significant non-football activities or by clubs of their annual financial competitions. Unless sponsorship club. The potential market value of converted into euros using the average they are included in the divisional totals capital transactions have been excluded statements. revenue is separately disclosed, ‘home-grown’ players is excluded from exchange rate for the 10 months as reported. from revenue. commercial revenue includes intangible fixed assets as there is no ending 30 April 2021 (£1 = €1.12). sponsorship, merchandising and acquisition cost. Amortisation of player The financial results and financial Some differences between clubs, or Financial projections other commercial operations. Where registrations is as disclosed in a club’s position of clubs in various non-English over time, may arise due to different Our projected results are based on identifiable from a club’s disclosures, accounts, increased by any provisions leagues, and comparisons between commercial arrangements and how a combination of upcoming figures distributions received in respect of for impairment of the value of player’s them, has been based on figures the transactions are recorded in the known to us (for example, central central commercial revenues are registrations. extracted from the company or group financial statements (for example, distributions to clubs) and other, in our included in commercial revenue, financial statements in respect of each in respect of merchandising and view, reasonable assumptions. or otherwise included in broadcast Net debt/funds is as disclosed in club, or from information provided to hospitality arrangements), due to revenue. financial statements (where shown) us by national associations/leagues. different financial reporting perimeters In relation to estimates and projections or is an aggregation of certain figures in respect of a club, and/or due to actual results are likely to be different Wage costs includes wages, salaries, from the balance sheet. The net debt/ If financial statements were not different ways in which accounting from those projected because events signing-on fees, bonuses, termination funds figure in the financial statements available to us for all clubs in a division, practice is applied such that the same and circumstances frequently do payments, social security contributions has been adjusted in some cases to then aggregate divisional totals have type of transaction might be recorded not occur as expected, and those and other employee benefit expenses. aid comparability, such as the inclusion been estimated for comparison in different ways. differences may be material. In Unless otherwise stated, wage costs are of related party debt. Net debt/funds purposes (from year to year or between particular, there are uncertainties as a the total for all employees (including, includes net cash/ bank borrowings, divisions). consequence of COVID-19 including the players, technical and administrative other loans, and soft loans. impacts on football competitions, clubs’ employees).

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