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European clubs need firm foundations to stay ahead of rivals: football finance expert / Photo: © AFP/File
European clubs need firm foundations to stay ahead of rivals: football finance expert
Europe's top football leagues have emerged strongly from the coronavirus pandemic but must get their financial house in order to stay ahead of rivals, an expert has warned.
Deloitte's annual review of football finance showed revenues in the "big five" European leagues grew by 10 percent to 17.2 billion euros ($18.6 billion) in the 2021/22 season, outperforming the pre-pandemic benchmark of 17 billion euros in 2018/19.
Wage costs across those leagues -- the Premier League, Bundesliga, La Liga, Serie A and Ligue 1 -- rose by 15 percent from 2018/19 to 12.3 billion euros in 2021/22, leading to fall of 1.8 billion euros in aggregate operating profits over that period.
"Topline figures show that European football has emerged resiliently from its most challenging period to date," said Tim Bridge, lead partner in Deloitte's Sports Business Group.
"Following the lifting of Covid-19 restrictions, fans' pent-up demand gave rise to record matchday and commercial revenues across Europe.
"However, with operating profits declining by 1.8 billion euros since 2018/19, it's clear that overall recovery is still a work in progress."
The Premier League continued to outpace the competition, with English top-flight clubs reporting a 12 percent rise in overall revenues year-on-year, culminating in a record aggregate revenue of 6.4 billion euros (£5.5 billion).
La Liga revenues remain about half of those of the English top flight.
"Big five" clubs reported a loss of 324 million euros in the 2021/22 season, although this was a slight improvement on the 2020/21 season (a loss of 400 million euros).
Bridge warned that clubs faced significant challenges, warning of the growing threat from "emerging leagues".
Karim Benzema last week signed up to the cash-rich Saudi Pro League, following in the footsteps of former Real Madrid teammate Cristiano Ronaldo.
A string of big names have been linked to a move to the Gulf state and Ronaldo has said the Saudi league could eventually become one of the world's top five.
"The focus for all clubs must now shift to ensure long-term financial sustainability across the football system, and the introduction of new regulations across European football are appropriately timed to support this," said Bridge, referring to the gradual introduction of UEFA's financial sustainability regulations from 2022/23.
"Record growth in the Premier League continues to increase revenue polarisation between and within European football leagues, and every league faces new challenges brought by increased competition, regulation and the strain of a challenging macroeconomic climate."
He added: "European clubs and leagues are set between the crossroads of some of the most pivotal regulatory changes that the game has ever seen, and a wave of investment into global football in an attempt to challenge the established system.
"And with emerging leagues looking to grow their offering and secure the best in on-pitch talent, European clubs' future may be dependent on how sound their financial foundation will be and whether they can use that to remain competitive and relevant."
S. Soares--JDB
