Charting Football’s Financial Growth

Football may be considered the People’s Game, but it is also a Money Game. Money has entered the game relatively recently, however, and its entry and influence not been thoroughly well charted. This leaves a range of questions to be answered:

• Where is the money?
• How much is there?
• Who is getting more and who is getting less?

In answering these questions, it is important to note first that football has grown and globalized incredibly in the last recent generation, such that many top clubs and leagues now enjoy international audiences that extend far beyond the local community. This global growth has been matched with an expansion of financial resources in the sector, especially in elite markets. The expansion is evident in Figure 1, which shows revenue growth between 1992 and 2013 in the English Premiership and Europe’s Big 5 Leagues (the top leagues in England, France, Germany, Italy, and Spain). The Big 5 revenues rose from about US$ 1 billion to US$ 12.2 billion in this period, a compound annual growth rate (CAGR) of 12.6% (where the CAGR is commonly used in work on football finance,[i] and captures the average annual growth rate over a period in time).

Table 1 presents other evidence of this growth, in the sponsorship and prize money for World Cup tournaments, FIFA revenue (calculated over 4 years and annually), English Premier League wage costs, and European Championship Tournament revenue. The CAGR for these different variables varies from 10% to 21%. In also providing data for various countries’ growth, the table shows that European football has grown much faster than various economies in Europe and beyond. Football’s growth is 3 to 4 times faster than that of Germany, the United Kingdom, and France; it is even higher than fast-growing economies like Brazil and India.

Table 1. Examples of Football’s Financial Expansion

Entity and measure	First year and value considered	Most recent year and value considered	Compound Annual Growth Rate (CAGR)
English Premier League Revenue*	1992, $353 million	2013, $3.2 billion	12%
Big 5 European Leagues Revenue*	1992, $1 billion	2013, $12.2 billion	13%
World Cup Sponsorship Revenue**	1982, $19 million	2014, $1.6 billion	15%
World Cup Prize Money**	1982, $20 million	2014, $476 million	10.4%
4-year FIFA revenue***	1982, $45 million	2014, $5.7 billion	16%
Annual FIFA revenue***	1978, $10 million	2014, $1.9 billion	17%
English Premier League wage costs#	1995, £195 million	2012, £1.7 billion	14%
European Championship Tournament Revenue##	1992, €19 million	2012, €839 million	21%
German Nominal GDP^	1990, $1675 bln	2015, $3371 bln	3%
UK Nominal GDP^	1990, $1036 bln	2015, $2864 bln	4%
France Nominal GDP^	1990, $1065 bln	2015, $2422 bln	3%
Brazil Nominal GDP^	1990, $443 bln	2015, $2054 bln	6%
India Nominal GDP^	1990, $233 bln	2015, $2182 bln	8%

Sources: * Deloitte, UEFA, and historical documents from the English Premier League (Deloitte calculate at14%); ** FIFA Annual reports, academic and other sources; *** FIFA annual reports, particularly 2003, 2012, and 2014 versions (note that historical numbers do vary between documents); # Deloitte; ##UEFA annual financial reports; ^Estimates based on nominal GDP data from the IMF, World Bank.

This financial growth has not been felt in the same way at all levels of football, however; even in Europe, where most leagues have multiple tiers (with clubs moving between different tiers when they are promoted upwards or relegated downwards). In England, where we have the best data, the CAGR in the top tier Premiership was 12% between 1992 and 2013, but only 10% in the second tier championship, and 9% for clubs in tiers 3 and 4 (called League 1 and League 2). Wage rates also increased at slower rates in the lower tiers (with a wage rate CAGR of 17% in the Premiership, 11% in the Championship, 8% in League 1 and 6% in League 2). Wage rate increases in the lowest of these tiers was close to what was experienced in England at the time, where the CAGR for average wages was 5% between 1992 and 2013.

The uneven rates of financial growth have led to major divergences and inequalities in the football sector. The top tiers of most leagues are much wealthier than lower tiers, for instance, and most top tiers have a select number of clubs that are much wealthier than others. Different national leagues in the Big 5 are also much wealthier than others, and regions like Europe dominate others financially. This is shown in Table 2, which aggregates what data exist for various regions and provides estimates to fill gaps where data do not exist. The revenues shown in the table are broken down according to four categories: revenue in European clubs, revenue in clubs outside of Europe, Total club revenues (global), and FIFA, Confederations, and other League body revenues. The total of these revenue sources amounts to about $38 billion (for 2013), but a more accurate final figure is $33 billion when one considers the double-counting of Confederation and Association revenues (given that a large portion of UEFA revenues are also counted in club revenues, for instance, with prize monies and solidarity payments; and a large portion of FIFA revenues are similarly captured in revenues of Associations, through solidarity payments). These data indicate Europe as a region makes up over two thirds of global football revenues. The concentration is even more severe than that, however, with the richest 30 European clubs accounting for about a third of all European club revenue (about $23 billion) and about a quarter of all global club revenue (about $30 billion).

