Fifth club licensing benchmark report

UEFA has issued its fifth club licensing benchmarking report on European club football – featuring analysis of more than 670 top-division clubs from UEFA's 53 full member national associations.

The European Club Footballing Landscape is a document of 124 pages, and is published in four languages – English, French, German and Russian. The report comes at a key time for European club football in the wake of financial fair play measures introduced by UEFA, aimed at limiting the financial problems which have affected the European club game.

The report provides the widest and most complete financial health check of club football available, with the five-year financial review sourced from over 3,000 detailed sets of financial statements, laying bare the strengths and weaknesses of club football finances across Europe.

For the first time, the benchmarking report includes a whole section on UEFA club competitions and the participating clubs, including analysis on where clubs' finances are in comparison to the impending financial fair play requirements. As well as analysing the financial contribution that UEFA club competitions make to club finances, the section also includes a unique review of the last decade of UEFA's two flagship club competitions, the UEFA Champions League and the UEFA Cup/UEFA Europa League, and the 578 different clubs that have participated during this period.

While there is an understandable focus on financial matters, the report also deals with other non-financial issues relevant to European football, with pan-European analysis on many diverse areas, including attendance levels and trends, domestic league structures, coach survival rates and stadium ownership.

The style of the report is visual, with many charts and a basic question-and-answer format; for example, one question asks: Is it 'the same old clubs' always competing in UEFA club competitions? Analysis of the last four three-year competition cycles highlights that only ten clubs participated in the UEFA Champions League group stage in each of the three years, compared to 15-17 clubs in the previous three cycles. Another question asks whether the record level of club losses is merely due to the "wealthy" clubs making ever larger losses, or whether the unwelcome trend of financial losses runs deeper.

The later chapters of the report study club finances in detail, at Europe-wide, national and individual club levels. A positive message is reiterated, namely that football revenues remain buoyant, with overall Europe-wide top-division revenues of €13.2 billion in 2011 representing growth of 24% since 2007 – extraordinary given the context of this period of economic downturn.

Even the pressure on league matchday attendances, which led to a decrease in matchday ticket income in 2011, has turned in 2012, with the majority of top-division European leagues reporting an increase in match attendances, and a 2.5% increase in overall league attendances to more than 103 million.

Elsewhere, the analysis provides food for thought, with an extraordinary 55% of top-division clubs replacing their coaches within a 12-month period. The report also documents the relentless escalation in club costs, in particular salaries and their associated costs, which have increased by a huge 38% between 2007 and 2011, far outpacing the revenue growth of 24% during this period. Indeed, combined employee and net transfer costs now represent 71% of club revenues, a dramatic increase from 62% in 2007. It is this relentless increase that forms the backdrop to record aggregate losses reported by European top-division clubs of nearly €1.7billion in the latest fully reviewed year, the financial year ending in 2011.

The report digs deeper behind these headline figures, with UEFA analysis indicating that the deteriorating results have been at all levels of the game, and not just the widely reported high profile club losses. While the losses of the ten largest loss making clubs increased by €260 million between 2007 and 2011, the financial results of clubs with losses ranked 11-30 deteriorated by €310 million, and other smaller loss-making clubs also reported more than a doubling of their losses during this period.

It is clear that the financial challenges run deeper and wider than just the high profile cases on the surface of club football. To counter-balance some of the bad news, the report does identify a slightly higher proportion of clubs that managed to balance their books, and analysis of club balance sheets yields a largely neutral picture.

With the dawning of UEFA break-even rules from the 2012 and 2013 financial seasons, many clubs competing in UEFA club competitions and running deficits will have to strengthen their balance sheets in order to meet the requirements.

The search for a more sustainable balance between income, spending and investment is central to the UEFA Club Licensing and Financial Fair Play regulations. What is abundantly clear from the report is that action from UEFA, national governing bodies and their clubs is essential to protect the future health of Europe and the world's most popular sport.