European Club Association warns of budget concerns as Serie A finalize broadcast deal over influx of cash

The European Club Association (ECA), the organization representing the interests of professional football clubs within UEFA, published its annual report for the 2019/20 season on Tuesday 3 November. The report summarizes the actions taken so far by the ECA in response. the coronavirus pandemic and examines the challenges that European clubs will continue to face in the 2020/21 season.

The section titled “Guidance Policy, Regulatory and Financial Matters” highlights the sharp increase in the salary-to-income ratio that clubs across Europe have experienced since the start of the pandemic last March. Expressed in terms of a club’s payroll relative to the revenue it generates, the salary-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 salary-to-income ratio will grow by 10.5% compared to two years ago, when it stood at 59.6%. (Figures do not take into account player transfer earnings.)

“In 2020/21, 70.1% of sample income is calculated based on salaries,” the report says.

This figure represents a 7.2% increase over the projected salary-to-income ratio had the pandemic not been a factor.

In the top 5 European leagues – the English Premier League, Spanish Liga, Italian Serie A, German Bundesliga and French Ligue 1 – the salary-to-income ratio is expected to reach 69.3% in 2020/21.

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

Agnelli, who predicts that the 2020/21 season will be “just as difficult” as the previous year, underlines the financial difficulties clubs continue to face due to the lack of income from match attendance.

“From a sporting point of view, nobody wants empty stadiums – our fans make the game what it is, giving our players the inspiration to come out and win,” the post from Agnelli read. “It is also undeniable that a complete erasure of a very important source of income in match day revenue has been felt by clubs larger and smaller.”

The financial damage linked to the lack of ticketing revenue has hit Serie A clubs hard. Just two weeks ago, Serie A president Paolo Dal Pino sounded the alarm on the impacts that l ‘absence of ticketing will have on the Italian elite in 2020/21: Of the 400 million euros in total losses that Serie A clubs will suffer this year, Dal Pino argued that 65% is caused by the lack of fans during matches.

The new Italian government decree, which goes into effect on Friday 6 November and implements new bans and restrictions for the Italian population, will not postpone or cancel any Serie A matches for the time being.

To alleviate some of the financial pressure that is currently crushing Italian football, Serie A recently agreed to sell 10% of its broadcast rights to a newly formed consortium of companies. This group is led by CVC Capital Partners, a Luxembourg-headquartered private equity firm, and includes US private equity firm Advent International and Italian sovereign fund Fondo Strategico Italiano (FSI).

Details of the negotiation are expected to be finalized by Tuesday, November 10. Next, the deal is expected to immediately inject € 1.65 billion into Serie A in a bid to ease the clubs’ current financial difficulties.

Agnelli was one of the main supporters of the deal alongside Urbano Cairo, an Italian businessman and president of Serie A club Turin. As an Italian newspaper Republic reported, Cairo is very optimistic about CVC Capital Partners. He praised the company’s extensive experience in operating the sports industry (they have worked with Formula 1 and rugby before) and their ambitious goal of expanding the Serie A broadcast network both in countries and abroad.

Regardless of the positive economic impacts Newco may have on Serie A, 2020/21 will undoubtedly be a very difficult year for all clubs across Europe. In the message included in the ECA’s annual report, Agnelli underlines the importance of mutual aid as the only means for clubs to overcome the financial crisis caused by the ongoing pandemic.

“By learning the lessons of the final months of the 2019/20 season, as we help each other return to the field, we will jointly find solutions to meet future challenges in order to ensure the sustainable future of our game,” the message from Agnelli read. “Always remember that we all face the same challenges and we must lend a helping hand when needed. “

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