Hyperinflation in European football - Outrageous spending is unsustainable

  • ID: 4426690
  • Report
  • Region: Europe
  • 28 pages
  • MarketLine
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Hyperinflation in European football - Outrageous spending is unsustainable

Summary

The recent transfer spending spree in European football has provoked discussions about the sustainability of this trend and the forces behind it. This case study analyzes the modus operandi of European football clubs, especially those of the wealthiest, which are the biggest spenders, in order to identify the causes and the implications of hyperinflation in European football.

Key Questions Answered
  • Why has the transfer expenditure in European football soared in recent years?
  • What are the major revenue streams for football clubs?
  • Is this hyperinflation in transfer fees and salaries sustainable?
  • Who finally pays the cost of these inflated values in European football?
Scope
  • Examines the forces behind hyperinflation in European football.
  • Analyzes the income streams of top European football leagues and clubs.
  • Examines the sustainability of the hyperinflation trend in European football.
Reasons to Buy
  • Hyperinflation in European football stems from increasing broadcasting revenues in top leagues, whilst huge commercial income inflates the revenues of the wealthiest clubs.
  • The hyperinflation in European football is not sustainable as the financial health of smaller clubs is impaired in an effort to catch up with the wealthiest clubs. In fact, it is not only the wealthiest football clubs that have spent too much on inflating transfer fees and salaries, but also smaller football clubs in top European leagues that have engaged in expenditure beyond their means.
  • Broadcasters and sponsors have ended up paying enormous amount of money to football clubs at the expense of their profitability, with that cost eventually passed to consumers.
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Overview
Catalyst
Summary
Hyperinflation in European football: revenues and expenditure soaring
Immense broadcasting and commercial revenue fuel, but also fueled by, expenditure
Broadcasting revenues the most significant
Matchday revenue losing significance
Commercial revenues on the rise as clubs monetize marquee signings
Different leagues, different dynamics
Wealthiest clubs spend too much driven by commercial revenues, but not more than their less affluent counterparts
Wealthy clubs exploit transfers and on-field success to secure lucrative commercial deals
Not only have the wealthiest clubs spent
Sustainability is a combination of financial health and demand
Financial health of smaller football clubs is impaired in effort to catch up with wealthier clubs
Wage costs dangerously high in relation to revenues
Demand cannot be further stretched, consumers can only take so much
Broadcasters’ profits are squeezed - TV subscriptions are rising
Consumers to lose interest over a product that is increasingly reliant on money
Conclusions
Appendix
Sources
Further Reading
Ask the analyst
About
Disclaimer

List of Tables
Table 1: Top European league transfer fee expenditures, EUR millions, 2006-07 - 2016-17
Table 2: Top European league transfer fees season-on-season inflation (%) , 2011-12 - 2016-17
Table 3: Top European football leagues salaries’ cost, 2012-16, ($m)
Table 4: Big 5 European football leagues’ correlation of transfer fees and salaries for the period seasons 2011-12 to 2015-16
Table 5: Revenues of the big 5 European football leagues, ($m), 2012-16
Table 6: Broadcasting revenues of the big 5 European football leagues, ($m), 2012-16
Table 7: Matchday revenues of the big 5 European football leagues, ($m), 2012-16
Table 8: Commercial revenues of the big 5 European football leagues, ($m), 2012-16
Table 9: Big 5 European football leagues’ correlation of transfer fees and commercial revenues for the seasons 2011-12 to 2015-16
Table 10: Top 10 most expensive transfers in the history of football (GBP)
Table 11: Revenues of the big 5 European football clubs, 2012-16 ($m)
Table 12: Transfer expenditure of the big 5 European football clubs, 2011-12 - 2017-18, ($m)
Table 13: Commercial revenues of top European football clubs, ($m), 2012-16
Table 14: Transfer expenditure to revenues, 2011-12 - 2016-17, (%)

List of Figures
Figure 1: Top 5 European league transfer fee expenditures, EUR millions, 2006-07 - 2016-17
Figure 2: Revenues of the big 5 of European football leagues , 2012-16, ($m)
Figure 3: Broadcasting revenues of the big 5 European football leagues, ($m), 2012-16
Figure 4: Matchday revenues of the big 5 European football leagues, ($m), 2012-16
Figure 5: Commercial revenues of the big 5 European football leagues, ($m), 2012-16
Figure 6: Income streams of the big 5 European football leagues, (%), 2012-16
Figure 7: Transfer balance of top European football clubs, ($m), 2012-16
Figure 8: Operating Revenues of big 5 European leagues, 2012-16, ($)
Figure 9: Net Income of big 5 European leagues, 2012-16, ($)
Figure 10: Big 5 European leagues, wage costs to revenue ($m), 2012-16
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