Deloitte: After Covid, clubs could become more financially sustainable

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Even though Deloitte’s latest figures show a 3.7billion euro reduction (PS3.4bn in European revenue) in football clubs, it is possible that they could be more financially sustainable.

The key findings of the 30th Annual Review of Football Finance by the finance firm, which was published Thursday, show that the total football market in Europe fell to 25.2 billion euros (PS22.1bn) during 2019/20.

clubs could become more financially sustainable

Deloitte reported in June that Premier League club revenue dropped from a record PS5.2bn to PS4.5bn for 2019/20. This was due to a decrease in matchday spectators and a delay in some broadcast income.

Covid-19’s impact on football – that saw it shut down in March 2020 and resumed in the Premier League’s “Project Restart” in June last year behind closed doors – led to a record number of pre-tax losses for all clubs of PS966m. This was exacerbated by the PS648m revenue loss, as well as the PS126m wage increase.

The wage cost of Premier League clubs increased by just four percent to PS3.3bn for 2019/20. However, the total player salary remained relatively flat through Europe’s top-flight competitions.

In 2019/20, the English Football League saw a reduction of revenue totalling 13 percent to PS943m (PS1.1bn for 2018/19).

Deloitte’s latest report does not cover the initial part of the pandemic. The 2020/2021 season will continue to play out but only for a few matches. This was mostly done behind closed doors, as national lockdown and coronavirus restrictions were increased.

Dan Jones, Head of Sports Business Group at Deloitte, reflects on the fall in Premier League revenue and discusses what that might mean for the transfer market this summer.

Premier League clubs will see an increase in figures for 2020/21 if supporters are allowed to return as scheduled. This would allow them to push back toward setting new records over 2022/22.

Dan Jones from Deloitte’s Sports Business Group believes that the rapid restructuring of football’s business model in the last 18 months may have a long-lasting positive effect.

Jones stated, “This tells the story starting at the early stages of the pandemic and the first signs (financial), hit.”

It was the Premier League’s first ever revenue drop and it was similar across Europe. Germany was the exception that got back on track before anyone else.

It focuses on two main things: the closing of the gates with fixtures and matches being kept behind closed doors.

In some cases, TV revenue for these games is shifted to 2020/2021. There are also rebates available to broadcasters that can have an impact on the year.

The short version is that Premier League revenues have fallen for the first ever time in 2019/2020. However, we anticipate a good rebound in 2020/2021.

“If we had asked you this year, what were our forecasts? It would have been an all-time financial record because of the new season as well as the extra revenue that was carried over from 2019/2020.

“Obviously, we didn’t expect that the entire season would be held behind closed doors last year – it was not something anyone had in mind.”

We believe 2020/2021 will see a rebound, however, we doubt it will bring back the 2018/2019 highs.

It appears that there won’t be any restrictions on supporters attending grounds for the 2021/2022 seasons, so this will likely be another record-breaking year.”

Tim Bridge, director of Deloitte Sports Business Group, says the football industry will have to change to recover from the financial damage done by the pandemic.

Jones believes that a “tightening” of the belts across clubs seeking to limit rising wage costs and a sharp decline in revenue could result in a more stable environment.

He stated that clubs could be seen, following an extreme financial shock in the last 18 months, being in a better position to face the future, because they have been able to reduce wage inflation.

“The resilience clubs are showing that if they build upon this they can be much more resilient than they were 18 months ago.

“Clearly, there is support and passion for all clubs in the country. If that leads to us getting into a better position, that would be great.”

Publited at Thu 29 July 2021, 00:02.02 +0000

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