OL do well out of player sales

The tireless Swiss Ramble has been spending the weekend analysing the accounts of Olynpique Lyonnais.  Many clubs throughout Europe have become increasingly reliant on player sales as a source of revenue, but these can be volatile.   However, OL have done better than most and appear to have a good strategy.  

Another important point to emerge is how far Ligue 1 lags behind the other top five European leagues.  PSG are, of course, an exception to the rule.

Due to a combination of COVID and no European competition, the pre-tax loss increased from €36m to €109m, as revenue fell €63m (35%) from €181m to €118m and profit on player sales dropped €38m from €83m to €45m. After four consecutive years of profits, OL have now reported losses two years in a row, amounting to €145m (2019/20 €26m and 2020/21 €109m).

The loss after tax is by no means the largest in Europe. In fact, it is much lower than Inter €246m, Juventus €210m, Roma €185m and especially Barcelona €481m.

The revenue fall was driven by gate receipts, down €34m (94%) from €36m to €2m, and broadcasting, down €29m (29%) from €98m to €69m. Commercial held up pretty well, only slipping 1% to €47m. Including player trading, revenue dropped €94m (35%) from €272m to €177m.

The €109m loss was only surpassed by PSG €125m in 2019/20, though Marseille were only just behind at €98m. Most French clubs post small profits or losses, but the figures will be worse in 2020/21, as they will include a full year of the pandemic.

The challenge facing OL is highlighted by PSG’s stratospheric €459m revenue growth since they were acquired by QSI in 2011. As a result, Lyon’s €118m is miles below PSG €560m (2020). Marseille could be second highest in 2021, as they will be boosted by Champions League money.

The club have estimated the direct and indirect revenue loss from COVID as €150m, including gate receipts €31m, Mediapro’s default and the shortfall arising from the absence from 2020/21 Champions League. Partly offset by €30m cost savings, giving a net €120m adverse impact.

The figures were boosted by €45m profit from player sales, mainly Bertrand Traoré to Villa €16m, Martin Terrier to Rennes €12m, Amine Gouiri to Nice €7m and sell-on fees €12m, though this was down from prior year €83m. Highest in France in 2019/20 was Lille €125m.   have made significant profits from player sales, including €416m in the last 6 seasons, averaging €69m 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 in France that has done better financially with player sales is Monaco, who made an incredible €644m in the five years up to 2020. However, OL’s €371m is well ahead of the rest, e.g. PSG €293m, Lille €268m and Bordeaux €126m.

player sale profits have been based on steady business, as opposed to one mega transaction, with four deals above €40m: Lacazette to Arsenal €50m, Ndombele to Spurs €48m, Mendy to Real Madrid €43m and Tolisso to Bayern €41m. Sales proceeds for 2021/21 already €40m.

French domestic TV rights should have increased by 60% in 2020/21 from €760m to €1.2 bln, but Mediapro could not meet their payments, so the new deal was cancelled. Canal+ and Amazon picked up those rights, leading to a revised total of €662m, i.e., less than the previous deal.   The revised €735m (including international rights) is the only one less than €1bn among top European leagues, miles below Premier League €3.6 bn, La Liga #2.0 bn, Bundesliga €1.4 bn and Serie A €1.3 n.

OL missed out on qualification for Europe after 2019/20 season was prematurely ended (due to COVID) when in 7th place, with a big impact on revenue, e.g. in the Champions League PSG earned €111m, Marseille €47m and Rennes €33m; in Europa League Lille €18m and Nice €12m.  European qualification (particularly Champions League) is extremely important for OL, who earned an impressive €221m from Europe in last 5 seasons.

Wages rose slightly from €132m to €134m, due to €7m increase in bonuses for reaching 2019/20 Champions League semi-final (games played in 2020/21 accounting year), partly offset by €5m reduction in fixed costs (including some staff on furlough).  €134m wages are the second highest in Ligue 1, though less than a third of PSG’s staggering €414m. They are still ahead of Monaco €121m, Marseille €118m and Lille €90m (all 2019/20 figures).

Following the steep decline in revenue, OL wages to turnover ratio increased (worsened) from 73% to 113%. This was a very healthy 59% in 2019 before COVID struck. Now one of the highest in Ligue 1, though still below the 2020 figures of Monaco 194% and Bordeaux 134%.