Belgian clubs recorded revenue growth of 18%, reaching €378,5 million in season 18/19, but struggle to achieve bottom-line profitability has been saved
Belgian clubs recorded revenue growth of 18%, reaching €378,5 million in season 18/19, but struggle to achieve bottom-line profitability
The estimated total impact of the premature end of the 19/20 season due to the COVID-19 crisis is a decrease of approximately 25 percent of total revenues.
Brussels, Belgium – 3 June 2020
Deloitte and the Belgian Pro League today issued the third “Socio-economic impact study of the Pro League on the Belgian economy”, a report that quantitatively and qualitatively measures the socio-economic impact generated by Belgian professional football. The clubs’ turnover continues to grow, representing €378,5 million in 18/19 compared to €321 million in 17/18 and €313 million in 16/17. The total gross output of the Pro League is estimated at €1,1 billion. In other words, individuals and organisations spent €1,1 billion in the Belgian economy thanks to Belgian professional football, on tickets, sponsoring, merchandise, etc., an increase of 21 percent compared to last year. The total number of jobs the clubs provided is 4.095. Direct job creation (players, club employees, etc.) decreased from 2.108 to 1.986 in 18/19 due to less player staff and less employees.
Revenue growth pre COVID-19 crisis
The Belgian clubs recorded €378,5 million of club revenues in season 18/19, an increase of 18 percent compared to the previous season. All traditional revenue sources like ticketing, sponsoring and advertisement, broadcasting,commercial, as well as the more volatile UEFA prize money experienced significant growth. For the last source, this increase is mainly due to the relatively successful performance of the Belgian clubs in European campaigns, which earned €63,6 million in UEFA prize money, double the previous season's figure. Broadcasting increased to €84,3 million and accounts for 22 percent of total revenues compared to €80,9 million in season 17/18. Sponsoring revenues are €76,2 million compared to €68,2 in the previous season. The strong revenue growth in 18/19 resulted in a total of €1,1 billion spent in the economy, which represents a solid 21 percent increase compared to €943 million in 17/18.
In 18/19, Belgian professional football contributed €630 million to our economy, compared to €615 million in the previous season. This year’s result follows a new calculation method with the application of the new economic multipliers following the Belgian Federal Planning Bureau*.
Impact COVID-19 crisis on Belgian Pro League
However, this positive evolution will be impeded by the COVID-19 crisis, which has severely hit the 19/20 season and will potentially have repercussions on future seasons. Sam Sluismans, Partner at Deloitte Belgium: “Although too early to say as we do not have the exact numbers yet, we estimate the total impact of the premature end of the 19/20 season will represent a decrease of around 25 percent of total revenues, mainly due to a drop in ticketing, sponsoring and commercial revenues. Furthermore, the transfer market, which has been very active in recent years, will potentially suffer the effects of this crisis and further affect the situation of the Belgian clubs, as transfers are a very important aspect of the business model of our Belgian clubs.”
Player salary costs rose for period 18/19
Although revenues steadily increased in 18/19, a similar trend can be observed for costs. Total player salary costs, the main cost for clubs, amounted to €249 million in the season 18/19, translating into an average yearly gross salary of €233.000 compared to a total amount of €214 million in 17/18, translating into an average yearly gross salary of €211.000. Of the €233.000 average yearly gross salary, €207.000 is actual gross salary, and €26.000 are contributions to group insurance.
The payroll cost/revenue ratio, calculated by dividing player salaries by total revenues (excluding transfers), decreased from 56 percent to 55,2 percent, reflecting a slightly greater increase in revenue compared to player salary costs. In addition to rising player salaries, total salary costs for other employees increased but to a lesser extent.
Results from player transfers decline while agent fees keep growing
Player transfers are another important aspect in club profitability. The net accounting transfer result, which takes into account the sale and purchase of players, player depreciation and agent fees, dropped from €73,3 million in 17/18 to €22,4 million in 18/19. This downward trend is driven by different factors, including the continued rise in transfer prices. The value of players on clubs’ balance sheets reached €172,3 million in 18/19, representing a 22 percent increase compared to 17/18, yearly average growth of 24 percent since 16/17.
Lower outgoing transfer activity with the Big Five competitions in 18/19 compared to 17/18 results in lower transfer revenues for the clubs and partially explains the drop in net transfer result. Sluismans: “This year’s result shows again the importance of transfers in the business model of our clubs. The best way for continued succcess in the transfer market is by keeping the focus on developing talent in the national youth academies, confirming the position of our country as a talented football nation. While we don’t have the numbers yet for 19/20, we did see high activity on the transfer market and we can expect an increase in next year’s net transfer result.”
Agent fees are another variable that can negatively affect the net transfer result. In Belgium, a total of €45 million in commissions was paid to 289 active agents in 18/19, representing an increase of €8 million compared to the 17/18 season. Of this amount, €26 million (57 percent) was paid for incoming and outgoing transfers and €19 million (43 percent) for mediation, such as contract renewals. More than one third of total agent commissions (37 percent) stays in the hands of the five main agents.
Despite revenue growth, Belgian clubs record a loss of €91 million in bottom-line profitability
Despite the strong top-line revenue growth, does a lower net transfer result, increasing agent fees and player salaries significantly affect the clubs’ bottom-line profitability. Belgian clubs recorded a consolidated loss of €91 million in 18/19, compared to a loss of €48 million in the previous season. Sluismans: “Controlling the costs will be a key challenge for the Belgian clubs to improve the bottom-line results.”
This decrease in profits directly impacted the contribution of Belgian clubs to the economy. Excluding the +€31 million due to the application of updated economic multipliers* which brought the total Gross Value Added to €630 million in 18/19, the fall in transfer results and profits negatively impacted the Gross Value Added compared to the previous season (-€16 million).
Direct jobs in decline
The Pro League and Belgian clubs provided 4.095 jobs in the 18/19 season, a difference of 10 percent compared to 17/18 due to the new employment multiplier*. Of these jobs, 44 percent are football players. The remaining 56 percent, the same as last season, are all other employees. However, the total number of direct jobs (players, employees of the club working in the stadium bar, etc.) decreased from 2.108 to 1.986 in 18/19 due to less player staff and less employees. The total tax contribution was €88 million, corporate tax, payroll tax, national insurance contributions and VAT combined.
Belgian clubs continue to invest in youth, with an investment 2,2 times higher than legally required
Belgian clubs keep investing significant time and money in youth academies, the backbone of a club. Pierre François, CEO Pro League: “In 2018, clubs invested €50 million while legally required to invest €23 million, with the ultimate objective to have some youngsters make it to the top of the football world. During the season 18/19, 261 young Belgian players (under 23 years) had a full-time or part-time contract, which shows an increase of 13% compared to the previous season. Together, these young players played a total of 98.717 minutes (+20% compared to 17/18), representing 11% of the total minutes played by all players.”