To most football fans, Thursday was a fairly unremarkable day. Talk about the previous nights Champions league clash between Real Madrid and Bayern Munich grabbed the back pages whilst the shock waves of the David Moyes sacking at Manchester United continue to ripple throughout the footballing world. But Thursday also saw the release of the sixth edition of UEFA’s European Club Licensing Benchmark report. The 109 paged report is hardly bedtime reading for most fans (this one being the rare exception) but inside its pages is a unique look at the general health of football across Europe and it makes for some interesting reading. The report is an accumulation of data about the clubs supplied by them to their respective nations as part of their licensing requirements. To break it down section by section would require more time and inches than this column provides so instead here for your viewing pleasure are the key highlights and learnings.
The divide is widening each year
Whilst UEFA is less than inclined to come out and say it, the financial disparity between teams in the top 10% in Europe and the rest is gradually increasing leading to longer term problems. The early indicators can be found in the report – 56% of teams with the highest wage budgets in their respective countries go on to win their leagues whilst the amount spend on players is increasing at a dramatic pace – €10.9billion has been spent assembling Europe’s top division playing squads. Teams are struggling to keep up with more than 200 clubs across Europe spending €12 for every €10 they bring in. This can lead to financial ruin as illustrated by the names of some of the teams banned from UEFA competitions due to financial issues. Glasgow Rangers, AEK Athens, CSKA Sofia and Besiktas have all been guilty of chasing the dream; wanting to compete with the larger clubs in Europe but as a result now face financial ruin. The list year over year is growing and it’s no coincidence (with the exception of Malaga and Rayo Vallecano) that these clubs all come from smaller nations that don’t reap the benefits of increased tv revenues and heightened commercial interest. The problem is sweeping Europe like a plague with UEFA reacting by introducing its fair play rules as a potential cure. The timing couldn’t be better. In total, 577 clubs applied for the necessary licence to play in UEFA sanctioned competitions but a staggering 18% (102 clubs) were rejected with the biggest reason relating to financial problems.
Its harder to succeed than ever before.
If you thought United were harsh on Moyes, think again. Moyes lasted 10 months but by the averages he only had 7 months left anyway. Managers across Europe are being given less time to find success with the average length of time now at 17 months. That’s seems like a long time but when you drill down in the individual leagues, alarm bells start to ring. The top leagues appear to have more patience than the average with 22 months the norm, however England’s number is slightly thrown off by Arsene Wengers extended 18 year stay at Arsenal. But moving into the leagues outside the top six, the situation is tougher with Greece averaging 4 months whilst Turkey comes in at 7 months. June and December are the busiest months for departures, mostly due to the proximity of the transfer window but frequent changes in management also has a knock on effect on the general stability of a club, leading to more financial problems.
Interest in football on the rise
Whilst it’s a mixed bag in terms of attendances at games with some countries suffering more than others, generally more people are watching European football. Interest in the beautiful game is high across Europe at around 78% with regions like Russia, Portugal and Romania seeing a lot of growth. Interestingly the spread of the supporter base across each country is widening with few teams dominating in terms of percentage of its population following one team. Only Benfica (47%), Steaua Bucharest (45%) and Galatasary (43%) pulled in high percentages. Barcelona is by far the most popular team, not necessarily in Spain (tied with Real) but in other markets like Poland, Israel, Hungary and Finland. With this interest affecting gate receipts, clubs are expanding its view on how to bring in additional money to bolster their coffers. Sponsorship money across Europe has grown to €3.3 billion overtaking gate receipts by €0.7 billion. Domestic broadcasting revenue has also increased by 8% to €4.4 billion making it the lion share of all revenues generated.
Players are benefiting regardless of league
With player wages combined across Europe now hitting €9.2 billion, it’s not hard to see where all the revenue generated is going. Wages have rocketed across Europe by 50% in the last 5 years with the less wealthier leagues feeling more of the pain. Unable to cope they have been forced to flog their highest paid stars to Europe’s top six leagues, which is illustrated in the reports transfer section which backs this theory up. Half of the worlds transfer spend can be attributed to the English, Spanish and Italian top divisions. The players however don’t appear to mind as they move to richer playing fields and broader contracts. Most of the players signed for €1m+ were given a four or more year contract with commercial and sponsorships components now added in as standard. How long this model continues will be based on how effective Platini’s financial fair play rules are at enforcing change. The alarming truth is that Europe’s biggest clubs (with the exception of Arsenal and Bayern Munich) are posting net losses due to increased costs and rising wages. The clubs below them are by in large self-sufficient with 88% posting positive cash balances. Fiscal responsibility comes in many shapes and forms and it appears as though clubs are starting to learn how to live by their means.
The UEFA report is not meant to be alarming, its sole purpose is transparency, refreshing especially at a time when FIFA is struggling to do just that. The report can be accessed by anyone and is meant to be absorbed, dissected and understood at various levels. It should heed some warnings especially for those clubs who haven’t quite found a way to live on a strict budget but it should also raise some eyebrows with the various leagues as they look to adapt to the ever-changing face of football. Adapt or die is the phrase mostly commonly used and in some cases it might be the only way to persuade them to do so. I recommend you look at the report yourself and make your own mind up. After all data can be interpreted several ways. I’ll let you decide if European football is on the up or on its knees.
You can find the report here: http://www.uefa.org/protecting-the-game/club-licensing-and-financial-fair-play/news/newsid=2091784.html