UEFA Financials Reveal Disparity between Top Spenders and All Other Clubs

UEFA has recently released their 2012 financial report, providing detail information about the landscape of football in over forty nations.  In its sixth edition, this report provides valuable insight into the financial stability and state of European football.  In the age of UEFA’s Financial Fair Play (FFP), this information has never been more paramount to clubs and investors alike.  UEFA General Secretary Gianni Infantino explicitly states in the foreword to the report,

Everyone involved in football wants to win – but when we look at the last three years of club football and see almost 2,000 head coach changes and combined club losses of more than €4bn, it is clear that the football family needs more stability…This project is a major challenge for both the clubs and UEFA, and it will certainly not solve all of football’s problems off the field. Nevertheless, it is a necessary and important step in the right direction, towards having a more stable base from which football can grow stronger in the coming years.

The report itself overviews various topics, including attendance trends, financial results, and cash flow analysis of UEFA clubs.  While some of the minor details of the data are not revealed, the extensive report reveals several trends in European football.

Top clubs show that they are successful in many ways but may not necessarily turn a profit. The successes of the top clubs in Europe are simply understood to many football fans worldwide.  To understand the full magnitude of these successes, it is important to highlight a few financial figures.  The newest benchmark report states that thirty-two clubs reported revenue of over €100 million, while 269 clubs reported revenue of less than €1 million in 2012.  This fact alone shows the massive gap between the top clubs and the remaining 696 clubs in Europe.

One of the explanations for this massive gap is the popularity of each club outside of the country in which they play.  In the commercial profile portion of the report, one study of thirty-five European nations reveals that fans favor a club outside of their own country.  For example, 27% of Irish football fans polled said their favorite team was Manchester United.  This is true for thirteen of the nations polled in the study, many favoring either Barcelona or Manchester United over domestic clubs.  Each of the twenty clubs in the Barclay’s Premier League reported more than €50 million in revenue, and  all but two clubs in the Bundesliga took in more than €50 million in revenue.  The quality of play in England, Spain, Germany, and other major football powers attracts a broader audience, increasing revenue from television deals, merchandise revenue, sponsorships, and marketing initiatives.

UEFA’s reports shows a bit of optimism that FFP is proving to be effective.  Thirty-nine leagues reported revenue growth between 2011 and 2012, including some of the big-spending football countries such as Spain, England, Germany, Italy and France.

Despite the growth in revenue, the bottom line still shows losses for nations as a whole.  After taxes, clubs in England still reported an 8% aggregate loss in 2012.  Italy, Russia, and France also reported losses at 11%, 9% and 7% respectively.  Of the top seven nations in revenue, the only one to report a profit is Germany at a mere 2%, while Spain reported no aggregate gains or losses. Only fifteen nations reported a profit after taxes in 2012.  Still, this is an improvement from 2011 when only nine turned an aggregate profit.

The number of clubs that report a profit in each country’s top division is relatively even.  In England, Germany, Spain, Italy, and France, a majority of clubs reported aggregate net profits in 2012.  A majority of clubs in each top league reports losses yet a majority of clubs in the league report a profit. This indicates that the teams that report aggregate losses tend to lose big.  The data supports this with eight clubs in the Barclay’s Premier League reporting more than a 20% aggregate loss.

For the top clubs in Europe, the only incentive to decrease their spending, mostly on player wages, is to meet UEFA’s FFP requirements.  Otherwise, spending on players has typically led to better results on the field.  In the report, UEFA states,

[The] relationship is even stronger amongst the 20 wealthiest leagues, with the highest wage spender winning the league in 12 cases in 2011/12 (60%). Five of the eight clubs that did not win in 2011/12 won the league the following year, meaning that 85% of top wage spenders won the league in at least one of the two most recent seasons.

This financial report does show some promise that clubs are beginning to spend wisely.  It also shows that turning a profit, even for most of the top clubs in Europe, is not a given.  There is still an incentive for top clubs to continue spending to match their wages and operational costs.  For smaller clubs, there is little hope in the near future to match the revenues of the top clubs.  Not every club in Europe can spend in the same ways that top clubs do without torpedoing the financial pyramid.  The soccer pyramid in Europe in many ways resembles the social class system in America: there are the top clubs spending to maintain their status and wealth, middling clubs that turn much smaller profits and look to maintain relevance, and the bottom clubs that report losses but exist only to keep the wheels of the league in motion.  The rich get richer.  It may not be a glamorous reality, but it is nonetheless often the case in the world of football.

 

What do you think about the financial results from UEFA’s 2012 report? Let us know in the comments section below, or via Facebook or Twitter.

Reporting on the business side of the world's game.