European club football season is back and with it, fan passions, support & excitement. Some nervous moments regarding confirming broadcast rights deal had preceded this. Many international fans are still waiting to see their favourite teams in action yet due to broadcast rights in their territories remaining unsold or yet to be finalized. For example, fans in Asia won’t be able to view their favourite Serie A or LALIGA teams in action because it’s not yet available on traditional TV but will have to log on to a relatively unknown Middle-East based streaming service. Ligue 1 domestic media rights deal was finally secured after a nerve-wrecking period
This brings us to the importance of broadcasting
Traditionally, broadcasting has been the primary driving source of revenues for the big five European leagues as well as their individual clubs. Question is, are the clubs over-dependent on the broadcast revenue component? In this blog, we will explore the revenue dependence on broadcast
Big Five Leagues
The big five leagues cumulatively aggregate €9.2bn revenues through broadcast stream which is approximately 88% (percentage assumed to be similar to 2021/22 revenue figures) of the total broadcast revenue by European top division leagues comprising 730+ teams
Interesting part is, within the big five league clubs, there is an exclusive group comprising 15 highest revenue generating clubs. These clubs are more dependent on non-broadcast revenue streams compared to the balance teams from their respective leagues who are highly dependent on broadcast revenues
This leads to a kind of catch-22 situation. For the other league clubs, inability to expand their non-broadcast revenue channels makes them uncompetitive to these top 15 clubs. The chart gives a situational analysis
- There is a stark difference in Premier League. For the top 6, 61% of their revenue come from non-broadcast streams whereas for the balance 14 clubs, it’s only 28%
- Similar situation can be seen in other leagues except Ligue 1
- Ligue 1 has a slightly different situation, explained later on in the blog
Premier League
As the research paper from Keiran Maguire and Dr, Christina Philippou states “reliance on a particular income stream is important when assessing financial risk. Too much reliance on a single source can create increased pressure and panic when that source is affected. For example, matchday revenue was affected during the pandemic lockdowns so clubs that were very heavily dependent on matchday revenue (more common the lower down the leagues one goes) suffered more than those that were not”
According to the 2022/23 club finances, there is a strong reliance on broadcasting income with nine clubs showing a very heavy reliance (over 70%) on broadcasting income
Such a case becomes more despondent if the clubs are relegated and unable to cover their cost base which further leads to a chain reaction of borrowing and susceptible to financial cracks
Ligue 1
With Ligue 1, it’s slightly complicated. They have a separate revenue head called ‘others’ which is presumably about merchandising, licensing, community grants etc. contributing a significant €662.6mn or 28% in the total revenue. The presence of this segment does not convey the importance of broadcast revenue. The picture becomes clearer on removing ‘others’ segment of revenue
Clearly, apart from PSG, rest of the Ligue 1 clubs depends very significantly on broadcast revenue (over 50% dependence) with 4 clubs exceeding 70% dependence
Lower Division Leagues
With lower division football, the income from media rights is significantly lower and therefore the dependence factor is subsequently lower. However, this increases the dependence on matchday income. In a way, that is an equivalent amount of risk. We have seen the effects of pandemic where fans were not allowed and this impacted revenue very heavily
What Next?
Broadcasting is and will continue to remain a very important factor, both in terms of revenue as well as increasing fan connect. However, it is important for the clubs to concentrate on revenue diversification. The biggest clubs have been able to successfully do it due to their global power. The smaller clubs will have to think out of the box like stadium rights sponsorship or evaluating digital assets to achieve this
It’s a challenging time for the clubs yet it’s important for them to step-up and overcome this
