The Football Industry – invest.ch

Football has more than 3 billion fans, making it the most popular sport in the world. As such, it can generate huge income. Football has three main sources of profit: match days, broadcast rights and commercial revenue. The European football market achieved a turnover of 25.2 billion euros in the 2019/2020 season, which is 13% less than the previous season.

This contraction is the result of Covid-19 restrictions, with all competitions suspended and no spectators allowed when it resumed. During this period, the games provided no revenue, but it was the broadcast contracts that posed the most problems for the leagues. These derive a large part of their income (between 40 and 60% depending on the competition) from temporary employment contracts. They sell the rights to broadcast their matches to media companies. But as no matches took place during this period, the leagues were forced to partially reimburse the broadcasters. The Premier League has been hardest hit, with £330 million in refunds being shared by all clubs.

Latest developments

The 2022 FIFA World Cup is rapidly approaching. This sporting event, which will bring fans from 32 countries to Qatar, will be one of the most anticipated of the year, and the financial impact will be significant: FIFA, football’s governing body, is currently planning a total budget of 4.67 billion, including 2.64 billion from broadcasting rights and 1.35 billion from sponsorship contracts. Hospitality rights and ticket sales will bring in $500 million.

As FIFA’s main source of revenue, the FIFA World Cup takes place at the end of a four-year cycle, resulting in a delay in revenue recognition. FIFA members recently adopted an overall revenue forecast budget for the full four-year cycle of US$6.44 million.

By the end of 2020, contracts had already been awarded representing 80% of the full cycle budget. The 2022 annual budget thus confirms the expectation that the 2019-2022 budget, as approved by the 70th Congress, will be fully realized. Even the news of the collapse of the partnership between video game publisher EA Sports and FIFA should not hurt the popularity or the revenue streams of these two giants.

Outlook 2022

The pandemic has shaken up the football industry’s revenue strategy. Leagues have been trying to diversify for years and this process should start to accelerate. The adoption of digital technology will be essential and in this area the NBA experience can serve as a guide: in 2019 it launched the NBA Top Shot virtual trading cards. Since then, transactions are estimated at more than half a billion.

The Premier League has already said it is looking at the option of NFTs and many clubs have issued Fan Tokens. However, the interaction between football, the entertainment industry and digital is far from being exploited. To create new revenue streams, leagues must adopt direct-to-consumer business models and monetize data through business intelligence. The demands of the public are also changing. As an experience, going to a football match and buying a sandwich or beer is no longer enough. It’s also not very productive from a marketing standpoint. Leagues and clubs should focus on strategies that allow them to optimize their turnover/m2. Digital technologies, artificial intelligence and engagement platforms can become the means for fans to generate the experience they want. This creates new sources of income.

AV and commercial revenue streams aren’t going to disappear, but they may have peaked. A less risky situation in terms of revenue will only be possible if the leagues diversify, and this can only happen if they adopt technologies that pave the way for a new type of business model in the football industry.

The Football Fever Certificate of swiss quote focuses on football industry players who are best positioned to benefit from the adoption of digital technology.

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