From Colin Mann

January 15, 2021

The devastating effects of the Covid-19 pandemic are clearly reflected in the financial performance indicators of the champions of the six major European leagues last season. This emerges from the European Champions Report 2021 by the Football Benchmark Team of the consulting firm KPMG.

All six champions examined in the report now saw a decline in their operating income: Juventus, Paris Saint-Germain and Porto saw double-digit year-over-year decreases, while Bayern Munich, Liverpool and Real Madrid saw a slight decrease in operating income, largely due to their ability to do the increase commercial income.

The German and Spanish champions were also rare exceptions across the football industry as they posted a net profit, while the other clubs posted significant losses for the fiscal year that ended May / June 2020.

Last season was relatively competitive as part of the analysis. Three champions – Juventus, Bayern Munich and Paris Saint-Germain – retained their national titles. New additions include Liverpool, who won the Premier League for the first time in 30 years, Porto, who recaptured the Portuguese title from last year’s winner Benfica, and Real Madrid, who won the 34th LaLiga trophy after two years by taking the throne recaptured from Barcelona.

“While the last seasons before Covid-19 showed constant and stable growth for almost all champions of the European top leagues, the past season was depressing for everyone, albeit to varying degrees,” notes Andrea Sartori, KPMG’s Global Head of Sports and Author of the report. “The coronavirus crisis has challenged the financial sustainability of the entire football ecosystem and further exposed its fragility. Even before the pandemic, excessive player salaries combined with rising transfer and agency fees put a considerable strain on the clubs’ finances. The crisis has exacerbated these shortcomings in the current business model. Football clubs suddenly had to grapple with liquidity issues for all of their revenue streams, affected by lack of gate revenue and renegotiating, suspending or canceling payments from media and trade agreements. “

Key conclusions of the report:

  • Operating income (minus transfer income) has decreased for all champions analyzed in the report.
  • Despite an 8 percent drop in sales, Real Madrid recorded the highest total income among the champions with 681.2 million euros.
  • With many games canceled or played behind closed doors, matchday income suffered the biggest blow for all clubs except Porto. Real Madrid lost the most in absolute terms (-34.9 million euros, a decrease of 22 percent compared to the previous year), while Porto’s decline of 4.2 million euros represented the highest annual decrease in percent (-34 percent).
  • All of these champions also saw a decline in broadcasting revenues, with UEFA Champions League performance also playing a role: finalists Bayern Munich and Paris Saint-Germain saw their TV revenues decline by just 4 percent, while Porto’s TV rights fell by 63 Percent declined as a result of their early exit into the UCL qualifying rounds.
  • Liverpool, Bayern Munich and Real Madrid could increase their trade incomes by 14 percent, 4 percent and 2 percent, respectively.

Challenges from a comparability perspective are the delay and / or cancellation of matches, which in some cases were played after the end of the financial year, and the uncertainty about possible renegotiation of payments from media and trade agreements, including UEFA revenue brought up how club revenues and costs were recorded.

In terms of operating income, FC Porto recorded the largest percentage decline from last year (-50 percent), mainly due to the early exit to the Champions League qualifying round, while FC Paris Saint-Germain suffered the biggest slump absolute conditions (- € 95.4 million). FC Bayern Munich recorded the smallest decline (-18.3 million euros, a decrease of 3 percent), while Real Madrid CF recorded the highest operating profit (681.2 million euros) among the champions despite a decline of 8 percent.

With many games canceled or played behind closed doors, match day income suffered the biggest blow for almost every club. Two exceptions were Liverpool FC and FC Porto, whose broadcasting revenues fell the most, largely due to their poorer performance in the UEFA Champions League compared to the previous season. Real Madrid CF lost the most on match day in absolute terms (-34.9 million euros, a decrease of 22 percent compared to the previous year), while FC Porto’s decline of 4.2 million euros represented the largest annual percentage decrease (-34 Percent)) among the champions.

Broadcasting revenues were also burdened to varying degrees. As fewer games were played in the national leagues and UEFA competitions up to June, TV income was reduced accordingly in the previous season, while the games in July and August after the end of the season were in most cases shown in the current year 2020/21 become season.

Clubs that have made further progress in the Champions League could benefit from higher UEFA contributions: both the finalists FC Bayern Munich and FC Paris Saint-Germain actually only saw their TV income drop by 4 percent, while those who did Eliminated in the round of 16 (Real) Madrid CF, Juventus FC and Liverpool FC) suffered an annual decline of 12%, 19% and 22% respectively. In contrast, FC Porto’s 63 percent drop in TV rights was mainly due to poor performance in the Champions League. This was the first time in eight years that the lucrative media revenue from the most important European club tournament was missed.

The champions’ commercial income varies even more – Liverpool FC, FC Bayern Munich and Real Madrid CF were able to increase their income from commercial activities by as much as 14 percent, 4 percent and 2 percent respectively, while Juventus FC remained stable. FC Porto and PSG recorded a decrease of 18 percent each. Nonetheless, advertising is the source of income with the largest share of total operating revenue for five of the six clubs examined, while broadcasting had the largest share for most champions a year earlier. Though significantly lower than other champions, broadcast revenue remained the primary source for FC Porto, although TV rights fell 63 percent due to their subordinate UEFA performance as the club’s most recent 10-year single TV deal provided stable income offers.

While several clubs succeeded in lowering players’ wages, not all were able to reduce operating costs in relation to the sharp drop in operating income. FC Bayern Munich and FC Juventus were able to successfully reduce staff costs (by 6 percent and 13 percent respectively) by agreeing to cut wages for the players. In contrast, Real Madrid CF’s staff costs rose 4 percent despite the players agreeing on a temporary 10 percent wage cut during the season. The club thus recorded the highest personnel costs (411 million euros) among the champions. PSG saw an even higher increase in staff costs (10 percent), largely due to the increase in total wages with some high profile signings and high social tax charges for workers in France.

While all champions achieved a profit after tax last year, with Juventus FC being the only exception, this time FC Bayern Munich and Real Madrid CF were the only clubs to record a modest profit (EUR 5.9 million and EUR 0.3 million respectively. EUR)). On the other hand, PSG’s net loss is the highest at 125.8 million euros, also because French Ligue 1 was the only top European league that was shortened, not delayed and completed later.

“A crisis almost always offers the opportunity to point out important shortcomings in the business model and to drive innovation and development forward. It is therefore encouraging to see that the governing bodies, associations and clubs of football are discussing reforms in relation to the competition calendar, cost control measures and changes to, among other things, the profitability and control of national and European competitions or the transfer system, ”said Sartori. “Our call for the crisis to break out almost a year ago remains valid: The unprecedented complexity of the problems in the new reality requires unparalleled flexibility, wisdom, responsibility and cooperation from all parties at all levels.”