The Player Trading Game 2017 footballbenchmark.com What is KPMG Football Benchmark? Consolidated and verified database of football clubs' financial and operational performance. Business intelligence tool enabling relevant comparisons with competitors. An ever-growing platform that includes data from over 150 European football clubs. A tool offering insights into many aspects of football clubs' operations, including, but not limited to, revenue generators, expense categories, profitability indicators, balance sheet items and stadium statistics. footballbenchmark.com Credits: Paris Saint-Germain FC © 2017 KPMG Advisory Ltd., a Hungarian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Table of contents Foreword 4 How we calculate player trading balance for the purposes of this report 7 The European Top 20 8 Where are the “big fish”? 13 Basis of preparation and limiting conditions 15 © 2017 KPMG Advisory Ltd., a Hungarian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 4 The Player Trading Game Foreword Only one year ago, the whole media and fans, it is noticeable that football world was stunned when the ratio between the fee paid for Manchester United FC broke record transfers and the operating the transfer record by signing revenues of the acquiring club has Frenchman Paul Pogba for EUR 105 remained stable at approximately million. Despite being considered 23% in the last 10 years. In view of by many as a disproportionate and that, Neymar’s acquisition by Paris unsustainable trend, this summer Saint-Germain FC (at 42%) could we have witnessed a further pull be considered as an exception, of the financial muscle exercised and more aligned to the ratio at the by clubs. The “Neymar effect”, turn of the century when Figo and i.e. the flamboyant Brazilian striker Zidane moved to Real Madrid CF leaving FC Barcelona for EUR 222 from FC Barcelona and Juventus FC. million upon payment by Paris Saint- Germain FC of his release clause, The obvious questions raised from Andrea Sartori continued a domino effect across such an analysis are: Is Neymar Partner the entire transfer window. Indeed, worth EUR 222 million? Can the KPMG Global Head of Sports put under pressure to replace their estimated overall investment of [email protected] star, the Blaugrana signed Ousmane approximately EUR 500 million Dembélé for a reported EUR 1051 produce a reasonable return? From million (plus add-ons). If we also a strictly financial perspective, consider the further incursion in when looking at the benefits the transfer window made by Les obtained from additional stadium Parisiens with the acquisition of and broadcasting revenues, as well French talent Kylian Mbappé, on as the increased chances of winning loan with the option of a permanent the UEFA Champions League, transfer next year for around EUR the answer would most likely be 180 million, then three players have negative. However, Neymar — an already surpassed the price tag of iconic player with massive brand Pogba, after only one season. value — can provide PSG with a unique international brand exposure These transfer figures have made and the opportunity to grow their pundits turn up their noses, already high commercial revenues questioning whether such profligacy even further. Neymar is indeed part is actually sustainable in the long- of a broader commercial and brand term and wondering how much exploitation strategy involving PSG, former football legends such as, for as well as the State of Qatar, host instance, Luís Figo, Zinedine Zidane of the 2022 FIFA World Cup, that or Ronaldo would cost nowadays should not be overlooked when as they were reportedly transferred assessing the commerciality of the for EUR 60, EUR 73.5 and EUR acquisition of the Brazilian star. 28 million, respectively, when the Portuguese and French footballers For the biggest European football moved, in different seasons, to clubs, which are intrinsically Real Madrid CF and Ronaldo joined part of the global entertainment FC Internazionale. However, while industry, increasing commercial increasing transfer fees continue revenues is an absolute must to to command the attention of the ensure a competitive advantage 1 For the purposes of this report, we have not included add-ons related to transfer fees. © 2017 KPMG Advisory Ltd., a Hungarian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The Player Trading Game 5 Most expensive transfers by year in the last 10 seasons and transfer fee to operating revenues ratio Player Selling/ Transfer buying clubs fee (EUR m) Luís Figo 2000 Barcelona / R. Madrid 60 Zinedine Zidane 2001 Juventus / R. Madrid 74 Robinho 2008 R. Madrid / Man. City 43 Cristiano Ronaldo 2009 Man. Utd. / R. Madrid 94 David Villa 2010 Valencia / Barcelona 40 Fernando Torres 2011 Liverpool / Chelsea 59 Thiago Silva 2012 Milan / PSG 42 Gareth Bale 2013 Tottenham / R. Madrid 101 Luis Suárez 2014 Liverpool / Barcelona 82 Kevin De Bruyne 2015 Wolfsburg / Man. City 74 Paul Pogba 2016 Juventus / Man. Utd. 105 Neymar 2017 Barcelona / PSG* 222 0% 10% 20% 30% 40% 50% Source: KPMG Football Benchmark research, www.transfermarkt.com *based on 2015/16 operating revenues against their peers. On the other than 150 clubs. Thus, it is important league in our report, with six hand, smaller clubs, with lower to note that this analysis does not clubs. international brand appeal, need to consider the latest transfers to focus on growing in-house talents be accounted in the 2016/17 and No English clubs are represented in and scouting young and promising 2017/18 seasons. the Top 20. footballers to be sold one day at a premium, as a way to ensure their Some of the most striking findings of As transfer fees continue to increase, continuous success. our research are: “net sellers” maintaining prolific academies and successful scouting Whilst media are attracted by The 20 clubs highlighted in this networks might be in the position the lavish spending on the “big report, which we can consider to further exploit this competitive stars”, in this first edition of “net sellers”, come from five advantage. “The Player Trading Game”, an different leagues: France, Italy, analysis undertaken by the Football Spain, Portugal and Germany. If you would like to receive Benchmark team of KPMG's Sports further information or discuss Advisory Practice, we review the Portuguese clubs are not our findings, please contact us at best performing clubs in Europe in just the only non-“big five” footballbenchmark.com. terms of player trading results. representatives in the top 20, but also lead the ranking with SL The foundation of this report is an Benfica (1st) and FC Porto (2nd). analysis of the publicly available financial statements of the two Underlining French academies football seasons 2014/15 and reputation as talent factories, 2015/16 from a selection of more Ligue 1 is the most represented © 2017 KPMG Advisory Ltd., a Hungarian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 6 The Player Trading Game Credits: FC Porto © 2017 KPMG Advisory Ltd., a Hungarian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The Player Trading Game 7 How we calculate player trading balance for the purposes of this report Football players constitute the key this case, the loanee acquires the which is recognised as an expense asset of the majority of football clubs rights of the player only for a pre- in the Statement of Profit and Loss. and transactions of players represent established timeframe and expenses Possible reasons for impairment, for a regular activity of any club. It should the cost of such loan in the Statement individual players or for the squad be highlighted that there is not a of Profit and Loss, while the loaner considered as a whole can be, among commonly-accepted methodology records the revenue associated to others: to report and account for a club’s it. Usually, loan activities represent a player trading result. Indeed, in relatively low amount in the overall Career-threatening injury; different countries and sometimes player trading activities. within the same league, differences Early termination of contract; exist. This methodological section But how are players developed explains how player trading can internally, through clubs' academies Long-term sanctions. be calculated and how, for the or youth teams, accounted for in purposes of this report, KPMG the books of a football club? Players has determined the annual player coming from a club's own academy are Player Trading balance trading balance. either not capitalised within intangible assets or capitalised at a low gross As a result of these activities, we Acquisition of players' rights book value, usually representing agent can summarise the player trading The acquisition of players can fees/bonuses paid at the signing of the balance in four main operations: occur