Pandemic pushes OL into loss

The authoritative Swiss Ramble reviews the 2019/20 accounts of Olympique Lyonnais.

Because of the effects of Covid-19 they swung from €8m pre-tax profit to €36m loss, as revenue fell €40m (18%) from €221m to €181m, though partly offset by €13m government aid and profit on player sales rising €6m to €83m. Also adversely impacted by €25m increase in costs.

Revenue had risen €42m (19%) to record levels in the first nine months of 2019/20, but it fell off a cliff in the last three months. Club estimates COVID revenue impact as €100m: €50m operating revenue and €50m player sales, as transfer window shifted to 2020/21.

Operating loss from COVID estimated as €58m, as €100m revenue reduction (match day €25m, broadcasting €6m, commercial €18m, player sales €50m) was partly offset by €42m cost savings (wages €21m, other expenses €21m.

In the last full season for Ligue 1 clubs, the club's profit before tax of €8m was third best in France, only surpassed by Paris Saint-Germain €32m and Toulouse €12m. Even before the pandemic struck, some clubs posted large losses, i.e. Marseille €91m and Lille €67m.

The €36m loss in 2019/20 is the first they have reported since 2015. Before that, they had accumulated €43m of profits in the previous four years, though this has now almost completely been offset in a single season. Club expects another loss in 2020/21.

The club have made significant profits from player sales, including €371m in the last 5 seasons, averaging €74m a year. Their strategy is “based on a top notch academy recruitment of very talented young players and an ability to unlock their sporting and economic potential." The only club that has done better financially in player sales in France is Monaco, who made an incredible €638m in the five years up to 2019.

Revenue has grown €84m (88%) in the last five years from €96m in 2015 to €181m, mainly driven by broadcasting €52m (Champions League success), match day €24m (impact of moving to new stadium) and commercial €8m [low by the standards of some Premier League clubs].

TV income fell €24m (20%) from €122m to €98m. Domestic was down €18m (35%) from €51m to €33m, due to rebate to broadcasters and 7th place vs. 3rd. UEFA TV money was down €6m (9%) from €71m to €65m.

European qualification (particularly Champions League) is extremely important for the club, who have earned an impressive €262m from Europe in last 5 seasons, only surpassed in France by PSG €406m, but well ahead of Monaco €169m and Marseille €44m.

Commercial revenue fell €9m (17%) from €57 to €48m, comprising sponsorship & advertising €27m, brand-related revenue €14m and events €7m. Adversely impacted by the mid-March shutdown. Before the pandemic struck, the club's commercial income had been steadily rising. In 2018/19 their €57m was ahead of Marseille €50m, Monaco €33m and Saint-Etienne €26m, but, like every other French club, was dwarfed by PSG’s extraordinary €452m.

The club “remain confident” of achieving €420-440m revenue (including player trading) and €100 EBITDA in 2023/24, partly based on building a new events venue near the stadium (€140m investment) and developing a leisure & entertainment complex in OL Valley.

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The Political Economy of Football V2

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