Europe’s top football leagues becoming more predictable
- Germany and France more balanced than England, Italy and Spain
- Champions League payouts dividing national leagues
London, Kyiv, 4 November 2009 – The last fifteen years have seen clear signs of a sharp decline in competitive balance of the five biggest European football leagues, with a handful of leading clubs increasingly pulling ahead of the rest of the pack, according to a new study by Ernst & Young.
Football meets finance VI, an analysis of the English, French, German, Italian and Spanish leagues over the last 15 years, which uses a range of indicators1 to measure the “competitive balance” within and across the leagues, suggests that the fundamental reason for this increasing disparity is the growing gap in income between the leading clubs and rest of their leagues. This, among others, has been exacerbated by the regular participation of the same top clubs in the UEFA Champions League.
Ligue 1 and Bundesliga most balanced and competitive leagues
The results of the analysis show that the English Premier League is the most predictable league of the main competitions in Europe, while the German Bundesliga and French Ligue 1 are the most balanced leagues.
By comparing the ratio of points scored by the top five teams in each league to their less successful rivals, the competitiveness of the leagues over the last 15 years for all of the leagues, except Ligue 1, has been declining throughout this period.
Bruno Perrin, EMEIA Media & Entertainment leader at Ernst & Young, says: “There are significant differences in the genuine competitiveness of these top five leagues. The main reason for the relative openness of the Bundesliga and Ligue 1 compared to Seria A and La Liga,is the central marketing of broadcasting rights and the resulting relatively even distribution of revenue between clubs. However, the English Premier League is by far the most predictable partly because the high volume of money spent by investors has had a significant impact on competition.”
Last season, many top teams occupied their final league rankings relatively early in the season. Barcelona headed the table from the ninth day of play. The same was true of Inter Milan in Italy (from the 11th day of play) and Manchester United in England from the 22nd day of play. In contrast, the team at the top of the league changed in Germany as late as nine match days before the end of the season, and in France even three days before the end.
Perrin continues: “In all countries, almost all the traits of competitiveness for the 2008/09 season were below the 14-year average. Fewer teams than average competed for the top five spots, taking away some of the suspense and excitement of those last few days of the season.”
Short term risers
In England (59%) and Spain (52%), in particular, the average rate for a promoted team to be swiftly relegated again is very high. In France (43.5%) and Germany (42%), on the other hand, the average is much lower, with promoted teams having a much higher chance of establishing themselves in the top league, at least for the medium term.
Neil Patey, Transaction Advisory Services partner and football industry advisor at Ernst & Young LLP (UK) explains: “The broadcasting revenue in France and Germany is distributed between the first and second leagues. This prevents the gap between rich and poor from becoming too wide and reduces the gap in the financial means available to the "badly" ranked clubs in the first league and the "well" ranked clubs in the second league.”
“Promotion, therefore, entails less financial strain than in other countries such as England, where there is a much greater discrepancy between the first and second leagues with regard to television broadcast revenue. This is putting newly promoted teams at a distinct financial disadvantage to compete immediately with the rest of the league, despite a possible rise in broadcasting income over the course of the new season.”
Financial divide
In the past, the growing gap between rich and poor clubs has been exacerbated by the ongoing participation of top clubs in the Champions League. Payouts in connection with this competition have risen sharply, particularly since the change in format at the turn of the millennium.
“Successful clubs obtain ever increasing bonuses, which allows them to further raise their competitive standing in the sport, in turn increasing the probability of being successful again in the future”, says Patey.
“A reform of the distribution of revenues to benefit non-Champions League participants seems urgent if this trend is to be brought to a halt. Furthermore, UEFA has already announced the creation of a commission charged with drawing up measures to create a level financial playing field among European clubs, to be based on the German licensing practice.”
In Spain and Italy, TV broadcasting rights have been marketed by the individual clubs since the end of the 90s, in contrast to most other European countries. Real Madrid and Barcelona now generate more than EUR150 million each per year in this way, and the top Italian clubs well in excess of EUR100 million. The central marketing of broadcasting rights in Italy and Spain would even out competition in those countries and is scheduled to be introduced in Italy in 2010.
“Though one of the consequences of centralized marketing is a more even national league, this generally comes at the cost of international success, and vice versa”, concludes Patey.
Kostiantyn Neviadomskyi, Advisory Partner at Ernst & Young, comments: “It’s interesting to consider the results of the study in the context of the situation in Ukrainian football. Based on European experience, Ukrainian football has two major ways for future development: (1)gradually decrease the discrepancy and balance the level of teams playing in the championship or, (2) keep the gap in club incomes (budgets) when a few leading teams will further raise their competitive standing.
Balancing the Ukrainian league will increase the public interest in the long-term perspective (as the interest of the public grows it will boost the interest of Ukrainian media to football). Obviously, the national media market and national football team will benefit directly should this strategy get implemented. On the other hand, as proves this study, "balancing" the league will affect the competitiveness of our clubs on the international arena, which, in turn, will inevitably affect the club incomes and the motivation of investors to continue investing in teams.”
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1A range of indicators were used to determine competitive balance in the national leagues including level of excitement based on seasonal and team components, standard deviation of the top five clubs over 15 years, competition for the title, Champions League qualification, number of ‘swift relegations and volatility among top five and bottom three clubs. Using this data it is possible to determine the average ranks of the leagues with regard to all of the indicators. 
