Europe’s footballing elite struggle to profit amid market turbulence

14 January 2022 4 min. read
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Of Europe’s top footballing leagues, only the champions of Germany, Bayern Munich, reported a financial profit in the last year. English champions Manchester City saw revenues grow, but that was negated by astronomical transfer fees, and one of football’s largest wage bills.

A volatile year has seen a majority of football’s reigning champions fail to turn a profit for the 2020-21 season. According to KPMG Football Benchmark's ‘European Champions Report’, six out of seven champions, for which financial information was available, suffered a net loss.

The absence of fans through the bulk of the season once again led to huge matchday revenue losses among the champions of England, Spain, Germany, Italy, France, the Netherlands, Turkey and Portugal. This was only partially mitigated by deferred broadcasting revenues, and these were not accompanied by a similar decrease in operating costs – meaning many of the footballing elite have seen cracks appear in their balance sheets.

Profitability overview: falling bottom lines

Commenting on the findings, KPMG Partner Andrea Sartori said, “With total revenues of most clubs still below their pre-pandemic levels, in an industry characterised by a predominantly rigid cost structure, most champions recorded massive losses for the financial year which ended in May/June 2021. While there were some notable exceptions, the most common trend seen was that operating revenues – hit hard by almost complete loss in matchday income, but mitigated by stable or increasing broadcasting and commercial revenues – could not make up for the generally high staff cost and decreasing player trading income.”

Bayern Munich were the only champions from Europe's top eight leagues to make a profit in 2020-21 as the coronavirus pandemic continued to hit European football. According to KPMG, the Bavarian club has enjoyed balance between competitiveness on the pitch and financial sustainability for three decades now, making it “one of the best management models in European sports history.” Bayern's 20-21 profit, after tax, was €1.8 million.

In comparison, despite the riches of the English Premier League, Manchester City does not seem likely to emulate the German giant. The Cityzens cruised to the Premier League title, and even reached a historic first Champions League final – meaning a €96 million boost in broadcast revenues compared to the previous season led to an increase in income. City’s €644 million in income was the only increase of any champion over the last season, however, the club also recorded a net spend of €294 million on transfers and has one of the biggest wage bills in football (which was already €421.26 million in 2018-19). The club has not formally reported its results yet.

Operating revenues overview Total operating revenues with breakdown (2020/21) in EUR million and YoY% change

With all that being said, even if City were to face losses when it did finally report its earnings, it would be unlikely to impact the club, or its oil-rich ownership. That is not the case with a number of Europe’s other champions.

Serie A champions Inter Milan recorded a net loss of €245.6 million in 2020-21 – the highest ever recorded by an Italian football club. Matchday revenue losses, operating costs growing and low income on player trading activities each saw the party swiftly sour, after the club claimed its first Scudetto in a decade. The losses coincided with the Nerazzurri's owner, Suning, having been hit hard by the economic chaos caused by the pandemic, leaving the club's project shrouded in uncertainty. The crisis led to a summer fire-sale, including the departure of striker Romelu Lukaku.

Meanwhile, Spanish champions Atletico Madrid also saw what should have been a remarkable year coloured by uncertainty. The club went from a net loss of €1.8 million in 2019-20 to €111.7 million. As a result, it is perhaps not surprising the Atleti, and fellow loss-making champion Inter and Manchester City, felt the need to throw their weight behind the Super League project – which promised a huge injection of funding before the project collapsed in ignominy.

Elsewhere, Turkey’s Beşiktaş JK were the sole champions to achieve improvement in their bottom line, although recording a net loss of €44.4 million, they almost halved losses compared to the previous period. Dutch champions AFC Ajax and Portugal’s Sporting CP meanwhile both suffered a decrease in operating revenues, a moderate rise in staff costs and, consequently, a rising staff cost-to-operating revenue ratio and a declining bottom line result.