tmt-predictions-2016

Predictions

European football scores $30 billion

TMT Predictions 2016

Executive summary

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. Most of this growth will likely 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.

Football’s revenues have been increasing consistently and impressively over the past few decades; but it is only recently that revenue growth has stayed ahead of costs, with improved cost discipline being implemented across the game. This improved cost management, combined with continuing broadcast and commercial growth, looks likely to make football clubs increasingly profitable. They are therefore attractive to investors looking for a consistent financial return, as well as those interested in building profile or business opportunities through acquiring a trophy asset football club.

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.

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. These are the two biggest drivers of revenue growth in the European football market.

It is not just from domestic markets that Europe’s top leagues are achieving substantial growth in broadcast rights fees. The EPL and La Liga’s international rights fees have been climbing fast too. 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 percent 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.

In the long run, there is a virtuous circle within football. The more revenues a club can generate, the more money 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 maximise 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.

European football scores $30 billion

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