How sustainable is football in its current state?

Football Clubs are facing a number of economic, social and political challenges which will further undermine the sustainability of many of them.

The current FFP (Financial Fair Play) issues and the recent docking of 10 points (reduced to 6 upon appeal)  for Everton forced many other Clubs to rein in spending during the recent transfer window.

Nottingham Forest have been docked 4 points for a breach of the Premier League’s Profitability and Sustainability Rules (PSRs) for the period ending Season 2022/23.  Which Club will be next ?

The January transfer window saw £100 million spent, a miserly amount in comparison to  £2.36 billion splashed out during the previous 2023 summer window.  Has the future of inflated prices for players come to an abrupt end ?

TV Rights revenue and player wages are usually the two main incomes and expenses respectively for a professional football Club.

We recently carried out due diligence for a Second Division Spanish Club which revealed their TV rights contract accounted for more than 68% of total revenue.

Sponsorship & merchandise accounted for 17%, which largely depends on the Club´s TV rights contract and ultimately staying in the Division.

In effect, 85% of this Club´s revenue is generated from sources out of their control.   These figures can be even higher for certain Premier League and Championship Clubs.  Is this a sustainable method of running Football Clubs moving forwards ?

With a heavy reliance on TV rights revenue, another question for future sustainability is will TV broadcaster companies be in a position to fork out the same premium for TV rights the next time around and will it be economically viable?

Will subscribers/customers continue to be in the financial position to pay the monthly subscriptions to view their favourite team in the Premier League, EFL and other European leagues ?

Various factors will determine whether customers can afford to continue renewing their subscriptions in the coming weeks, months and years.

With the increase in food and energy costs,  higher monthly mortgage payments due to hiked interest rates and  AI predicting to further increase unemployment, to what extent will these affect subscriber numbers?

Furthermore, with  the football fan consumer habits changing and less concentration spans coupled with an increasing number watching games via illegal streams,  can  TV broadcasting firms continue to rely on drawing in sufficient subscribers in the foreseeable future ?

DAZN the online streaming TV media company reported losses of 1 billion a year back in 2022 and charges €39.99  a month, a substantial increase from a couple of years ago.  Does the increase in price justify the content value being provided,  and to what point will capital keep being injected to keep it running?

Movistar, the main Spanish Broadcaster and Telecommunications company charge €139 for internet , TV package and “Total fútbol”   With the above mentioned costs rising will enough consumers/subscribers continue to afford  this subscription and consider it value for money ?

Player wages form the lion´s share of expenses for most Professional Clubs.

Our Second Division Club analysis revealed 80% of expenses account for players and staff expenses and within a few Championship Clubs playing a risky game to gain promotion, player wages /revenue ratios are north of 100%…

Are player wages sustainable ?  Star players in the 70 and 80´s would earn around 10x the average fan, now this number for a Premier League star player is around 500x!

Raheem Sterling earns 325,000 per week at Chelsea FC, whereas just up the road at Corinthian Casuals FC, players received a pound a week as “professionals”, and subsequently “donate” this back to the Club!  An exaggerated example I admit, but it still sums up what is wrong in the modern game of football.

Fan engagement”  is a term used widely when discussing sports investments.   Digital technology has made life easier for the fan from buying tickets online to self-order beer machines within the ground.

Numerous tech start-ups view football fans and content as the perfect mix to release new technology to appeal to fans at a local, national and particularly on a global scale to maximise returns.

However, what about the “true local” fans that have supported their Club for years and live within a 10/15 mile radius of the ground ?  Their main concern will be the price of their upcoming season ticket and matchday prices.

Fans across the country have complained about the hike in season ticket prices for the 2024/2025 season.   Spurs fans were in uproar recently as season ticket prices were set to increase by 6% and senior citizen season tickets to increase significantly more.

At Bristol Rovers FC the kids 2024/25 season ticket is set to increase by 345%.   Unfortunately smaller Clubs further down the football food chain are forced to increase prices to barely survive.

Many Clubs that have been heavily leveraged with debt and are finding it harder to service it as interest rates remain high and inevitably ticket prices and match day revenues will continue to increase further alienating fans.  The era of “free money” is well and truly behind us.

Private equity into Clubs can be beneficial with improved stadium infrastructure and newly built academy facilities to promote grassroots football, just as long as fans are not expected to pay exorbitant prices to service the debt.

Although the football ecosystem is complex and it faces many challenges, finally changes are being introduced, in particular with the recent  UK Government´s ruling to introduce an independent football regulator.  A definite step in the right direction for Club´s sustainability and interesting to see how this plays out over the coming months and years.

With stricter financial guidelines for Clubs, the potential exists to improve grassroots football and to nurture more homegrown players as well as increased funding for academy and stadium facilities in order for Clubs to be fully utilised for other events and not just for match days.

With fans becoming more and more disgruntled, the opportunities are opening up for further crowdfunding Club models to emerge which again has proved to be successful in a number of countries.

A  football storm is brewing and one can only hope that the changes that are necessary will help many Clubs become more sustainable to not only survive but perhaps even thrive!

Leave a Reply

Your email address will not be published. Required fields are marked *

Open chat
Need Help?
Hello,
How can we help?