In European football, the concentration of financial might with the ‘big five’ leagues has created a gap with other leagues so wide that it has restrained these leagues to themselves. The possibilities of reshaping the terminology from ‘big five’ to big six or any other is virtually nonexistent. In such a scenario, the fact that growth rate of non ‘big five’ top leagues exceeding that of the ‘big five’ leagues, is a pleasant surprise. And that is precisely what the Deloitte Annual Review of Football Finance report shows. The ‘non big five’ top leagues clocked a total revenue of €7.3bn in 23/24 growing by 7% over 22/23 revenue figures. In the same period, ‘big five’ leagues grew by 4%.
That, of course, does very little to reduce the revenue gap.
The revenue of non ‘big five’ top leagues can be claimed to be led by the Dutch Eredivisie, Liga Portugal and Belgian Jupiler Pro League, who collectively, contribute to about 26% of the total revenue appropriated to ‘non big five’ top leagues. The aggregate revenue of these three leagues, have grown by 11% in 22/23 over 21/22 and expected to grow at the same rate in 23/24 too. These leagues, particularly the Portuguese and Belgian, have become the investment hotspot for multi club operations in the recent few years.
This blog is dedicated to understand more about them through their revenues, transfer spends and why clubs from some of these leagues are on the radar of private equity investment firms to bolster their multi-club structure.
Financial Overview
As mentioned above, although the three mentioned leagues lead the might of ‘non big five’ leagues, but each of these three leagues have a very different characteristic from each other. On deep-diving the financial figures by leagues, some interesting observations are seen:
- Media rights deals in Portuguese league is based on deals signed by individual clubs and that makes the distribution very uneven. Collective broadcast revenue share is 30% of the total league revenue but the gap between the highest to the median earning club is extremely high at 12.6X and the top three clubs contribute 64% of the broadcast revenue. In case of Eredivisie and Belgian Jupiler League, the share of broadcast revenue to that of the total revenue is low at 12% and 17% respectively.
- On the commercial revenue stream, Eredivisie clubs have the highest share to the total revenue at 41% while that for the Portuguese and Belgian league clubs, it is 20% and 27% respectively.
- Dutch Eredivisie clubs are also characterized by a high share of matchday income in the total at 26% whereas for the other two leagues, it’s as low as 12% for Portuguese league and 17% for Belgian league.
- Belgian Jupiler League is also characterized by a high share in the ‘other non-commercial’ income stream at 25%, about one-fourths of their total income.
- High wages-to-revenue ratio is present in all of the three leagues, highest in Belgian Jupiler League at 86%.
- Contribution of income from UEFA competitions is high in case of Portuguese league at 32%.
Attractive Proposition for Investment
Both first and second division leagues from Belgium and Portugal rank high in terms of private capital investment, multi-club ownership as well foreign investment and the Dutch leagues moderately so.
Why would that be?
The answer can be attributed to three key factors:
- High OPEX in these leagues: 45% OPEX in Dutch Eredivisie, 42% in Portuguese league and 50% in Belgian Pro League leading to a constant demand for additional funds / investments.
- Easier regulations make it simple and open for foreign investments.
- High footballing standards makes it a suitable source of quality footballers. Transfer activity for the past 3 years illustrates the point where cumulatively clubs from these three leagues accounted for almost €2bn in net positive income balance with the Portuguese league clubs making almost €900mn followed by Dutch Eredivisie clubs with €600mn and Belgian league clubs with almost €500mn. High quality players add to the attractiveness of investment.
The resulting situation makes Belgium, Portugal and The Netherlands suitable for prime investments in the multi clubs operating model resulting in at least 35 clubs from these leagues have become a part of at least one multi club ownership group.
In Conclusion
The above factors undermine the shape of the Eredivisie, Liga Portugal and Belgian Jupiler League also highlighting the promising factors for investment purposes especially in the multi-club ownership perspective. However, there is & will be backlash from local club supporters complaining about acting as feeder clubs for the marquee club in the ‘big five’ leagues.
Leagues, Investors will have to collectively address this issue in order to succeed.
