Experts predict revenue slump for European football

30 December 2019

Photo: Getty Images Television reporters and pundits from different tv stations report pitchside ahead the Premier League match between Manchester United and Liverpool at Old Trafford.

Pay TV subscriptions down across Europe. Premier League clubs should be able to survive - but many clubs in Italy, France and Spain will suffer.

Telcos have failed to capitalise on football as large-scale subscription driver. Tech giants unlikely to compensate.

Falling revenue at the top of European football creates risk of more club insolvencies.

Experts call for an easing of the post-insolvency process, which can protect clubs, fans and players, rather than failed owners.

Henrik Lønne

Last time the Premier League auctioned its domestic broadcast rights in 2018, the revenue decreased by ten per cent. According to a report from Enders Analysis, this was the first sign that European football has reached peak football revenue and must look to restructure rules of the European game in order to avoid collapsing clubs.

Talking to François Godard and James Barford, two of the report's authors, has learnt that based on their research, they expect that broadcast revenue will at best stagnate across Europe.

They attribute the lack of continued growth to the fact that telcos, such as BT in the UK, Deutsche Telekom in Germany, and Orange in France, that aimed to use football rights as a loss-leader or differentiator for subscriber growth, have either withdrawn from early ambitions to be prominent sports broadcasters or have strongly moderated their ambitions about their place in the market.

"BT once tried to overtake Sky to become the main EPL broadcaster, but it has now retreated to focus on the CL," explains Godard and Barford.

While BT Sport has retained the Champions League rights in the UK, the fee, which is reported to be £400 million a year, is only marginally higher than in the last cycle. It was reported that BT Sport was in fact looking for an even cheaper deal, but competition from Sky and ITV kept the broadcast fee stable. This points to a pushback against the ever-higher prices to broadcast football among the traditional broadcasters.

New players cannot compensate

Godard and Barford also point to the case of Amazon in the Premier League, showing that even if tech companies are getting involved with broadcasting football, they are unlikely to bid up prices at the height of the European market.

The other new players in football broadcasting are OTT (over-the-top) streaming services. 

BT Sport announced in mid-December that its OTT service will be available as a stand-alone service - without also having to pay for broadband. According to the report from Enders Analysis, Sky has become increasingly dependent on its NOW TV online service for subscribers and, as it charges a lower fee, that makes it harder to spend ever-larger amounts on broadcasting rights for high-cost live football. 


Other players independent of traditional broadcasters and telcos have not shown a competitive approach that suggests they would be able to compensate for this trend.

"In Europe only one operator, DAZN, has spent a significant amount of money and so far, they have not shown any willingness to go head-on against existing pay tv operators. They are happy to take a slice of the rights and to be a number two. Their approach has been very controlled and measured."

No risk for Premier League

With the value of domestic broadcasting rights going down, and the Premier League being at the forefront of that change, François Godard is, however, not worried about the health of Premier League clubs:

"I don't fear for the Premier League, because that league has the most healthy clubs in Europe. The leagues most at risk are in Southern Europe, especially Spain, France and Italy. They may start suffering if the Premier League clubs start spending less on transfers and acting more cautiously on the transfer market."

In fact, a report from CIES Football Observatory  shows that Premier League transfer spending has indeed already seen its peak, with £1.83 billion spent in 2018, but only £1.62 billion in 2019. According to Godard, these signs are already having an effect on how other European clubs are looking to the future.

"The expectation of an upcoming revenue squeeze is also having a political effect. It is the reason why clubs like Juventus are pushing for a revamp of the Champions League, and why there are discussions about a new Club World Cup. I do, however, not expect anything to happen without the approval of Premier League clubs, which are financially more solid," says Godard

Wasted opportunities

According to Godard, European football has wasted the opportunities created by the growth rates in broadcast revenues to solidify their off-the-pitch business and have instead spent that money on transfer fees and player salaries.

In their report, Godard and Barford suggest learning from the more egalitarian approach in US sports, and Godard is quick to point out one initiative that he believes would make European football more financially stable:

"More egalitarian sharing of TV revenue. This is a mechanism that helps the competitiveness of smaller clubs. The fact that the Champions League is almost only paying to the participating clubs, and that most domestic broadcast deals, except for the Premier League, are very twisted towards the winners, creates a strong imbalance between the clubs."

If Enders Analysis is right in its prediction and European football is facing lower revenue, this will put pressure on many clubs outside of the elite and could push many clubs into insolvency. In order to avoid situations like the one at Bury, where the club collapsed entirely, Enders Analysis suggests that European football take a new approach to insolvent clubs.  

New approach to insolvency

James Barford, one of the report's co-authors, explains to that it is not a matter of changing the legal insolvency process that applies to any limited company, but that the football authorities' behaviour should be changed. 

"The current football authority approach is to punish a club which becomes insolvent. This strikes us as both iniquitous and ineffective as a deterrent, as it does not punish the (previous) owners, whose actions led to the insolvency, as they have already lost their equity value through the insolvency process and have no financial interest in what happens next. It does punish the fans, who had nothing to do with the insolvency," says Barford.

Football clubs are more than companies and Barford suggests an approach which recognises and protects the communities around the clubs. His approach would allow for insolvent clubs to survive without relieving the failed owners of their responsibilities.

"Instead, we would suggest an approach which recognises that owners take risks and sometimes these do not pay off, and eases the process for the post-insolvency club (e.g. transferring contracts etc.), and any relevant non-financial parties that have lost out (e.g. players and/or other clubs which are owed money). Of course, the previous owners would still be subject to any relevant legal sanctions and would lose the value of their investment," says Barford.