Football’s bubble is slowly bursting

THE long era of growth enjoyed by football looks to be coming to an end judging by the recently published Deloitte Review of Football Finance for 2021. With broadcasting revenues possibly peaking, wages flat-lining, lost revenues due to the covid-19 pandemic, not to mention other concerns around club stability and the moral obligations of the game, the sport may have passed what could be looked at as a golden age.

The European football market contracted by 13% in 2019-20 with overall revenues falling by € 3.7 billion to € 25.2 billion. This was the first decline in income since 2009. All football leagues were affected by the pandemic, but the big five European leagues saw their income decline by 11%.

Furthermore, the disruption to world football has, at long last, slowed-up the growth in player wages, which have been on a dramatic upward spiral for the past 20 years. In the Premier, total wage bills for 2019-20 were £ 3.3 billion, compared to £ 3.2 billion in 2018-19. But with revenues declining, the wage-to-income ratio rose by 12 percentage points to 73%, higher than UEFA’s recommendation. A total of 14 clubs from the Premier exceeded this limit.

How long can clubs continue to pay wages at such a level? Not only is the Premier League, for all its wealth, treading a dangerous tightrope, but it also encourages clubs below the Premier to spend way too much. In 2019-20, the Championship paid out £120 for every £100 earned, while League One and Two have ratios above 70%.

With the exception of Germany’s Bundesliga, which has a ratio of 56%, all of Europe’s major leagues are paying out far too much. France’s Ligue 1 is in the midst of a serious economic crisis and has a ratio of 89%. France’s situation also highlights the over-reliance on broadcasting revenues. Ligue 1’s deal with MediaPro was cancelled in December 2020 and they have struggled to fill a big gap, losing more than 40% of revenues from this stream. Similarly, new broadcasting deals are generally lower than the previous cycles, suggesting the days of wine and roses may be coming to an end.

Football has shown it can be vulnerable to market downturns and unexpected setbacks. Many clubs have very little put aside for a rainy day and have been exposed. The Premier League made a combined pre-tax loss of £ 966 million, attributable to a £ 648 million drop in revenues and a £ 126 million increase in wages. Two clubs – Everton and Manchester City – generated losses of well over £ 100 million. Even before the pandemic, profitability was in decline in football and has since proved to be the catalyst for greater cost controls and concepts aimed at creating a more exclusive environment. The transfer market certainly saw the effect of a diminished appetite, with gross expenditure dropping by 40%.

Falling profits obviously had a negative impact on some owners and their business models. While few clubs have changed hands in the Premier – Burnley was one such club that was sold to new owners – the current climate suggests there could be spate of acquisitions in the coming year or two.

All the major European leagues saw their operating profits eroded while some saw their losses increased. Germany saw combined profits reduce by 45% to € 215 million, their lowest level since 2012. Spain also experienced a 60% fall to € 183 million. Italy’s operating losses worsened, from € 17 million to € 274 million, while France’s position worsened by almost £ 270 million to € 575 million.

Deloitte highlighted the growing presence of private investment in football. Between January 2020 and February 2021, the investment flow into US and European sport properties totalled € 7.8 billion, a 50% increase on 2019. As well as long-term commercial partnerships with leagues and federations, private equity and institutional investors have been buying clubs and creating portfolios. Companies like ALK Capital, Silverlake and Elliot Management have all made forays into club ownership. There remains a good deal of suspicion about the motives and practices of investors such as private equity and their involvement has been met with resistance in Germany and Italy, to name but two leagues. The concept of multi-club ownership is also frowned upon, fans believing that it goes against the spirit of the game.

Clubs clearly need cash and in the Premier League eight increased their bank borrowings in 2019-20, including Tottenham and Liverpool, who have borrowed £ 173 million and £ 147 million respectively. No surprise that Premier clubs’ net debt has risen during the pandemic to £ 4 billion, some £ 500 million higher than 2018-19. 

There is a great deal of uncertainty around the finances of football and its clubs and the coming season will surely reveal more hurdles to be encountered. The full cost of covid-19 has yet to emerge and there may still be seismic events that demand innovative solutions. The biggest challenge will be around cutting expenses, including player wages, which represent the biggest outlay at almost every club.

The European Super League, which was a reaction to the crisis as much as a deep-rooted desire by some clubs to squeeze a great share of the spoils for themselves, may rear its head once more as it is an idea that has been rolling around for the best part of 20 years. This ill-judged and ill-timed announcement created a huge rift in the game which may take time to heal, but the manner in which it collapsed suggested a lack of conviction and confidence in the project and in the fragile character of the clubs involved. 

One thing is certain, the football world is a far less stable place than it was two years ago and we may yet see some more serious casualties if clubs lurch into trouble and fall into the abyss. The post-pandemic football world has to learn from the unprecedented events of the past 18 months and must present a united front rather than clandestine schemes that are less inclusive and somewhat self-serving. This may be easier said than done. 


Photo: dom fellowes CC-BY-2.0

Money, image and greed – football’s problems are of its own making

WE all assume football’s biggest problem is the way that money has overtaken the game and fuelled its transformation from sport to a business sector. This is not a modern issue by any means, people were complaining about the direction football was taking back in the 1950s and 1960s. Indeed, the recent SKY documentary on Sir Matt Busby includes an interview with the great man where he talks of football’s evolution into the world of commerce.

