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Competition Faced By European Leagues

Mon, 28 February 2011

UEFA adopted financial fair play rules last May. As reported at that time in the Guardian:

“Uefa has approved plans to force clubs in European competition to spend only what they earn. The financial fair play rules will require clubs to break even over a rolling three-year period if they want to play in the Champions League or Europa League.”

Two factors lie behind the introduction of the rules:

  • The unfairness of clubs overspending on expensive players and their salaries, in order to gain an advantage on the playing field.
  • Football’s reputation, when clubs blatantly over-extend themselves financially without regard for the economic consequences.

As far as football finance is concerned, I look out for the following each year:

Deloitte no longer make publicly available their ranking of leagues by revenue, which is now part of their Annual Review.  However, it continues to be reported in the media.  For 2010, CNN reported:

The German Bundesliga has overtaken the English Premier League as the most profitable in the world, according to financial analysts Deloitte.

Despite predicting that the Premier League’s revenue will top $2.8 billion in the season just gone, Deloitte said clubs’ profitability has more than halved between the 2007-08 season and the 2008-09 campaign.

Deloitte’s annual review of football finance also showed that the total European football market grew to a record $19.3 billion in 2008-09.

Player salaries are a significant factor.   The CNN article went on to refer to financial regulation in Germany and ownership of clubs, contrasting the situation in England.

Many top European clubs appear to have been operating on the following premises:

  • TV revenues will be sustained or increase in the future; and/or
  • European football will continue to capture foreign markets in the Middle East, Asia, the Asia Pacific, the Americas  and Africa, thus increasing opportunities to sell merchandise and seek bigger TV audiences (which translates into higher TV revenue),

thus spending more than they can afford to in a strict accounting sense at present in expectation of substantially greater revenues in the future.   However, with increasing international competition between sporting markets, such increases in future revenue are far less certain than over-extended clubs need, with the risk of a future implosion in the European football market as great as ever, notwithstanding UEFA’s financial fair play rules.

Other statistics I keep track of are:

With the former, I have merged the listings for outdoor sports and indoor sports, and listed them by average attendances (based on the figures available on Wikipedia), which can be downloaded here.  I’ve listed the top 50 below.

European football leagues don’t only face competition between themselves, they face competition from football leagues in the countries in which they seek to capture markets, and from other sports.

European football cannot assume that their domestic markets, let alone foreign markets, will continue to lap up their product, as the competition increases.

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One comment

  1. [...] expand on the financial implications, much of football European [...]



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