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One area of life that continues to grow despite the global economic recession worldwide is the football trade.

In a report
released by Deloitte Annual Review of Football Finance on Monday, the
European football market grew to €15.7 billion in 2008/09. The ‘big
five,’ leagues in England, France, Italy, Germany and Spain boosted
revenues in 2008/09 to a collective total of €7.9 billion (N2.8
trillion); up from €7.7 billion (N1.39 trillion) in 2007/08. The
Bundesliga, Serie A, and Ligue 1 achieved growth across all three major
revenue streams; broadcasting, match-day, and commercial revenue.

Dan Jones, partner
in the Sports Business Group at Deloitte, said: “European football’s
continued revenue growth demonstrates an impressive resilience to the
extremely challenging economic times; underlying the continued loyalty
of its fans and the continued attractiveness of football to sponsors
and broadcasters. Unquestionably, football’s biggest challenge is not
revenue generation, but rather the need for much greater cost control;
notably over players’ wages and transfer fees.”

Wage bill growth

The ‘big five’
leagues’ wages increased by €305m (N55 billion) to exceed €5 billion
(N907 billion) for the first time. In England and Italy, wage growth
was greater than revenue growth, putting further pressure on operating
profits. The Bundesliga became Europe’s most profitable league as its
clubs generated increased operating profits of €172m (N31 billion) to
comfortably overtake the Premier League, whose profits fell markedly to
€93m (N17 billion). Serie A and Ligue 1 remained loss making. In Spain,
Barcelona and Real Madrid generated substantial operating profits but
the remaining clubs recorded a significant aggregate operating loss.

Alan Switzer,
director in the Sports Business Group at Deloitte, said: “Since the new
UEFA Club Licensing and Financial Fair Play Regulations will first
apply for financial statements ending in 2012, with no sanctions before
2013/14, clubs should have sufficient lead time to adapt but need to
start preparing themselves now. In addition to continuing to grow their
revenues, including through investment in their facilities, clubs must
focus on ensuring their cost base better reflects their revenues and
has sufficient flexibility built in to deal with any revenue shocks.”

The new UEFA Club Licensing and Financial Fair Play Regulations,
which were approved in May 2010 and applied for entry into UEFA
competitions, will require many European clubs to take action to better
balance their revenue and expenditure. A key part of the regulations is
the ‘break-even’ requirement which, in basic terms, means clubs will be
required to spend no more than they earn after taking into account
certain exempt expenditure. Examples can be made of Portsmouth that
became the first Premiership club to go into administration.