Welcome back to Football Benchmark, and also to Andrea Sartori, Global Head of Sports of KPMG. Hi Luca! Today we will try to understand how the English Premier League (EPL) became the most important league in the world. We will see how they succeeded, and which economic strategies they applied in order to become one of the most popular brands in the world. And we will also compare them to the Serie A. Let’s start our analysis with the evolution of the EPL’s total operating revenue, namely, the amount of money that the Premier League earns. We have considered the evolution of the EPL’s total operating revenue since the season 2011/12. We can note that, at that time, the EPL was already richer than the Serie A, with around EUR 1 billion more revenues, almost 70% more than the Italian championship. In the last 5 seasons, the gap increased even more, and the EPL almost doubled their total operating revenue, while the Serie A grew by 30%. Furthermore, while the EPL has an average annual growth of 15%, the Serie A just 5% – and this proves the huge difference between the two leagues. How is such a gap possible? While the EPL was able to double their revenues, did the Serie A fall behind, despite a still remarkable increase by 30%? Not considering the competitiveness, the football players, that are sort of a consequence. The first thing to take into consideration is the evolution of the matchday revenue. In fact, when we see the matches in the EPL, the stadia are almost always full, no? Yes, the stadia are full, even if, on average, they are smaller than the Italian ones. Regarding matchday revenues, we can note that the EPL earns three times more than the Serie A, nevertheless, in this case, the gap remains almost the same. However, this is due to the GBP depreciation, because we converted the amount from GBP to EUR, and in 2016/2017, the Brexit referendum and the GBP depreciation had a very negative impact. So, the EPL registered an annual average growth at 4%, while the Serie A at 5%. The gap is more or less the same, but the amounts are really different. Then, another difference is the average attendance, a very huge gap there, again, and it remained almost the same during the last 7 years. Indeed, in the EPL, the average attendance is 36 000 spectators, while in the Serie A, it is 23 000 spectators, so less than two-thirds compared to the EPL. Regardless that in the Serie A, the stadia are generally bigger and the tickets are cheaper. This explains the difference in terms of matchday revenue. Moreover, in the EPL, the stadia are newer and they are owned by the clubs themselves We have also showcased the stadia utilization rates. In the EPL, the utilization rate has never been lower than 90% in the period we analyzed. On the other hand, in Italy, the highest utilization rate was 62%, in the 2017/2018 season. Yes, in other words, the EPL utilization rate varies between 92% and 96%, while in Italy the lowest rate was 56% (both in the 2014/2015 and 2015/2016 seasons), and the highest rate was 62%, in the last season. This was due to the good sporting performances of Inter and Milan, which helped the average utilization rate grow. The fact that the stadia are smaller, can be an advantage from a certain point of view, because there are less seats, so I am willing to spend more money. Exactly, as usual, it is a matter of demand and supply. This is also why , clubs should consider developing 20% less seats than their highest registered attendance, when they want to build a new stadium. For example, Juventus built a stadium of just 42 000 seats, and they can sell the tickets at higher prices. Another important source of income is the broadcasting revenues. In this case, we have analyzed how much money the clubs received from the international broadcasting deals, in percentage of the total tv deals. Yes, let’s start with saying that we have taken into consideration the last three distribution cycles, so in the EPL we started from the 2010-2013 cycle. In total, in the EPL, the broadcasting rights value is EUR 3.1 billion for the last three cycles, while in the Serie A, the tv rights value is EUR 1.3 billion. In the EPL, if we consider the 9 seasons analyzed, on average, 42% of the total revenue came from the international tv rights.
So, almost half of them. Yes, even if we can note that the trend is slightly decreasing. On the other hand, in the Serie A, the situation is completely different: both the amounts and the percentages. Absolutely, first of all, the figures are smaller. Secondly, the average value of the international broadcasting rights is also smaller. We analyzed the last 3 distribution cycles in the Serie A too, covering 9 seasons here too, and, international broadcasting revenues, on average, give only less than 20% of the total tv rights. This proves the attractiveness of the EPL on the international market. Yes, and so we should say that if the Serie A wants to increase in terms of broadcasting revenues, it should try to make the championship more attractive also to an international audience. Yes, absolutely! For example, in my opinion, La Liga and the Bundesliga are performing very well from this point of view. The source of income to take into account are the commercial revenues. The EPL is performing very well, especially from this point of view. For example, they have created a specific brand that has a very big exposure. Here again, the difference was big at the beginning and then it became huge, during the seasons you have taken into account. Yes, in the 2011/12 season, the EPL was 60% richer than the Serie A. Then, during the following years, despite the GBP depreciation, especially in the 2016/17 season, the EPL increased this gap up to 120%. On average, the EPL’s annual growth rate was 20%, while 6%. at the Serie. Nevertheless, the trend is becoming positive again, especially due to Juventus and Inter. For instance, Inter is the ninth club in Europe by their commercial revenues. Another metric to consider is the profits before the player trading, namely the profit calculated before the football players are sold, that can alter the economic overview. Here, the gap is really astonishing. We can note that the trend in the Serie A has always been negative, with the only exception of the 2016/2017 season, when the positive result reached EUR 24 million. On the other hand, in the EPL, the aggregate result increased from around EUR 100 million to 1.2 billion, almost 12 times more. The thing that I found very astonishing is that the EPL earns 50 times more than the Serie A, namely EUR 1.75 billion compared to EUR 24 million. Absolutely, and this proves again the higher competitiveness of the EPL. Indeed, in the next infographic, we show how much the English teams spent on the market, compared to the Italian ones. The first year we took into account was the 2013/2014 season, when the gap was not so huge. However, then the gap increased a lot, especially in the 2017/2018 season, when the gap was more than the double, almost EUR 1 billion of difference, whereas, in the last season it was smaller. Yes, if we take into account all the 6 seasons in the infographic, the Serie A spent EUR 6 billion, while the EPL spent EUR 9 billion. Nevertheless, the very interesting point is the difference of the two deficits, namely the difference between sold and bought players. The deficit of the EPL is EUR 4.5 billion, while the Serie A’s deficit is EUR 600 million. We can also note that 4 out of the 6 seasons analyzed, the EPL spent more than the double of the amount the Serie A spent. Even if it is also true, that in the past season, this gap has been reduced a lot and the EPL spent less money on the transfer market. However, this is due to a GBP depreciation, again. So, what we have just showcased proves that the EPL can spend without selling lots of players, thanks to all the revenues we have just presented.
Absolutely! Thank you, Andrea, for this analysis about the EPL growth throughout the recent years, especially in the latest seasons we have analyzed. Football Benchmark winds up, we will see next Thursday! Thank you again!