The Political Economy of Football V2

A very useful report from KPMG detailing how the pandemic is not deterring investors in football, particularly from the US:  https://footballbenchmark.com/library/pandemic_not_discouraging_football_club_investors American investors hold major stakes in one-fifth of the top 60 teams playing in England, Italy and France. One interesting insight is that European football often offers a better return than investing in major American sports.

From his fastness in Zurich, the authoritative Swiss Ramble takes a look at the 2019/20 accounts of Rangers. The club's pre-tax loss widened from £11.4m to £17.8m, despite revenue rising £5.9m (11%) to £59.0m, though profit on player sales fell £2.4m to £0.7m. This was due to £11.5m (18%) increase in operating expenses, as the club invested in the first team. After tax loss was £17.5m. The main driver of the revenue increase was the Europa League, which was worth £20.7m compared to £14.3m prior year. However, player and other wages surged by £8.9m. To increase their revenue by £6m (11%) in a COVID impacted season is a noteworthy achievement, especially considering the hefty reductions in most other leading clubs across Europe. Rangers have consistently lost money in recent times, aggregating £70m of losses in the last seven years. The £18m loss in 2029/20 is the largest in that period, partly due to the investment in the squad, but also adversely impacted by the pandemic. The cl...

Atlético Madrid's debt is nearly €1 billion.  However, despite a fall of nearly 10 per cent in revenue, the club still managed to make a profit against the background of the pandemic:  https://www.sportspromedia.com/news/atletico-madrid-debt-2019-2020-broadcast-advertising-revenues-la-liga?_hsmi=101315867&_hsenc=p2ANqtz-_37nY_96enPEavzK-rkQtSqy7vrUKjg469zWcPcFvbq8LuKR-wf2cPVW5NuzC2LxKUikdoXPmWZ5AB_eQsyx9Ha3742gA1Q4cUnmDTIkwdASmUvE4

The authoritative Swiss Ramble reports on the 2019/20 accounts of Aberdeen FC. In 2019/20 Aberdeen's loss narrowed from £5.0m to £3.2m, largely because prior year included £4.3m impairment of Pittodrie. Revenue dropped £1.6m (10%) to £14.3m due to COVID, while wages rose £0.5m (6%) to £9.8m. Debt cut from £7.2m to £1.3m after equity conversion. Overall revenue declined £15.9m to £14.3m. Match day revenue was down because of the effects of the pandemic, a fall of 32 per cent from £5.4m to £3.7m. Broadcasting was more or less steady at £3m, a third of that coming from European competitions. The wages to turnover ratio went up from 58 per cent to 68 per cent, still within UEFA guidelines. In many clubs across Europe player sales are an important contributor to revenue. However, Aberdeen showed a small deficit of £0.2m after a small surplus of £0.3 the previous year.

Inter Milan recorded a loss of €102.4 million for the 2019/20 season, a period remembered for the massive impact the coronavirus pandemic had on football.   The club's loss is more than tice that of the preceding year. If it had not been for deferred income, turnover would have been stable at €423.7m. Their results were revealed after a number of other big Italian clubs presented historic deficits; AS Roma a loss of €204 million; AC Milan €195 million; and Juventus €89.7 million. "The financial year saw economic and financial streamlining measures implemented, with a particular focus on monitoring costs and carefully managing working capital, investment and liquidity," the club said in a statement.

The idea of a European Super League (ESL) has been around for some time and so far it has remained a pipe dream.  However, every time there is a serious proposal Europe's leading clubs use it to leverage more concessions from UEFA and the Champions League.   Currently in favour is a so-called 'Swiss model' based on chess competitions in which ten clubs would play each other in a league with the top clubs going on to a knockout competition. This format guarantees ten European matches each season instead of six in the Champions League and it would also avoid some big clubs getting knocked out early. This increases the financial divide in football.  According to Deloitte, revenues at the 10 richest clubs in Europe were €6.3bn last season, up from €2.6bn a decade earlier.  Covid-19 just enhances the need to boost sources of revenue. Fans don't like the idea because they are more interested in ancient rivalries.  But globalisation remains a strong force in footb...

The authoritative Swiss Ramble reviews the latest financial results for 2019/20 for Tottenham Hotspur. Tottenham Hotspur’s 2019/20 financial results covered a season that was disrupted by the COVID-19 pandemic, but they still benefited from the new stadium. The club swung from £87m profit before tax to £68m loss, a deterioration of £155m. Revenue dropped £69m (15%) from club record £461m to £392m (including exceptional £11m TV rebate), while profit on player sales rose £4m to £15m and expenses increased £85m. After tax loss was £64m. This is the first year that Spurs have reported a loss since way back in 2012 – and that was only £7m. In the intervening 7 seasons, they have generated an impressive £412m of profits, averaging £59m a year. In 2018 and 2019 alone they delivered a hefty £226m. Main driver of revenue fall is broadcasting, down £108m (44%) to £136m, due to Premier League deferral/rebate and reaching Champions League final prior season. However, new stadium led to growth in m...