Covid-19 kicks £2bn hole in football club finances

The world’s leading football clubs are set to miss out on over €2bn (£1.78bn) in revenue this season as a result of the economic and social disruption caused by the pandemic, according to analysis by Deloitte

The firm’s annual Football Money League shows the 20 highest earning football clubs worldwide generated €8.2bn of combined revenue in 2019/20, down 12% on the prior season (€9.3bn).

The €1.1bn decrease is explained by a €937m (23%) drop in broadcast revenue and a €257m (17%) fall of matchday revenue, although these were offset by a €105m (3%) increase in commercial revenue, reflecting the commencement of several major commercial arrangements across clubs in 2019/20.

This year’s analysis is largely based on the financial year ending 2020, as the disruption to the 2019/20 football season and the differing approaches by the various leagues, broadcasters and commercial partners have resulted in clubs’ revenue generated in respect of the 2019/20 season being spread across two financial years ending in 2020 and 2021.

Despite the significantly different conditions across leagues in the 2019/20 season, the Money League’s composition has remained broadly consistent with previous years.

Among the top 10, the two leading Spanish clubs maintain their financial rivalry. Barcelona heads the table at €715.1m, while Real Madrid is second at €714.9m, with the gap between the two of just €0.2m being the closest in Money League history.

Bayern Munich (€634.1m) rose to third place, the club’s first top three ranking since 2013/14. It had the smallest revenue decrease (4%) of the Money League top 10, benefitting from being able to recognise all of its domestic broadcast revenue in the financial year ending in 2020 due to the earlier completion of the Bundesliga season.

The highest placed English club, Manchester United, also posted the largest year-on-year decline. The club’s revenue of €580.4m (£509m) saw them slip to fourth place following a 19% drop in revenue which was down €131.1m (£118.1m).

This was largely due to the Manchester United not competing in the 2019/20 UEFA Champions League as well as being affected by the absence of matchday revenue and broadcast rebates and deferrals.

On the other hand, Liverpool entered the top five for the first time since 2001/02 with revenue of €558.6m (£489.9m).

Manchester City (6th - €549.2m / £481.6m), Paris Saint-Germain (7th - €540.6m), Chelsea (8th €469.7m / £411.9m), Tottenham Hotspur (9th - €445.7m / £390.9m) and Juventus (10th - €397.9m) make up the remainder of the top 10 clubs.

Only two clubs in the Money League top 20, FC Zenit and Everton (17th - €212m / £185.9m) saw an increase in revenue compared to the previous year. Everton’s marginal revenue growth was driven by the club’s commercial revenue more than doubling to €86.7m (£76m). This was the largest growth (104%) in commercial revenue across all the clubs.

Dan Jones, partner in the sports business group at Deloitte, said: ‘There is no doubt that this is one of the most testing times the football industry has ever had to endure.

‘Whilst no football club has been immune to the challenges of Covid-19, and other clubs have suffered more in relative terms, those in the Money League have borne the greatest financial impact in absolute value terms.

‘In this year’s edition, the top 20 clubs generated an average of €409m per club, a decline of €55m compared to 2018/19 (€464m per club).

‘Matchday operations are a cornerstone of a club’s business model and help drive other revenue-generating activity. Fans’ absence will be more fully reflected in next year’s Money League.

‘The final size of the financial impact of the pandemic on football will depend, in no small part, on the timing and scale of fans’ return.’

Looking ahead, Deloitte’s sports business group estimates that the top 20 clubs will have missed out on over €2bn in revenue by the end of the 2020/21 season. Matchday revenues have been close to nil from March 2020 onwards, with fans seemingly unlikely to be able to return in significant numbers for any of the 2020/21 season, while rebates to broadcasters relating to the ‘big five’ leagues and UEFA reportedly total almost €1.2bn currently, of which a large proportion is borne by the top clubs.

Deloitte said its research suggested the pandemic has provided an impetus for clubs to rethink and recalibrate their wider strategic objectives and business models in a bid to rebuild their revenues.

Tim Bridge, director in Deloitte’s sports business group, said: ‘In particular, the focus on both internal and external digital capabilities has accelerated as digital interaction has become the dominant way in which clubs can engage with their employees and fans.

‘The most agile and innovative clubs will be the best placed to deliver the greater value to their key stakeholders and be rewarded with the fastest and strongest recovery.’

For further information, see the Deloitte Football Money League

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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