Table 2. Estimates of Annual Revenues in Global Football

Revenue Source	Revenue ($ billion, 2013)	Sources and Comments
Richest 10 Clubs in Europe	4.3	Deloitte Annual Review of Football Finance (2014) and Deloitte Rich List (2014);[ii] also verifiable with Forbes list of most valuable soccer clubs.
Second Richest 10 Clubs in Europe	1.8
Third Richest 10 Clubs in Europe	1.3
Rest of the Top League Clubs in Top 5 Countries	5.9	UEFA 2013 club financial data (made available by league).
Other Top Leagues in Europe	6.3
Lower League Clubs in Top 5 European Countries	2.7	Multiple sources for each league in the top 5 European countries, and estimates for others based on Transfermarkt data and other studies.
Other Lower League Clubs in Europe	0.65
Total European Clubs	23
African Clubs	0.3	Estimates based on multiple sources for South Africa, Nigeria, Ghana, Egypt, and Algeria. Estimates for others.
Asian Clubs	2.3	Estimates based on multiple sources, including Asian Football Confederation reports; annual reports for most associations, and studies.
Oceania Clubs	0.0	Estimates based on academic and media reports.
North American and Caribbean Clubs	2.0	Estimates based on various sources, including reports for major leagues.
South American Clubs	2.6
Clubs outside of Europe	7.2
Total Clubs (Global)	30.2
FIFA and Regional Confederations	3.4	Annual Reports, with average annual revenues shown over last five years for FIFA, UEFA and some confederations, and estimates for others.
National Associations and League Bodies	4.0	Estimates based on annual reports from some associations and league bodies, estimates for others.
Total	38
Total without duplication of Association and Confederation revenues.	32 – 34	This assumes that 50–75% of revenues from Confederations and Associations are counted as revenues by other Associations, or Clubs.

Source: Various, as alluded to in the text. Authors’ analysis. It is difficult to verify the accuracy of estimates, especially in areas like Africa and in respect of National Associations and League Bodies, given the dearth of publicly available data produced in these contexts.

As a sector, global professional football now produces about as much annual revenue as the United States movie industry (at $31 billion a year) or the apparel and sports good company Nike (which makes about $28 billion annually).[iii] It accounts for about 40% of revenue produced in all spectator sports (which various estimates place at around $80 billion per annum).[iv] The relative size of the football economy is reflected probably most impressively in the fact that the richest 30 football clubs produce about as much revenue as the United States Major League Baseball (MLB) and National Football League (NFL) (which raise annual revenues of about $9 billion each).

The financial growth of global football has not been even over time, however, and has actually slowed in the dominant European markets in recent years. The revenue CAGR has been 7% for the English Premiership and Championship since 2003, for example, and 2% and 4% for lower tier Leagues 1 and 2 (having been above 10% between 1992 and 2003). The revenue CAGR for Europe’s Big 5 leagues shows a similar pattern; It was 18% between 1996 and 2000, 7% between 2000 and 2008, 5% between 2008 and 2012, and 6.4% between 2009 and 2013.  Interestingly, this revenue slowdown in the bigger established leagues has been balanced by major growth in upstart leagues in (predominantly) Asia, the Middle East, Eastern Europe and Central Asia. Table 3 identifies some of these fast growing markets, showing that the financial gains in football are increasingly global:

• These include the relatively small Armenian league that has grown at 32% CAGR since 2009 and is now producing over €3 million in annual revenue.
• The neighboring Georgian league that has produced a 66% CAGR since 2009 and now boasts annual revenues of over €20 million.
• Further afield, one has also seen high recent growth in countries like Australia, Saudi Arabia, the UAE and China. The Saudi Arabian and UAE leagues are now producing combined revenues of over $600 million a year, up from just over $200 million in 2010. Chinese Super League revenues expanded from $109 million in 2010 to over $225 million in 2013, having been created in only 2004.  
• Thailand’s new top tier league grew from just $6 million in revenues in 2010 to over $30 million in 2013.

