Hyperinflation in European football – Outrageous Spending is Unsustainable

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

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Reasons to buy

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Table of Contents

Table of Contents

Overview 2

Catalyst 2

Summary 2

Hyperinflation in European football: revenues and expenditure soaring 6

Immense broadcasting and commercial revenue fuel, but also fueled by, expenditure 8

Broadcasting revenues the most significant 10

Matchday revenue losing significance 11

Commercial revenues on the rise as clubs monetize marquee signings 12

Different leagues, different dynamics 14

Wealthiest clubs spend too much driven by commercial revenues, but not more than their less affluent counterparts 16

Wealthy clubs exploit transfers and on-field success to secure lucrative commercial deals 19

Not only have the wealthiest clubs spent 19

Sustainability is a combination of financial health and demand 21

Financial health of smaller football clubs is impaired in effort to catch up with wealthier clubs 21

Wage costs dangerously high in relation to revenues 23

Demand cannot be further stretched, consumers can only take so much 23

Broadcasters’ profits are squeezed TV subscriptions are rising 24

Consumers to lose interest over a product that is increasingly reliant on money 24

Conclusions 25

Appendix 26

Sources 26

Further Reading 26

Ask the analyst 27

About MarketLine 27

Disclaimer 27

List of Tables

List of Tables

Table 1: Top European league transfer fee expenditures, EUR millions, 2006-07 – 2016-17 7

Table 2: Top European league transfer fees season-on-season inflation (%) , 2011-12 2016-17 7

Table 3: Top European football leagues salaries’ cost, 2012-16, ($m) 8

Table 4: Big 5 European football leagues’ correlation of transfer fees and salaries for the period seasons 2011-12 to 2015-16 8

Table 5: Revenues of the big 5 European football leagues, ($m), 2012-16 9

Table 6: Broadcasting revenues of the big 5 European football leagues, ($m), 2012-16 11

Table 7: Matchday revenues of the big 5 European football leagues, ($m), 2012-16 12

Table 8: Commercial revenues of the big 5 European football leagues, ($m), 2012-16 13

Table 9: Big 5 European football leagues’ correlation of transfer fees and commercial revenues for the seasons 2011-12 to 2015-16 14

Table 10: Top 10 most expensive transfers in the history of football (GBP) 16

Table 11: Revenues of the big 5 European football clubs, 2012-16 ($m) 17

Table 12: Transfer expenditure of the big 5 European football clubs, 2011-12 2017-18, ($m) 17

Table 13: Commercial revenues of top European football clubs, ($m), 2012-16 18

Table 14: Transfer expenditure to revenues, 2011-12 2016-17, (%) 20

List of Figures

List of Figures

Figure 1: Top 5 European league transfer fee expenditures, EUR millions, 2006-07 – 2016-17 6

Figure 2: Revenues of the big 5 of European football leagues , 2012-16, ($m) 9

Figure 3: Broadcasting revenues of the big 5 European football leagues, ($m), 2012-16 11

Figure 4: Matchday revenues of the big 5 European football leagues, ($m), 2012-16 12

Figure 5: Commercial revenues of the big 5 European football leagues, ($m), 2012-16 13

Figure 6: Income streams of the big 5 European football leagues, (%), 2012-16 15

Figure 7: Transfer balance of top European football clubs, ($m), 2012-16 18

Figure 8: Operating Revenues of big 5 European leagues, 2012-16, ($) 22

Figure 9: Net Income of big 5 European leagues, 2012-16, ($) 22

Figure 10: Big 5 European leagues, wage costs to revenue ($m), 2012-16 23

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