KPMG Football Benchmark has analyzed the ranking of the top 32 European clubs by operating revenue removing media-related revenue from the equation. Non-broadcasting revenue is in the control of the club and can be improved through investment in, for example, facility improvements and brand awareness; and so there’s a lot to learn for top clubs across sports and for football clubs a bit further down the pyramids of UK football.
During the past month, one of the big talking points in the football industry has been the suggestion by the six most prominent Premier League clubs that their share of broadcasting revenues should be increased. With the Premier League enjoying its largest broadcasting deal, KPMG’s Football Benchmark team analyzes the impact of non-broadcasting revenues on football clubs, a stream that is still extremely important for the whole sector.
Looking at football key revenue streams – broadcasting, commercial and matchday – broadcasting revenues, in most cases centrally distributed, stand alone as being largely uncontrollable from a club’s viewpoint. The remaining sources, i.e. matchday and commercial, are fully managed by clubs and thus imperative from a control standpoint. In this article, for clarity purposes, we refer to the aggregate of income from commercial activities and stadium-related revenues as “non-broadcasting revenue”.
Using KPMG Football Benchmark data from the top 32 clubs by total operating revenues (2015/16 season) it can be seen that broadcasting income, season-on-season, was up by 13% in 2015/16 and represented 45% of total revenues. However, if media-related revenue is removed from the equation, the top 32 ranking changes significantly.
For example, all four Bundesliga clubs in the list were able to improve their rankings, mostly because of the overall commercial strength of their domestic market. This supports the self-sustaining business model of the biggest German clubs.
Looking outside of the so-called “big five” leagues, the two emerging competitions are the Dutch Eredvisie and the Turkish Superlig. Ajax (+25), PSV (+17) and Feyenoord (+32) improved their overall rankings by 74 places, and the trio of Turkish giants (Fenerbahçe +10, Galatasaray +7 and Beşiktaş +17) also climbed the non-broadcasting revenue ladder.
On the other hand, the fall of some English and Spanish clubs’ rankings, reflecting lower non- broadcasting revenues, highlights the over-dependency on huge broadcasting deals. The lower status of Southampton (-12) or Everton (-9) could act as a warning to those who advocate a ranking- based distribution method for overseas broadcasting revenue as the loss of competitive balance could be detrimental in the long-term.
Similarly, it is interesting to note the importance of increased broadcasting revenues from LaLiga and the UEFA Champions League to Atlético de Madrid, as they lost six places upon removal of the revenue stream.
Another case worth reviewing is that of Juventus. Similar to other Italian peers, the bianchonneri have long relied on income from Serie A’s profitable domestic broadcasting deal and the large UEFA Champions League market pool available to Italian clubs. Interestingly, when removing media- related income, the club lost only one place in the ranking, demonstrating the importance of increased matchday revenue and the commercial growth of Juventus over recent seasons.
Another relevant metric related to the clubs’ dependence on broadcasting income is the percentage of non-broadcasting versus total revenues i.e. the higher the percentage, the more direct control a club has over its revenue streams.
Looking at the performance of the “big five” clubs in this regard, league patterns are less clear. Clubs from Germany’s Bundesliga perform well, but for all other leagues, clubs can be found at both ends of the scale.
From this year’s pool of “big five” teams, the leader in non-broadcasting share is Brighton & Hove Albion. However, their lead is explained by their participation in the Championship in the previous season, thus collecting limited broadcasting revenues. After the 2016/2017 season, their non- broadcasting share will undoubtedly drop markedly.
From the clubs participating in the UEFA Champions League, Paris Saint Germain has the best share with 75%, followed by Bayern München and Manchester United. There are only 20 clubs in the “big five” leagues who have a better non-broadcasting share than 50%.
On the very bottom of the scale, we can find clubs from the Premier League, La Liga and Serie A. The worst performing clubs in the 2015/16 season in terms of non-broadcasting revenue share were Bournemouth, Eibar and Getafe. There are 12 “big five” clubs under 25% and 41 under 40%.
While the overall weight of non-broadcasting income may continue to fall as a result of increasing broadcasting deals, these revenue streams are key for the successful operation of a football club over the long term. The coveted self-sustaining business model is based on a healthy non- broadcasting revenue mix and most clubs should target their long-term growth based on streams that are not related to central distribution mechanisms and offer the chance for a club to work on growing income.
KPMG Football Benchmark team can help clubs to analyze their revenue streams and identify potential growth opportunities and competition organizers to find the best revenue sharing methods and mechanisms.
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