• Daniele Proch

European Club Association Warns Of Budget Woes, Serie A Finalizes Broadcasting Deal For Cash Influx

~ Original article here!

The European Club Association (ECA), the organization representing the interests of professional soccer clubs in UEFA, published its annual report regarding the 2019/20 season on Tuesday, Nov. 3. The report summarizes the measures taken so far by the ECA in response to the coronavirus pandemic and looks at the challenges that the European clubs will continue to face during the 2020/21 season.

The section under “Guiding Policy, Regulatory and Financial Matters” highlights the large increase in wage-to-revenue ratio that clubs across Europe have experienced since the beginning of the pandemic last March. Expressed as a function of a club's salary bill over the revenue it generates, the wage-to-revenue ratio is used to calculate the value of a club’s employees.

Based on a sample of 10 European leagues, the ECA estimates that at the end of this season, the wage-to-revenue ratio will register a 10.5% growth from two years ago, when it sat at 59.6%. (The numbers do not take into account gains from players’ transfers.)

“In 2020/21, 70.1% of the income of the sample is calculated to go against salaries,” the report reads.

This figure represents a 7.2% increase from the projected wage-to-revenue ratio had the pandemic not been a factor.

In the top-5 European leagues - the English Premier League, Spain’s La Liga, Italy’s Serie A, Germany’s Bundesliga, and France’s Ligue 1 - the wage-to-revenue ratio is expected to reach 69.3% in 2020/21.

The report also includes a message from Andrea Agnelli, the chairman of both the ECA and Serie A club Juventus.

Agnelli, who anticipates the 2020/21 season to be “just as challenging” as the year before, stresses on the financial hardships that clubs keep facing due to the absence of revenue from match-day attendance.

“From a sporting standpoint, nobody wants empty stadiums – our fans make the game what it is, giving our players the inspiration to go out and win,” the message from Agnelli reads. “It is also undeniable that a complete wipe-out of a very important revenue source in matchday receipts has been felt by the biggest and smallest of clubs.”

The financial damage stemming from the lack of ticketing revenue has strongly hit the Serie A clubs. Just two weeks ago, Serie A President Paolo Dal Pino sounded the alarm about the impacts that the absence of ticketing will have on Italy’s top flight in 2020/21: of the total €400 million losses from which Serie A clubs will suffer this year, Dal Pino argued, 65% are caused by the lack of fans at games.

The Italian government’s new decree, which will be effective starting Friday, Nov. 6 and implement further bans and restrictions on the Italian population, will not postpone or cancel any of the Serie A fixtures at this time.

To alleviate some of the financial pressure that is currently crushing Italian soccer, Serie A has recently agreed to sell 10% of their broadcasting rights to a newly-formed consortium of companies. This group is led by CVC Capital Partners, a private equity firm headquartered in Luxembourg, and comprises U.S.-based private equity firm Advent International and Italy’s sovereign wealth fund Fondo Strategico Italiano (FSI).

The details of the negotiation are expected to be finalized by Tuesday, Nov. 10. Then, the deal should immediately inject €1.65 billion into Serie A with the goal of mitigating the clubs’ ongoing financial struggle.

Agnelli was one of the main advocates of this deal alongside Urbano Cairo, an Italian businessman and chairman of Serie A club Torino. As Italian newspaper Repubblica reported, Cairo is very optimistic about CVC Capital Partners. He has praised the company’s large experience in operating within the sports industry (they have previously worked with Formula One and rugby) and their ambitious goal of expanding the Serie A broadcasting network both domestically and abroad.

Regardless of the positive economic impacts that the Newco may have on Serie A, 2020/21 will undoubtedly be a very challenging year for all clubs across Europe. In the message included in the ECA annual report, Agnelli highlights the importance of mutual help as the only way for clubs to weather the financial crisis brought about by the ongoing pandemic.

“Taking the lessons learnt over the final months of the 2019/20 season, as we assisted one another in returning to the pitch, we shall, together, find solutions to tackle future challenges to ensure the sustainable future of our game,” the message from Agnelli read. “Always remember that we are all facing the same challenges and must lend a helping hand where needed.”

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