Lost in translation Football Money League Sports Business Group February 2009 The unique nature of the football industry will enable major clubs to be relatively resistant to the economic downturn Contents 2 Welcome 5 How we did it 6 Ups and downs 7 The Deloitte Football Money League 28 Tackling the crunch Edited by Dan Jones Authors Austin Houlihan, Rich Parkes, Martyn Hawkins, Simon Hearne, Amelia Ashton-Jones and Caspar Schmick Sports Business Group at Deloitte PO Box 500, 2 Hardman Street, Manchester, UK M60 2AT Telephone: +44 (0)161 455 8787 Fax: +44 (0)161 455 6013 E-mail: [email protected] www.deloitte.co.uk/sportsbusinessgroup February 2009 Football Money League 2009 Sports Business Group 1 Welcome Welcome to the twelfth edition of the Deloitte Football Chart 1: Total revenues 2007/08 (€m) Money League, in which we profile the largest clubs in the world’s most popular sport. Being released less than 400 nine months after the end of the 2007/08 season, and 8 as soon as all the clubs’ revenue figures are available to . 350 5 6 us, the Money League is the most contemporary and 3 8 . reliable analysis of clubs’ relative financial performance. 4 2 300 8 . 3 8 3 . 0 5 3 There are a number of methods that can be used to 9 2 9 . 4 . 250 8 e l determine the size of a club including measures of 4 r 6 l i 6 u 2 e 2 p s s r fanbase, attendance, broadcast audience, or on-pitch t a o d e M H t 9 i V success. However, for this publication we compare clubs 5 . e 200 . n S m 0 d 9 a y r U 1 t 0 h e e i t using revenue from day to day football business 2 e r 2 n u l g C a t r e e q r s t i c u g 4 t 9 . t e a p . h operations which we believe is the best publicly available b t t o 5 c 5 2 a s . T u m m 7 t e 7 b w 7 150 7 y . a r l 1 S e h 1 6 4 e financial comparison – with our methodology outlined 5 H . c O 0 1 N B . n 5 8 n f e 5 1 a 4 V F 8 9 4 6 . in more detail in ‘How we did it’. 1 . M 1 6 7 5 s 2 2 5 3 2 i . d 0 100 1 1 a 1 . 1 1 e n t 4 1 1 i n 0 1 1 n h o In all our previous editions of the Money League we 1 e c U l y i a L a r n n d n e i e u 4 o t have reported on the remarkable revenue growth of our r l o l u s i 0 a 50 d n e M s o z e q a l a i c a e u m l a o h r n i a e t p k r top 20 clubs, and this year’s edition is no different. The c n l p o M a s n n l r r e l a M n R m B e e e e e y a a s y h v t l v S r h C a e i C c u combined revenue of our top 20 clubs was €3.9 billion n M L R C F J A I A A B O S in 2007/08, more than three times the level in our first 0 edition covering 1996/97, and a €220m (6%) increase Source: Deloitte analysis. on the previous year. As predicted last year, a minimum revenue level of €100m is now required to gain a place We expect next year’s edition, covering the season amongst our top 20 clubs. Congratulations to Real currently in progress (2008/09) to show some early signs Madrid who top the Money League for a fourth of how the wider economic environment is affecting the successive year with a revenue total of €366m. game’s top clubs at a revenue level particularly across the matchday, driven by attendances and ticket pricing, However, we publish this year’s edition amidst a global and commercial revenue streams. However, we believe it economic downturn affecting the majority of industry will not be until the following season, 2009/10 and sectors. Football is not immune to the difficulties caused seasons after that, that we will we get a fuller picture of by this changing environment. Nonetheless, we believe the impact of the changing economic environment as that the unique nature of the football industry, clubs’ revenue performance will reflect the impact on underpinned by loyal club fanbases and long term season ticket and corporate hospitality renewals, and broadcast and sponsor contracts secured in advance may several clubs will have been in the market to renew or enable major clubs to be relatively resistant to the negotiate new sponsorship contracts. economic downturn. There are other businesses that will feel the pain sooner and to a greater degree. This does not So far there are some encouraging early signs. Whilst there mean football clubs can be complacent, far from it. But are differences between clubs, average attendances in the they do have more time to plan and adjust than some. ‘big five’ leagues – in England, Germany, Spain, Italy and France – are generally holding up in the first half of the This edition covers the 2007/08 season, the most recent 2008/09 season when compared with previous seasons. period for which club revenue figures are available, and It will be interesting to note how the more flexible pricing this period was clearly before the worst of the economic structures adopted by certain clubs impact on matchday slowdown and so has had only a limited impact on the yields. Furthermore, even in the last six months or so as revenues of the top 20 clubs. All bar two of our top 20 recession has set in in the wider economy, several Money clubs have shown revenue growth in this period when League clubs have either renewed existing commercial revenues are calculated in local currency. contracts or secured new partnerships, which reflects the 2 continuing attractiveness of the game’s elite clubs, many Overall, in the past four years, we have seen a clearly with global fanbases, to commercial partners. defined top 10 develop in the Money League with the main debate being about the order, not the The most obvious effect of changing economic composition, of that list. circumstances on this year’s Money League is the depreciation of Pound Sterling against the Euro and the At the lower end of the top 20 there are three new impact this has had on the relative ranking of English entrants ‘promoted’ into the Money League compared clubs. Last year we predicted that English clubs could to last year, two of which (Fenerbahce and VfB account for around half the Money League clubs in Stuttgart) reach the top 20 for the first time with 2007/08, the first year of new improved Premier League revenues driven by their successful participation in the broadcast deals. In fact there are seven clubs in this UEFA Champions League, reinforcing the importance of year’s list, one more than last year and one fewer than competing in Europe’s top clubs competition in the the record of eight in the previous year. Money League rankings. Congratulations to Fenerbahce who become the first Turkish club to feature in the The impact is most obvious at the top and the bottom Money League and are the only club from outside the of the Money League. Manchester United’s record ‘big five’ European leagues in this year’s list – an breaking year in winning the Premier League and UEFA impressive achievement. Finally, the first year of new Champions League helped increase revenues to £257m, Premier League broadcast agreements has facilitated an uplift of £45m compared to the previous year. Manchester City's return to the top 20, with the club’s new Abu Dhabi based owners having grand plans to The most obvious effect of changing transform the club’s fortunes on and off the pitch. So how are clubs equipped to meet the challenges economic circumstances on this year’s presented by this changing economic environment? Money League is the depreciation of In addition to profiling the top 20 clubs in 2007/08, we provide commentary on the possible future outturn in Pound Sterling against the Euro and this edition. At a revenue level, broadcast revenue has been a key driver of clubs’ growth since we began our the impact this has had on the relative analysis. For several leagues, new or previously ranking of English clubs negotiated broadcast contracts are set to provide a stable revenue stream for clubs for a significant number of years. Converting the club’s revenue figure into Euros at the exchange rate used for this edition (as at 30 June 2008) The French league has a four year broadcast contract in translated to a total of €325m and second place in this place running to 2011/12, with a slight uplift in value, year’s Money League rankings, over €40m below the whilst the German Bundesliga has recently concluded revenues of Real Madrid, and €16m above third placed broadcast deals for the four year period from 2009/10, club FC Barcelona.