The growth rates in these leagues compare with rates in some of the world’s most expansionary sectors and economies, including the Indian IT sector, Indian and Chinese construction industry, Russian, Indian and Chinese economies.[v]

Table 3. Football’s Recent High Growth Leagues

Country in which top tier league is located	First year, and revenue (estimate)	Most recent year, and revenue (estimate)	Compound Annual Growth Rate (CAGR)
Australia	2010, $25 million	2013, $50 million	28%
Saudi Arabia	2010, $90 million	2013, $275 million	43%
UAE	2010, $120 million	2013, $360 million	40%
Qatar	2010, $100 million	2013, $260 million	38%
China	2010, $100 million	2013, $230 million	29%
Thailand	2010, $0-5 million	2013, $30 million	78%
Kazakhstan	2009, €45 million	2013, €115 million	25%
Azerbaijan	2009, €12 million	2013, €30 million	26%
Armenia	2009, €1.2 million	2013, €3.5 million	32%
Georgia	2009, €2.7 million	2013, €20.7 million	66%

Sources: Based on estimates, given data sourced from national league financial reports, UEFA, AFC, club reports, media reports, and others. 

Cumulatively, these data show that finance has entered the world of football in a prominent manner in the last three decades, in Europe and beyond. This has led to new global transactions and deals, most evident in the world transfer market. As Table 4 illustrates, there were over 13,000 transfers across borders in 2014, as compared with 11,883 in 2011 (when FIFA’s Transfer Management System first captured such player movements). The CAGR is transfer numbers in this period has been 3.28%. The CAGR for transfer values has been 11.87%.

Table 4. The Recent Growth in Global Transfers

Year	Transfer numbers	Transfer $ value
2011	11,883	$2.90 billion
2012	11,552	$2.72 billion
2013	12,718	$3.98 billion
2014	13,090	$4.06 billion

Source: FIFA Transfer Management System (TMS) reports, from 2012 to 2014.

The growth in transfer numbers and money spent on transfers is important to note because it shows how global transactions now are; football’s financial expansion has led to a sector that is more interconnected than ever before. The figure shows how these linkages are now structured, at least in respect of transfers (based on 2014 FIFA TMS data). Europe and Asia are the world’s big football importers (of players) while South America and Africa are the two big net exporters. This trade is in people and money, and involving over 160 countries annually—all of which are now engaged in football’s money game.

 

There is little common and shared knowledge about how all these countries and clubs and associations are engaging around this money, and the monetary transactions that now seem so prominent in the game. This post does not pretend to provide such knowledge conclusively, but hopefully stresses the importance of learning more. This industry now employs over a hundred thousand people globally and is largely centered on the trade of these people with the end of making money. It is vital that such trade be understood.  Particularly if we want to answer the most important question out there:

• How might the new influx of money change the game (or how is it changing the game now)?

 

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[i] Especially by Deloitte, which publishes regular (and regularly cited) reviews on football finance.

[ii] Available at http://www.dailymail.co.uk/sport/football/article-2920602/Real-Madrid-football-rich-list-Premier-League-dominates-overall-making-HALF-40-wealthiest-clubs.html

[iii] Various sources, including annual financial reports of these companies and United States Treasury reports.

[iv] The following table captures estimates of annual revenues for various spectator sports, globally. Sources and methods for estimation are available on request. These are all estimates, however, as the sector is incredibly opaque and it is difficult to find reliable sources of data for most sports.

Sport code	$ billion estimate	Sport code	$ billion estimate
Association Football	33.5	Mixed martial arts	2
NFL	9.8	Marathons	0.1
MLB	7.1	Olympic movement	1.2
NBA	4.56	Table Tennis	No estimate
Tennis	3	Weightlifting	No estimate
Golf	2	Gymnastics	No estimate
Formula 1	4.6	Field Athletics	No estimate
Nascar	1	Lacrosse	No estimate
NHL	3.7	Volleyball	No estimate
Baseball outside of USA	0.32	Field Hockey	No estimate
Basketball (outside USA)	0.4	Badmington	No estimate
Australian Rules Football	0.4	Squash	No estimate
Rugby League	0.32	Cycling	No estimate
Canadian Football	0.18	MotoX	No estimate
Rugby Union	0.75	Wrestling	No estimate
Cricket	0.4
Handball	0.15
Other ice hockey	0.15
Horse racing	4
Boxing	0.22
Swimming	0.1
		Total	79.95

 

[v] There are many different high growth sectors or economies to consider when benchmarking growth in global football. For instance, the Indian Software Industry CAGR since 2009 has been over 30% (like the CAGR in football leagues in Australia, Armenia and China). The Chinese construction industry nominal CAGR has similarly been over 20% between 2009-2013. The Indian construction industry had a 13.52% CAGR between 2009-2013. The Russian economy CAGR was about 18% between 2003-2013. India and China had a CAGR of about 15% between 2003-2013. The book value of Warren Buffet’s Berkshire Hathaway shares had a CAGR of 12.7% between 1993-2013, compared with the CAGR of 7.1% for NASDAQ shares in the period.