By Mark Baber
January 19 – Audit firm Deloitte Global predicts that the European football market may generate $30 billion (€27 billion) in revenues in 2016/2017, an $8 billion (€7 billion) increase relative to 2011/2012, and a compound annual growth rate of seven percent.
According to Deloitte, most of this growth will be driven by the five largest leagues – England’s Premier League, France’s Ligue 1, the German Bundesliga, Italy’s Serie A and La Liga in Spain – whose share of revenues continues to rise. These leagues are expected to generate approximately $17 billion (58%) of total revenues in 2016/17.
Deloitee say that: “Football and pay television have had an increasingly symbiotic relationship over the past two decades, and forecast 2016/2017 revenues attest to this. Football’s revenues are predominantly made up of matchday (admissions and hospitality), commercial income and broadcast revenues, and it is this latter source which is forecast to generate both the majority of total revenues and the increase in revenues in 2016/17.”
So the principal drivers of the increase in football revenues are from broadcast deals in the big European Leagues, and the 2016/2017 season will see new broadcast deals for both the English Premier League (EPL) and Spain’s La Liga come into effect.
Domestic live broadcast rights is expected to generate an average of $2.6 billion for the EPL for the three seasons from 2016/2017, a 71 percent increase on the prior agreement. Spain’s La Liga, which has recently moved to a collective broadcast rights selling model, is expected to earn approximately $1.1 billion per season from domestic live rights.
Whilst both the UK and Spain now have “relatively mature” pay-TV markets for football, with 17.4 million pay-TV homes in the UK (65% of all households) and 5.4 million (29%) in Spain, substantial growth in broadcast rights fees is also expected to come from abroad. According to Deloitte,” In the 2016/2017 season the EPL is expected to generate over $1.5 billion from overseas broadcast rights, a gain of at least 40% compared to the previous rights cycle. La Liga generates less than half this amount, but has achieved substantial recent growth, and generates the second-highest broadcast revenues from non-domestic markets of any sports league.”
Deloitte’s figures underline the dominance of the English Premier League clubs, with their combined revenues predicted to surpass $6.5 billion in 2016/17, more than double that of the next-highest European league.
Another major trend which Deloitte pick up on is the increasing tendency for the leading clubs to make a profit – with costs no longer automatically keeping up with increased revenue. This trend is also reflected in increasing foreign ownership for clubs and Deloitte predict “further purchases of leading European football teams, in part or whole, are likely in 2016 and beyond.”
Perhaps the Deloitte’s most optimistic prediction is that, “In the long run, there is a virtuous circle within football. The more revenues a club can generate, the more it has to invest in talent, increasing the chances of on-pitch success, with the associated financial rewards allowing it to reinvest. This creates an imperative for clubs, and the leagues of which they are a part, to maximize their revenues. More revenue should enable clubs to recruit not just the best talent and coaches on the field, but also the best commercial staff, access to the best technology, and also the ability to invest for the long term, for example by investing in youth academies. The more popular football becomes, the more brands will likely want to be associated with it.”
It is this virtuous circle which leads Deloitte to conclude that, “In the long term, prospects look favorable as long as football maintains its ability to remain a spectacle that can attract a large proportion of the population, almost every week of the year, and which plays out not just on our television screens, but also through online news sites on the Web, on social networks, on video games, in the back pages of newspapers, over breakfast, in school break times, and indeed in almost every other medium.”
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