Don’t Be Fooled By The Premier League’s $1bn Predicted Revenue Drop

If you think a near £1bn ($1.28bn) coronavirus revenue hit to Premier League
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clubs, predicted by Deloitte, is the start of English soccer’s decline. You are wrong.

Coronavirus won’t be bursting its financial bubble, in fact, long-term it could help it grow.

Deloitte’s Annual Review of Football Finance 2020, released today, expects rebates to broadcasters, lost match-day income and the delay of a quarter of the games to bite hard for England’s elite soccer clubs. 

Revenue is tipped to fall from £5.15bn ($6.59bn) this year (2018/19) to £4.3bn ($5.5bn) in 12-months (2019/20). 

But, crucially, this impact is expected to last a single season. After that, the boom times are back, Deloitte is predicting a bumper 2020/21. 

It forecasts revenue will leap to £5.4bn ($6.91bn), as the benefits of having two seasons squashed together and deferred payments from broadcasters are felt.

To see what soccer’s ‘new normal’ looks like, we’ll have to wait three years, according to Deloitte. By which point, the ‘old normal’ might have resumed. 

“The impact of Coronavirus, we believe will be a single season”, Deloitte Sports Business Group senior manager Sam Boor told me.

“We believe that the core fundamentals of football as an entertainment proposition should mean that, in the medium to long term, we’re expecting it to recover quickly. We’re expecting it to still generate interest levels that were seen pre-COVID and potentially even more, because people have missed it so much.”

The bad news, as ever, in Deloitte’s report is for league’s less wealthy.

Rich ride out the storm

Even before coronavirus slammed soccer club’s revenue generation to an abrupt halt, the financial gap between the biggest clubs and the rest had been increasing.

In the Premier League, the performance of the big six; Arsenal, Chelsea, Liverpool, Manchester City, Manchester United and Tottenham Hotspur, is outstripping the rest at an alarming rate.

This year, Deloitte found the gap between the average revenue generated by those half-dozen clubs and the rest of the league continued to grow.

 In 2018/19 the average revenue generated by a ‘big six’ club was £500m ($639m), an increase of £39m ($49m) from the previous edition. Average revenue for the remaining clubs crept up by a meagre £7m ($8m) to £154m ($197m). 

It’s not just the total, the largest clubs are increasing their income at almost twice the rate (9%) as the rest of the league (5%).

It’s a trend Boor only sees continuing.

“Polarisation could be exacerbated through the current coronavirus,” he said. 

“Those clubs at the top of the Premier League, they’re in the more comfortable cash positions [with] the wealthiest owners. [So they] are in a position to be able to ride the out the storm.” 

Boor argues that those at the top will not only be able to retain their best players, they will also be able to take advantage of the situation. The need for cash could see them steal smaller clubs most talented players in cut-price deals.

“[They can] potentially invest and take advantage of the transfer market by recruiting new players at [a] time when other teams need to sell and raise cash”, said Boor. 

“[This] could potentially strengthen their performance on pitch [and] provide them in another competitive advantage to establish themselves even further.” 

The Deloitte soccer expert believes this will increase the revenue disparity and appeal to commercial partners.

Match-day decline

Another trend which coronavirus has turbocharged is the decreased importance of match-day revenue for Premier League sides. 

At 13%, it continued to be the smallest component of the league’s total revenue, Deloitte’s report showed. 

This looks unlikely to change because Stadium utilisation was 97%. Growth in match-day revenue can only really be achieved if clubs raising ticket prices or increase capacities. 

It would be surprising, given the economic turbulence the U.K. is preparing for, if ticket prices were jacked-up. While Liverpool and Chelsea’s decisions to abandon stadium enhancement projects shows that capacity upgrades won’t to be forthcoming.

“Clearly clubs are really desperate to have people back in the stadium as quick as they can, but they’re going to be dictated by government policy.” Boor told me. 

“I’d imagine that the matchday as a proportion of total revenue in the next edition [of Deloitte’s football finance review] would fall because of clubs not being able to hold people in the stadium. Long term prospects will be dictated by whether broadcast and commercial continue to grow. But it has been a reducing share of club income.”