After three years of no change at the top of KPMG’s annual enterprise value table, which measures overall financial strength, cashflow and pre-tax profit of the top football clubs in Europe, Real Madrid is back in number one spot, beating Manchester United into second place, Bayern Munich moves up to third with Barcelona out of the top three for the first time.

The total enterprise value of the top 32 clubs in Europe is £31.5bn ( €35.6bn), up a staggering €3bn in one season. Since 2016, there has been a 35% in just three years marking huge hikes in TV revenue, prize money from successes in the Champions League and record transfer fees leading to elevated squad values. The aggregate enterprise value (EV) of the top 32 clubs has increased by 9% year on year, demonstrating that the football business is growing at a significantly faster pace than Europe’s economy in general.

English teams dominate the top 10 most valuable clubs in Europe with six teams – Manchester United, Manchester City, Chelsea, Liverpool, Arsenal and Tottenham Hotspur, making the English Premier League the dominant football force with the nine clubs on the list accounting for nearly half (43%) of the total aggregate value at £13.6m (€15.4m), compared with the six Spanish clubs featured in the list, valued at £6.93m (€7.84m).

Both Champions League finalists, Liverpool and Tottenham, have increased their value by over 30% year on year, the second and third biggest growth of the entire list, and FA Cup and domestic treble winner, Manchester City has grown by 14% in the last 12 months.

Real Madrid and Manchester United are the only clubs above the €3bn threshold for enterprise value. The top eight clubs have an EV in excess of €2bn, with Chelsea and Liverpool having joined this group.

‘For the third consecutive year, the overall EV of the 32 most prominent European football clubs has increased by 9% (35% over the past three years),’ said Andrea Sartori, KPMG’s global head of sports.

‘This growth rate is in contrast with the overall trend of the major European Stock Exchanges, notably the STOXX Europe 50 Index, showing a year-on-year decrease of -13% (-9% from 2016), and demonstrating the different pace at which the football industry is evolving.

‘The transition of major clubs into media and entertainment companies, with global brand exposure, also helps create more stable and predictable cash flows and consequently better warranties to investors and financiers.’

Although the top 10 consists of the same clubs as last year, all the clubs changed positions, with the only exception being Manchester City, which retained fifth position. Spurs knocked Juventus out of  9th position, and Arsenal dropped two spots to 8th, with Chelsea moving up to 6th and Liverpool in 7th.

The two 2019 UEFA Champions League finalists reported strong financial performance in the past season: Liverpool’s 33% annual EV growth is second only to Inter Milan’s 41% year-on-year increase in the ranking, while Tottenham came in third with a 31% growth. They also registered record levels of pre-tax profit – €157m for Spurs and €136m for Liverpool. Tottenham’s 39% staff costs-to-revenue ratio is also the lowest among the 32 clubs.

The enterprise value (EV) of a company is calculated as the sum of the market value of the owners’ equity, plus total debt, less cash and cash equivalents. It indicates what the business is worth regardless of the capital structure used to finance its operations.

KPMG Football Clubs' Valuation: The European Elite 2019

Sara White