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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Champions League glory hard to buy for football’s economic elite

15 March 2019 Consultancy.uk

The thrills and spills of knock-out football can still be one of the sport’s great levelling forces, with the Champions League’s second round having shown that the biggest spenders aren’t always able to buy their way to glory. While a league format broadly favours the squad depth of the beautiful game’s richest teams, half of the tournament’s wealthier teams exited in the first one-on-one elimination round.

As the Champions League burst back into life in February, following an agonising winter break, only two of the 16 teams re-launching their Champions League last-16 bid were from outside the so-called Big Five football leagues. With the exceptions of Portuguese champions FC Porto and Dutch footballing powerhouse AFC Ajax, teams from the world’s biggest spending leagues monopolised the second round. As outlined by analysis from KPMG’s Football Benchmark, the Premier League was represented by four teams, with three clubs come from La Liga and the Bundesliga respectively, while Serie A and Ligue 1 both retained two clubs.

This followed a grimly predictable group phase, which had seen the two most expensive squads progress in all but one of the eight collections of four teams. The one team to buck that trend, Ajax, had last won Europe’s premier club competition in 1995, but those halcyon days have long since faded into memory, and Ajax had failed to progress beyond the group stage in 13 years. With the second youngest squad in the tournament, what now seems to be an awakening football giant had some shocks in store for the second round too.

Group Stage values

Despite an impressive Europa League run which saw the team reach the final two years ago, Ajax had not progressed in a Champions League knockout stage tie since the 1996-97 campaign. That all changed this time, as Erik ten Hag’s men overturned a first leg deficit to trounce Real Madrid 5-3 on aggregate. Having felt hard done by in a 2-1 defeat at the Johan Cruijff ArenA, the Amsterdam club cruised to a 4-1 victory at the Santiago Bernabéu, a result which saw the tournament’s fourth most expensive squad crash out to the third cheapest remaining team.

The supremely expensive team, which had won three Champions Leagues on the trot, had crashed out in spectacular style. For many footballing purists, the end of the seemingly invincible Galacticos would have been enough to restore some of their faith in the sport – but there would soon be more schadenfreude to revel in, as a succession of Europe’s most bank-breakingly costly teams would soon join Los Blancos in their exit.

The pick of the bunch was unquestionably Paris Saint-Germain, who forfeited a 2-0 first leg advantage to somehow crash out of the Champions League. The team, who are fast becoming known as the foremost bottlers in Europe, faced a grim dissection in the French press following a 3-1 defeat by Manchester United at Le Parc de Princes. While it would be over-egging it to paint United as ‘giant killers’, the Red Devils squad is worth markedly less than the club bankrolled by Qatari oil money. PSG hold two of the most expensive players of all time in French World Cup winner Kylian Mbappe and Brazilian playboy Neymar.

Second Round values

Elsewhere, the round’s cheapest squad proved further that money is not everything, as Porto overcame Roma (the Italian club has since parted ways with manager Eusebio Di Francesco in the wake of this humbling) – while Juventus battled back to beat Atlético Madrid. The most ‘balanced’ tie of the round, there was a squad value difference of only €22 million between the two squads, in favour of the Spanish giant. With that being said, €113 million of Juve’s price-tag came from the summer acquisition of Cristiano Ronaldo. Ronaldo’s tie-settling hat-trick went to show that money spent in the right place ultimately makes the difference.

Spending wisely

At the same time, there were also four teams which lived up to their large price-tags. Manchester City pummelled Schalke over the course of two legs, hammering the German team 7-0 in the second game. With the largest squad market value in the tournament, the Citizens showed that their spending had not merely been a frenzy provoked by having large amounts of money to throw about – a la PSG – and that every penny had in fact been used to craft one of the continent’s most well-balanced and dangerous teams, to ultimately contend for the title.

Tottenham Hotspur similarly brushed off Borussia Dortmund, while Liverpool eventually overcame Bayern Munich, to leave no German teams in the tournament. Meanwhile, Barcelona similarly did for the French contingent of the Champions League, bundling out Olympique Lyonnais 5-1.

Operating Revenues

Going forward, the humbled economic superpowers of European football will take solace from the fact that their huge operating revenues will allow them to buy up talent which has emerged in this year’s Champions League. With Real Madrid having re-installed Zinidine Zidane as Head Coach, the club has already committed itself to spending big in the summer, cashing in some €50 million of its €743 billion revenue stream from last year to sign Éder Militão from Porto – who has impressed in this year's Champions League – in the summer.

Whether the PSG project is financially sustainable in the long-term remains to be seen, meanwhile, but with a huge portion of commercial revenues including shirt-sales from the club’s array of superstars, it will likely also seek to bring in more big names in the summer. The club was reportedly in the running to sign Ajax star Frenkie de Jong, before Barcelona finally secured his services from the end of the season.

The likes of Ajax will meanwhile face an uncomfortable wait, as a range of its new crop of outstanding players inevitably attract the attentions of Europe’s top spenders. With the lowest operating revenues of any team left in Europe, the club will face an uphill struggle to hang on to the likes of teenage captain Matthijs de Ligt. However, it would not be the first time that the club has been plundered for its top talent, and what Ajax and clubs of its size can take forward is that with the right eye for lower-key recruitment, they can rebuild, and still challenge Europe’s elite.