The beautiful game has developed into a multi–billion Euro business. The 20 Premier League clubs achieved revenue of EUR 4.8 billion (£4.3 billion) in 2015/16, making it Europe’s biggest league according to Deloitte. The top division in Germany was a distant second (EUR 2.7 billion) while Spain, France and Italy collectively earned EUR 5.84 billion.
The transformation came 20 years ago in England when the clubs in the first division rebranded themselves into the FA Premier League, and that enabled them to strike commercial deals.
The first major deal with BSKYB in 1991 was worth £304 million over a 5-year period. Today, rival bidders BT and Sky bid £5.14 billion for three years representing compound annual growth of 14% a year. But can it continue?
According to the Financial Times, BT shares slipped to a four year low on 24 October 2017, ahead of a possible profits warning and dividend cut. Stockbroker Jeffries in the same article said “We believe investment in networks will need to rank visibly above both shareholders and spending on TV rights. The most clear-cut way in which BT could demonstrate this (without ambiguity) would be to trim its dividend commitment, in our view.”
So, on the next round of bidding BT may have to bid for the lesser known teams. But that is not until 2019 and a lot can happen between now and then. BT shares are down 31% on the year.
By 2019 we would expect to see new entrants into the market. Amazon Prime and Netflix who stream content, could be Premier League rights candidates. Amazon recently purchased the rights to NFL matches.
Add to this continued interest from Asia in European football it is easy to see that the beautiful game remains a growth business.
But it is not all rosy for the football clubs. Losses from European football clubs totalled EUR 286 million in 2016 according to UEFA, although this was better than the EUR 1.7 billion in losses in 2011.
The losses have not dissuaded international billionaires from bidding for clubs. Over half the clubs (14 out of 20) in the Premier League now have foreign owners.
By Warwick Bartlett