A focus on broadcasting revenues and their impact on European clubs’ EV

We have been looking at the summary of the European top clubs' Enterprise Value as provided by KPMG. We further continue with the size and the impact of a competition’s broadcasting revenues and their distribution method are captured in their proprietary algorithm, as they play a fundamental role in the income generation potential for Europe’s elite football clubs.

KPMG Football Benchmark Aggregate EV and aggregate broadcasting revenues of top 32 clubs showed profiting from a sizeable and relatively wealthy population, broad commercial appeal, a large and mature pay TV market, especially the fierce competition between Sky and BT, boosting the English Premier League (at GBP 1.7 billion/season for 2016-2019) to comfortably top the charts, with the most valuable domestic media rights deal.

Behind the Premier League, albeit under very different scenarios, are Spanish LaLiga and Italian Serie A. Both stand to generate approximately EUR 1 billion in domestic broadcasting revenues in 2016/17.

In the case of LaLiga, says the report, this sum represents a 65% year-on-year increase over the 2015/16 season, the league’s first season selling its media rights on a collective basis. Aiming for a distribution ratio below 4:1 this season (5:1 ratio in the 2015/16 season), LaLiga’s new system equally distributes half of the available funds and assigns the rest according to a club's performance (25%) and popularity (25%).

"Therefore, while Real Madrid CF (2nd on KPMG’s EV ranking) and FC Barcelona (3rd) will still receive a larger revenue share than their peers, clubs with large fan bases, such as Atlético de Madrid (13th) or Sevilla FC (27th), are expected to profit from this system in the coming seasons."

By contrast, Serie A’s next media cycle (2018-2021) is expected soon.The league previously benefited from intense competition (Sky/Mediaset) to strike a record deal, which currently accounts for more than 80% of its total broadcasting revenues.

The report goes further to say that, in Germany, the Bundesliga’s expiring agreement, impacted by Sky’s dominant position and the country’s low penetration rate of pay TV, has historically kept the German league (at EUR 628m/season for 2013-2017) behind its European counterparts. 

The Bundesliga recently recorded an increase of 85% in the value of its domestic rights, from which member clubs will potentially derive significant profits from next season (EUR 1,160m/season for 2017-2021).

French and Turkish clubs are now even further away from the industry leaders which may lead to an even wider gap in total revenues and EV in the medium-term.

Having promoted their product and projected a consistent brand for longer than any other football league, the Premier League’s popularity on the global stage is unrivalled. 

The Premier League dominates key markets in Asia and North America and its international media rights are now more valuable than the domestic rights of any of its European counterparts.

Premier League distributes international revenues equally among its members, which helps to position English clubs among Europe’s most valuable ones.

LaLiga already spreads kick-off times and schedules major football fixtures to maximise international audiences and will soon follow the Premier League in launching a 24/7 English channel for international licensees.

The Bundesliga is currently restructuring its international operations and has intensified its efforts in foreign markets with the recently-reported five year agreement (USD 272 million for 2018-2023) with Chinese broadcaster PPTV suggesting the league is starting to reap some rewards. 

Under its motto “Football as it’s meant to be”, the league’s international revenues are expected to continue growing in the mid-term, albeit they are likely to stay behind Premier League and LaLiga.

What is your take on the figures?

Tackling skills: the big-5 league rankings (2016/17)

The CIES Football Observatory Weekly Post (Issue number 189) released the big-5 league players according to their tackling skills. A successful tackle is defined by our data provider OptaPro as tackles resulting in winning possession or the ball being put out of play.

According to the report, the tackling index was calculated by multiplying the average number of tackles attempted per 90 minutes and their success rate. 

This analysis was done for those players fielded for at least 1,500 domestic league minutes.

The top three ranked players came from three different championships - Ligue 1, La Liga and the English Premier League. 

Topping this list, is  Valentin Rongier of Nantes in France. He is followed by Carlos Casemiro of Real Madrid of La Liga. 

Idrissa Gueye of Everton in England comes third on the list. The top ranked Bundesliga player is Douglas Santos who plays for Hamburg.

The Serie A top tackler is Pescara's Gastón Brugman.

However, quantitatively, the big-5 league top player who attempted the most tackles is Sergio Álvarez of Sporting Gijón. He attempted a total of 138. 

Idrissa Gueye of Everton achieved the most in England; 99. To place the EPL high in he ranks, the highest success rate among players in the top 100 list was recorded for Pedro Obiang (West Ham) who achieved 89%.

Ligue 1 has three players in the top ten, with the Bundesliga, La Liga and Serie A having two each and the EPL just one.

What is your view on the statistics?

Borussia Dortmund are back

They used to be the benchmark of football the world over. They dominated Germany football and Europe for a while and then faded like stone washed jeans, but Borussia are back.

The end of the great AC Milan era of Ruud Gullit, Marco van Basten and Frank Rikjaard in the late 1980s, brought a sharp but brief craze of complete football dominance that differed from the pressing Arigo Sacchi philosophy obtained from basketball tactics. It was neither the Ducth total football born of the Johan Cryuff generation.

Borussia Durtmund strangulated opponents by totally subduing them the entire 90 minutes. They became a standard that was immediately emulated by neighbours, Bayern Munich, which saw the two teams reach one UEFA Champions' League final at one point. Their tactics and prowess was always accredited to massive mental strength enabling them to concentrate the entire match.

It was during those days, that even for one to be considered a coach, they needed a German qualification. However, the German and European giants went into hibernation, being a shadow of Bayern Munich, Leverkusern, Shalke 04, Kaiseslautern, Eintrancht Frankfurt, Werder Bremen and others.

Now, Borussia are back, and with a bang. They are 11 points clear at the top of Bundesliga, and with a goal difference of 31, they mean business. Having played 19 matches, they lost twice and drew as much. If they reach their potential as we know it, Barcelona and Manchester United have something to deal with. It could be the end of their dominance in Europe.

It will soon be seen if they can restrict teams outside the Bundesliga to the same psychological wrestling only they can win. It took teams to be well polished in their play to implement a strategy that could afford them a sniff the goal. On their part, Borussia needed a single shot at goal. The luxury of the second would be just that, excess.