Football Clubs Continue to Defy Economic Pressures
Thu 9th Feb 2012 | Money & Finance
European football clubs continue to defy the economic downturn posting an increase in combined revenues of 3% on the previous year.
As many European countries battled with their increasingly depressed economies, the latest figures from the annual Football Money League released today by Deloitte, the business advisory firm shows the top 20 European football clubs generated an impressive €4.4 billion in revenues for the 2010/11 season with nine of the top 20 clubs recording double-digit growth.
Dan Jones, Partner in the Sports Business Group at Deloitte, commented: “Continued growth of the top 20 clubs during 2010/11 emphasises the strength of football’s top clubs, especially in these tough economic times. Whilst revenue growth has slowed from 8% in 2009/10 to 3% in 2010/11, their large and loyal supporter bases, ability to drive strong broadcast audiences and continuing attraction to corporate partners has made them relatively resilient to the economic downturn.”
For the fourth successive year, the clubs comprising the top six places in the Money League – Real Madrid, Barcelona, Manchester United, Bayern Munich, Arsenal and Chelsea – have remained the same, with no movement in their respective positions for the last three years.
Real Madrid is now just one year short of equalling Manchester United’s dominance in the top position during the first eight years of the Money League. They are being chased hard by rivals Barcelona, whose 13% growth in 2010/11 meant revenue surpassed €450m for the first time. Manchester United’s failure to qualify for the knockout stages of the Champions League in 2011/12 will likely result in the gulf between the club and its Spanish opponents stretching to over €100m.
Commenting on the report, fcbusiness Editor, Ryan McKnight said: “These figures represent the unrelenting appeal that football has. There is huge reservoir of untapped commercial potential within football. Football clubs are building fan-bases in developing nations which are helping to fuel this growth. This is coupled with the ever increasing value of TV rights deals in domestic club and European cup competitions.
But he urged caution: “Chelsea are placed 6th in this table but recently posted losses of over £67m for the same period despite an increase in turnover which shows the struggle clubs face at the minute. With clubs now in the accounting period for UEFA’s Financial Fair Play regulations these figures show that despite the severe economic situation across Europe, they still have the ability to increase their commercial activities but it now must be done in a way that is sustainable.”
Once again, the Money League top 20 comprises clubs from the ‘big five’ European leagues, six of which come from the English Premier League. A further five Premier League clubs were just outside the top 20 for revenues in the 2010/11 season (Aston Villa, Newcastle United, Everton, West Ham United and Sunderland).
After its first season without Champions League football since 2003/04, Liverpool slipped another place down the Money League, dropping to ninth position. Despite reporting strong growth from its commercial revenues, and a new six-year kit deal with Warrior Sports from 2012/13, Liverpool needs a return to European football to help secure its top 10 position in the Money League. This is under threat from English Premier League rivals Tottenham Hotspur (11th) and Manchester City (12th), among others.
Alan Switzer, a director in the Sports Business Group at Deloitte, said: “Spurs’ recently received planning consent for a new stadium development, coupled with a continuation of their recent on-pitch form, could secure a Money League top 10 position for the club on a frequent basis. A glance across North London to Arsenal leaves little doubt of the scale and impact of the increased matchday revenue opportunities that arise from a modern stadium development.”
Tottenham’s debut in the Champions League, where it reached the quarter-final stages, gave the club a chance to gain 10th spot in this year’s Money League. However, it was leapfrogged by Schalke 04 – this year’s biggest climbers – which jumped six places, pushing Italian giants Juventus out of the top 10 in the process.
Despite impressive revenue growth, Manchester City slipped one place in the Money League.
Switzer explained: “The club’s heavy squad investment secured Champions League football for 2011/12. When combined with the ground breaking 10-year partnership with Etihad, this will provide substantial growth across all three revenue sources and will see City break into the top 10 in the Money League next year.”
Commenting on the impact of UEFA’s financial fair play break-even requirement, Paul Rawnsley, a Director in the Sports Business Group at Deloitte commented: “The focus on football’s future financial sustainability is more prevalent in Europe than at any time in the past 20 years. We remain keen to see that translated into a better balance between revenue and expenditure. UEFA’s break-even requirement, to be assessed for the first time in 2013, is helpful in driving this improvement. It is encouraging more owners to consider the longer term development of their clubs, in terms of generating revenues, investing in facilities and youth development, and controlling their expenditures.”
Posted by: Aaron Gourley
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