The most valuable football teams in Europe, English clubs rule

09 June 2017 Consultancy.uk

With a total worth of €3.09 billion, Manchester United are the most valuable football club in Europe, according research by to Big Four consultancy KPMG. Back-to-back Champions League winners Real Madrid were meanwhile beaten into second place, while La Liga rivals Barcelona ranked third.

According to researchers of professional services group KPMG, the most valuable club in Europe is Manchester United, currently boasting an Enterprise Value (EV) of £2.6 billion (or €3.09 billion). The study analysed broadcasting rights, profitability, popularity, sporting potential and stadium ownership in order to determine a total EV for top football clubs across the continent.

English clubs dominated the consulting firm’s study of 32 teams, with United’s local rivals Manchester City, Arsenal, Chelsea, Liverpool and Tottenham filling six top 10 places, while English Premier League clubs dominated the ranking, accounting for approximately 40 percent of all aggregate EV. Moreover, as a result of the latest in a long line of copious broadcasting agreements, which began this season, English clubs are expected to be even more prominent in next year’s report.

Top 10 Clubs by Enterprise Value range

Earlier in the year, Deloitte Sport published a report showing Premier League clubs had made their first collective loss before tax since 2012, however as they also forecast that television money would return teams to the black, KPMG have confirmed that another bumper year for domestic TV rights has seen English football prosper over the 2016-17 season.

Profiting from the fierce competition between broadcasters Sky and BT, the English Premier League has the most valuable domestic media rights deal by some margin, currently receiving a colossal £1.7 billion per season from 2016-19. This money is also relatively evenly spread throughout the league, with a ratio between the top and bottom club of 1.5:1, going some way to explaining why so many English teams from the league feature at the top of KPMG’s list.

Despite this English dominance, Spain is still the only country with two clubs reporting an EV above €2 billion, namely Real Madrid CF and FC Barcelona. Furthermore, while the distribution of increasing TV revenue is still relatively favourable to those two giants, at 4:1 from first to last team, the overall value of Spanish clubs in KPMG’s ranking increased this year by 10%.

Domestic broadcasting rights deal per season

It was undeniably Manchester United who came out on top in the annual findings though, as despite spending the year outside the lucrative UEFA Champions League and experiencing a 20% decrease in their share price, they enjoyed an EV increase of 7%, to leap-frog Europe’s most successful team, Real Madrid in this year’s table, in spite of the Galacticos winning the tournament for a second year running.

United spent the season under constant pressure for success, as a £600 million summer spending spree saw them become the most expensive team ever assembled, but in spite of this, the Red Devils saw Return on Sales (ROS) rankings in the top 10 as well. ROS ratings, which measure profitability of the operating activities of a company – in this case including clubs’ player trading results – saw the financial sustainability of this year’s EV leader reflected in their ability to generate a significant level of EBIT despite bearing one of the highest wage bills of all clubs examined.

Portuguese giants SL Benfica were meanwhile the best performers in this space), as for every €100 million of revenues, the club generated €30 million in Earnings Before Interest and Taxes (EBIT).

Top 10 by ROS

Manchester United also sit top of the tree when it comes to overall reported kit value.

The club would have lost out on £21 million in sponsorship revenue from kit manufacturers Adidas, had the team failed to qualify for the Champions League next season, however after completing a League Cup and Europa League double meanwhile, United will return to the UEFA Champions League next season having won Europe’s second-string competition

Tipping €150 million in combined EV kit value, the Old Trafford-based club are followed closely by FC Barcelona and Bundesliga champions Bayern Munich, along with four other English clubs, again emphasising the importance of the exposure provided by lucrative and wide-spread television coverage that those teams benefit from.

Top 10 by overall reported kit value

Andrea Sartori, KPMG's global head of sports and the report's author, said the overall value of the football industry had grown over the past year.

"While this is partially explained by football's broadcasting boom, the internationalisation of the clubs' commercial operations, their investment into privately-owned and modern facilities, and overall more sustainable management practices, are also key reasons for this growth," he stated.

"In terms of media rights value, the English Premier League sits comfortably at the top of European leagues, although other major leagues have outlined well-defined strategies to compete for the attention of global fans."

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