Blogs & Comment

U.K. football rules ok

Despite the crashing British economy, its top-flight football teams are as strong as ever. At least thats what Forbeslatest valuation rankings and Deloittes revenue analysis seem to reveal as the European season heads into its final weeks.
According to Forbes, the average value of the top 25 football clubs rose 8% from last year to hit US$597 million. Eleven of those 25 teams either play in the English or Scottish Premier leagues, with Manchester United leading the way at US$1.9 billion, up 4%. Also up year-over-year were Chelsea, Tottenham Hotspur, Manchester City, Aston Villa and Everton, while Liverpool remained unchanged at US$1 billion. Arsenal dipped 4% to US$1.2 billion, Newcastle United was down 5% to US$285 million and Celtic dropped 4% to US$218 million.
The reason for the increased top 25 valuations, reports Forbes, is that multi-year broadcasting and sponsorship deal have insulated the top clubs from the current recession. Thats helped spur average operating incomethat is, before interest, taxes, depreciation and amortizationto US$42 million during the 2007-08 season, up 20% from the previous season.
And the future seems bright, too. According to Deloittes annual Football Money League report in February, several of the top football teams either recently renewed existing commercial contracts or secured new deals. Deloittes revenue ranking puts Real Madrid on top with 365.8 million (about $591 million) in revenue and Manchester United just behind at 324.8 (about $525 million).
Interestingly, Deloittes revenue calculations are typically about 20% lower than those used by Forbes. Some of the difference could be chalked up to the fact that Deloitte bases some of their revenue calculations on a calendar year, whereas Forbes looks at revenue on a seasonal basis (that is, split over two calendar years). Currency conversion changes from February to April probably factor into the equation as well.
Despite the apparent healthy state of the English Premiership, some teams have either frozen or even cut season ticket prices for next season as they try to judge just how much people are willing to spend when everything else is collapsing. Ticket pricing is an emotionally charged area for fans and management alike, noted Jake Wilson, a senior consultant in Deloittes Sports Business Group. Clubs have to balance sometimes conflicting objectives of developing ticketing income, filling the stadium and providing affordable tickets and value for money.
But Deloitte also noted that the desire to see live football remains high and that many fans might cut costs in other areas in order to hang onto their season tickets. Five of the top six English teams in the Deloitte Money League play to more than 95% capacity, suggesting other supporters could offset any drop in season subscribers.
One revenue stream that will likely affect future English Premiership revenues is its television deals. The leagues current deal is set to expire after next season and it has been negotiating three-year contracts for the start for of the 2010/11 season. Deals that have been recently inked for domestic live rights with BSkyB and Setanta and highlight rights with the BBC will give the league a 4% hike, and overseas deals should increase as well.
Now if only I could get some Canadian station to show Nottingham Forest games.