European football leagues finding new ways to generate revenues

The new season would have, under normal circumstances, begun. Football stadiums across Europe should have been buzzing with activity and the loud cheer among its fans. Unfortunately, with a fresh wave of the virus hitting Europe, the hope of spectators returning to the stadium appeared some distance away.

Last month, the UK government had decided that spectators could not return to the stadium for any sporting events from October 1. That is as bad news for the European football market, estimated at €28.9 billion in 2018-19, as can be.

AC Milan striker Zlatan Ibrahimovic last week tested positive, according to a statement from the club, adding to the worries for the sport in the region. The club had earlier announced defender Leo Duarte had tested positive a week ago. In the English Premier League in three rounds of testing since August 31, 10 positive cases have been found. In France’s Ligue 1 season opener between Marseilles and Saint Etienne last month, the match was postponed after three Marseilles players tested positive.

While the last season was disrupted as the pandemic flared up in the region, a fresh wave to put a spanner in the works for the new season too.

Every penny counts for clubs

Navigating through the current period where the matches will be played in empty stadiums will further make it difficult for smaller clubs. In the UK, the biggest football market in Europe, the Premier League has been facing a tough time. Owners of the 72 clubs that make up for the lower division are hoping that some financial measures will be announced for them.

If the 20 elite clubs can add to the Government effort, it could help the football market survive and, hopefully, thrive. During 2018-19, the professional football industry paid £2.3 billion in taxes to the government.

Spain’s La Liga had a blockbuster year in 2018-19 and managed to wrest the second spot from Germany’s Bundesliga as the world’s second-highest revenue-generating football league. La Liga has been working consistently to reduce the ratio of central broadcast revenues between the teams at the top and bottom. That could make revenues more predictable for teams in the league. At a time when gate receipts and merchandise revenues have all but disappeared, it could be great news.

For the Bundesliga, the next cycle for broadcast rights is scheduled to begin in 2021-22. The media right values are certain to be hit because of the current situation. It has mooted the idea of ‘no exclusive owner’. The rights will have to be shared with the internet and media providers if the first four packages of rights are acquired by one partner.

Serie A’s domestic and international broadcast rights expire at the end of the 2020-21 season. Under a new President, the league management is assessing various options so that it can create its own platform with a non-traditional broadcast entity. The new entity can underwrite revenue commitment to clubs so that it can see through the troubled times. It has been working on expanding the global marketing for the league to improve its value and develop its own broadcast capabilities.

The French Football League (LFP) has been trying to negotiate with international rights holders since clubs want to generate more value from their global audiences. The top nine clubs at Ligue 1 together believe that there is a strong growth potential with global audiences and it can fetch better value for the LFP.

Leagues that could be hit harder

FIFA has now set the rules that must be followed for football matches. It has announced guidelines, keeping in mind the matches that will lead up the World Cup 2022. All international football matches will have to apply the guidelines that are important for the health and safety of the players and officials.

For the professional football leagues across Russia, Turkey, Portugal, Belgium, Austria, Sweden, Denmark, Poland, Scotland and other smaller countries, the reliance has traditionally been on a higher share of matchday revenues. With fans missing, that source of revenue has evaporated. Worse, there is little visibility on when this source of revenue could show up again.

For leagues that have invested in developing their own online brands, there might be a silver lining in the dark clouds. For some others, it might already be too late to salvage the situation for the current crisis.

  • Ashutosh Sinha is the founder of WordWiseWeb Media. Read his weekly column on the business of sport here. Connect with him @ashutoshsinha00 on Twitter

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