Before the modern game emerged, we often perceived football to be something almost vocational, that players had an obligation to put the club before their own requirements and that it was almost sacrilege for any employee to be interested in getting the best possible financial deal for themselves. “They’re only interested in the money,” would be the complaint from disgruntled fans.


Players who recognised their value and therefore confidently negotiated their contracts with their clubs, such as Johan Cruyff and Kevin Keegan (to name but two), were often criticised for being money-orientated when they merely had more savvy than most of their contemporaries. And nobody can seriously deny both gave excellent value for that money.

Most of us aim to get the best out of our careers in terms of remuneration, and footballers are no different. One of the things that has always attracted people to the game has been its glamorous image, which is down to adulation, glory and, dare we say, a materialistic lifestyle funded by big money. And they loved playing football, of course.

The problem is, in today’s environment, the pay packet of a footballer at the highest level has soared into the world of fantasy and represents multiples of the average daily wage. The lowest-paid Premier League club in 2019-20 was Sheffield United, whose players earned an average of £ 910,000. The average UK salary in 2020 was £ 31,000 – one 29th of that figure. Go higher and the statistics made you wince even more – Manchester City’s average was £ 8.7 million per player. The riches that have been handed to football at the top are not going into club coffers, they are making players even more wealthy. 

On the face of it, the vast sums paid to the Premier League should make the clubs secure and prosperous, but as the pandemic has shown, it wasn’t that difficult to expose the fault lines in the business models of a lot of clubs across Europe. Put simply, there is considerable financial distress at the moment. The situation at Real Madrid and Barcelona indicates that even the biggest clubs can be vulnerable, but how can you sympathise with any club that earns as much as they do but pays 70%-plus to its playing staff? 

Barcelona made a huge loss (€97m) in 2019-20 and every Premier League club bar two (of those who have reported) also posted losses. All the major Italian clubs also generated big deficits.

Football has long deluded itself that it is a huge sector when it is quite plainly far from it. In corporate terms, the industry is small beer, but where it differs is the reach of the top brands, which is enormous and globalisation encapsulated. Brand Finance, a UK-based consultancy that looks at company brands, estimated that football club brands have not been overly impacted by covid-19 compared to some areas of business. While most clubs have seen their revenues drop, quite a few have had surprising increases in commercial activity, which underlines how fans still clamour for branded goods such as shirts and leisurewear.


Football’s image has taken a battering in recent months, but clubs have long been very focused on generating positive public relations (PR), employing teams of staff with expertise in media communications. It is evident that most interviews, statements and announcements are carefully-tooled, scripted to include the corporate tone and, mostly, very anodyne. I have been in a couple of press conferences where journalists have asked a difficult question to a manager and afterwards, the offending hack has been identified and a note made (mental or otherwise), suggesting they had made it onto a black list. Clubs seem to have near total control of the news and opinion coming from their staff which is understandable to some extent, but doesn’t make for good copy.

The obsession with good PR has also extended to being seen to do the “right” thing which often seems disingenuous and feels as if it is just designed to score moral points. It’s a characteristic of the corporate world where a company tries to make itself feel better because their core activity might be something that isn’t perceived to have great social value. Moreover, at some firms, employees are encouraged to engage in charitable activities to improve their CV and enhance their career prospects. 

Football’s “wrongs” really revolve around paying extraordinarily high and unsustainable wages to young men. It is positive to do good things in the community, but even better to allow the public to find out without intensive publicity. The best people are those that help others but do not seek attention for doing so.

There’s no doubt that clubs, to their credit, “communicate” more than ever before with their fans – compare the current situation with the 1970s and 1980s – but unfortunately, the messaging is frequently disappointing.

Professional football often gives the impression of being an industry sitting on the edge of its seat, wringing its hands with high anxiety. If it is not players and their agents causing challenges for clubs, it is fan dissatisfaction, protests against unpopular owners and temporary appointments such as managers. Football’s unpredictability doesn’t make for a stable business model – relegation can be the catalyst for a massive swing to the negative in income, a seismic shift that would send stock prices plummeting in any conventional sector. And stability is also compromised by short-term hirings in key positions such as the coach – the clubs really do inflict pain upon themselves. Little wonder that club owners backing the European Super League were trying to protect their investment by creating a closed league where revenues would be guaranteed and status preserved. 


The answer is surely to introduce a more level playing field while retaining the meritocracy football desperately needs and the pathway for clubs to climb the system and recover when they fall. A sport that rewards winners so handsomely but punishes failure so harshly is hardly conducive for the creation of a healthy eco-system, which is inevitably ailing because very few clubs plan for a rainy day.

Change cannot be achieved in five minutes, possibly not even in five years, but in the medium-to-long term, football has to protect itself by making the landscape more equitable. The European Super League may have gone away for the time being, but if we are talking about the law of the footballing jungle and the survival of the fittest, then they will be back. The irony is that those pushing for an elite structure are the very clubs who wish to be seen as caring, sharing, philanthropic institutions and therefore proudly display their corporate social activities for all to see!


Photo: Alamy