Roar power Annual Review of Football Finance 2018 Sports Business Group June 2018 A Annual Review of Football Finance 2017 | Section title goes here The financial results for the 2016/17 season may well be viewed in the future as the defining moment in the delivery of sustained profitability by football clubs competing in the Premier League. B Annual Review of Football Finance 2018 | Contents Contents Foreword 02 Edited by Dan Jones Delivering results worldwide 04 Sub-editors The leading team in the business of sport 06 Timothy Bridge, Matthew Green Europe’s premier leagues 08 Authors Michael Barnard, Matt Dwyer, Jake Wilson Deloitte Football Intelligence Tool 14 and Christopher Winn Premier League clubs 16 Sports Business Group Telephone: +44 (0)161 455 8787 Under my umbrella 22 PO Box 500, 2 Hardman Street, Manchester, M60 2AT, UK E-mail: [email protected] Finding the leading edge 23 www.deloitte.co.uk/sportsbusinessgroup Football League clubs 24 June 2018 Player transfers 28 Fields of dreams 29 Stadia 30 Please visit our website at Moore’s Law 32 www.deloitte.co.uk/arff to download a copy of the full report and to purchase the Databook. Our 32 page Databook includes over 8,000 data items on the various topics covered in this report, prepared on the basis of our specialist and long-established methodologies. It is available to purchase for £1,000 from www.deloitte.co.uk/arff 01 Annual Review of Football Finance 2018 | Foreword Roar power Welcome to the Annual Review of Football Finance 2018, the Top level football and the live, unscripted drama league clubs entering insolvency proceedings publication that remains the most comprehensive analysis of it delivers, remains the premium content that for over five years and our consistent reporting broadcasters wish to acquire and amid changing of improved financial stability and profitability the financial trends in, and prospects for, the football industry. consumer habits and fragmentation that are for that period, we hope that the developing impacting the entire entertainment industry, financial maturity of the football industry will the Premier League has once again shown its soon be more widely recognised. This 27th edition follows a similar structure decade ago when 60% of the Premier League’s resilience and strength by retaining the vast to previous years in outlining the key clubs were making operating losses and the vast majority of its audience and value. Indeed, once This new era of profitability alongside the high developments across European football, but majority of any revenue increases were being the sales process for the remaining domestic quality of football strengthens the opportunity the storyline that flows through has changed paid out in wages, prompting concerns over and international rights is completed, we expect for the Premier League and its clubs to have a somewhat. The phenomenal growth of the long-term financial sustainability. the league will have delivered overall increases huge influence upon their local communities English Premier League, capped by its financial in television revenue. and more widely around the world. The Premier record breaking 2016/17 season, seems to Whilst the impact of the record broadcasting League currently supports not only the 20 have at last delivered a consistently profitable arrangements for the Premier League cannot be Whilst the ‘big six’ tighten their grip on the top clubs but also the 72 Football League and 68 picture for top tier clubs and more signs of underestimated and the increase in rights value of the table, on any given weekend the matches National League clubs to deliver community long-term financial sustainability for those in the across the past two cycles is the primary factor remain as competitive and exciting as ever. This programmes, which have been praised for the Football League. behind the growth in revenue, the benefit to was demonstrated by the fact that the leading impact they make. clubs’ finances of operating in an appropriately revenue generating club in world football, regulated environment, via UEFA Financial Manchester United, were defeated by all three Continued growth will further boost the King of the jungle Fair Play regulations and the Premier League’s promoted clubs during the 2017/18 season. It is financial contribution to deliver high-class The financial results for the 2016/17 season fully cost control measures is equally evident. The this unpredictability that appeals so strongly to football facilities in communities and schools, affirmed the English Premier League’s position financial position of the clubs competing in the broadcasters and other commercial partners. whilst promoting the connection between the as the market leader, with record revenue Premier League on a consistent basis currently Premier League and future fans for the long- generated of £4.5 billion, as every one of the 20 suggests that profitable performance and The combination of financial success and stability, term benefits of the clubs themselves and the clubs set their own personal annual revenue strengthening balance sheets, that looked so and the global popularity of the competition reputation of the competition. record. impossible a decade ago, are now the norm. makes the Premier League an increasingly attractive asset to investors, offering a financial With revenue growth outpacing the growth in The recent announcement that the Premier return alongside the thrill and excitement of You got to put your behind in your past the wage bill, no clubs reported an operating League’s domestic rights selling process for owning a major football club. Nonetheless, we Below the Premier League, the desire of clubs loss and only one reported a wages/revenue 2019/20 – 2021/22 did not deliver the uplift that still sense in the market a hesitance amongst competing in the Championship to benefit from ratio above the UEFA guideline for a club’s followers have become accustomed to over traditional financial institutions to accept that the potential financial windfall of promotion financial health of 70%. It is a far cry from a recent years should not be a cause for concern. the landscape has changed. With no football remains unwavering. Whilst the Championship 02 Annual Review of Football Finance 2018 | Foreword those in receipt, and those not, of parachute Germany’s Bundesliga will see growth The circle of life payments. The key concern remains that from 2017/18 as a result of new broadcast I’d like to thank all of those that have financial disparity will in the future translate to arrangements but their opportunity to close contributed to this year’s edition of the Annual more predictable on-pitch performances. If this the gap on the Premier League may well rely Review of Football Finance from across the were to become the case, then it may well be on their, and their clubs’, ability to innovate football world and to say thanks to all former less attractive for many Championship clubs to and have the first mover advantage as new colleagues who have made it such a huge push for promotion in the future. Championship revenue generating opportunities arise. This success in the past and now work in a variety of club owners will doubtless be heartened by the will be particularly crucial given the recent exciting roles across the sports industry. I am success of clubs such as Burnley, Bournemouth announcement that German clubs voted against very grateful to my colleagues who have written and Huddersfield in securing and retaining any changes to the 50+1 ownership model that this year’s edition and Henry Wong for his “This new era of profitability Premier League status. Notably, the 2017/18 effectively retains fan control and rules out design expertise. alongside the high quality season saw no ‘yo-yo’ effect among either the the significant owner investment seen in other promoted or relegated clubs from 2016/17. countries. Deloitte is proud to support the Green Ribbon of football strengthens the Campaign, helping to #endthestigma of mental opportunity for the Premier Further down the English football pyramid, health, an issue that impacts the football League 1 and League 2 are together financially Being brave doesn’t mean you go looking community in the same way as any other. League and its clubs to have bigger than ever before and comfortably the for trouble a huge influence upon their biggest leagues at that level anywhere in the Changes to both the financial distribution We hope you enjoy this edition. world. The cost control measures that have mechanism and the format of the qualification local communities and more been implemented by the Football League are process for the UEFA Champions League from Dan Jones, Partner widely around the world.“ a further clear example of the positive impact 2018/19 will alter the footballing landscape in www.deloitte.co.uk/sportsbusinessgroup that financial regulations can have. Europe slightly but the rumoured FIFA led wider changes in global club football could have a much more significant impact. is the biggest second tier competition in world You can either run from it, or learn from it football, generating more revenue than it ever More widely, whilst growth was achieved across Such change to the structure of club football has before, club owners and management all of Europe’s ‘big five’ leagues, none of the requires careful consideration and detailed have on the whole taken the decision to stretch Premier League’s competitors could match the assessment by football’s governing bodies, themselves financially to gain promotion and pace, and the challenge now rests with them as whilst the initial financial boost of a new this is the driver of the traditionally significant to try and close the gap, in revenue terms, in tournament or format could be substantial, the operating losses and high wages to revenue ratio.