LaLiga’s Economic Report for the last completed season, 2020/21, shows for the first time in recent years revenue losses, which coincided with the most acute phase of the pandemic, but also reflects the financial strength of the competition and the responsibility of the Clubs, which has prevented greater impact, and which will also underpin a solid recovery in the coming seasons.
LaLiga clubs together achieved total revenues of €3,818m in the 2020/21 season, 24.1% less than in the 2019/20 season, with declines in Matchday revenue (-53%) and player transfer fees (-52%) affecting income the most.
This is in any case a substantially lower amount than the one predicted by PwC for LaLiga (COVID forecast report of January 2021) and a milder reduction in relative terms than that experienced by European professional football as a whole. According to UEFA, the decline in ordinary turnover amounted to €7 billion in the two seasons with COVID. Including player transfer revenues, the total revenue erosion in European professional football as a whole, amounts to more than €10 billion.
In the LaLiga aggregate, there is only one club of particular relevance that is responsible for 58% of the losses in terms of EBIT, 56% of the losses in terms of net result (NR) and 26% of the gross financial debt (GFD). However, of the total losses recorded by this institution, approximately 50% corresponds to accounting conventions associated with the extraordinary write-down of its balance sheet, with no immediate financial impact.
While it is true that 71% of clubs have a negative NR, it is also true that the majority of clubs have a positive EBITDA (62% of them) and that, in the worst periods of the crisis, have reduced their GFD level in the season (55% of the clubs).
As usual, as part of the total aggregate competition expenditure, the main item isthe cost of the sports staff (46%), followed by player amortisation (16%). For the first time, however, expenditure fell by – 5.4%, a symptom of the operational effort made by most clubs, with player amortisation (-6.6%) and the decrease in other operating expenses (-13.4%) standing out.
In addition to the containment in the level of current expenditure, it is necessary to underline the effective activation of an ‘automatic stabiliser’, resulting from the Economic Control of LaLiga: in the context of a lower level of divestments associated with the transfer of players (sales), the level of
investment in the playing squad (transfers) has also slowed down, maintaining the clubs’ balance sheet. However, at the outcome level, the effect is not symmetrical: lower sales have a direct and immediately unfavourable impact on the season’s results, while purchases will only gradually increase over the next few years due to depreciation. But in terms of liquidity consumption and pressure on borrowing, i.e. cash, the balance is already being felt in a very positive way.
In terms of the degree of capitalisation, the clubs’ shareholders have shown a strong commitment by underwriting capital increases of around €215 million. Without considering the negative impact associated with the deterioration of the equity of the aforementioned entity (with net worth of around -450 M€), the aggregate Equity Ratio of LaLiga would be 28.8%, a more than notable relative level. These results imply that we have regressed, unusually and temporarily, to levels of some five or six years ago, due to such contingencies as the closure of stadiums to the public, the concentration and rearrangement of television schedules (with the consequent impact on the turnover from these schedules), the decline in the commercial investment capacity of sponsors and advertisers, and finally the general contraction of the European player transfer market. Nevertheless, during the 2020/21 season, LaLiga has promoted several transformative agreements (some formalised in the current 2021/22 season) that allow Spanish professional football to experience an immediate advance, that organically, would have only been possible in a 20-30 years period, thus encouraging a stronger competitive position. This lays the foundation for further growth and profitability in a future business environment that is quite different from the traditional one.
In this regard, we can highlight disruptive strategic initiatives such as the Boost LaLiga Plan, LaLiga Tech, expansion of joint-ventures at international level, the successful sale of audiovisual rights in domestic and foreign markets, as well as the signing of important sponsorship agreements during the
In particular, thanks to the strategic equity agreement signed with CVC, as well as the commitment shown by the clubs’ shareholders (substantiated in the capital increases subscribed), in the 2021/22 season the extraordinary injection of resources will allow the absorption of incremental losses (due to the higher level of recoverable expenditure) compared to the situation that would have occurred in the absence of the Boost LaLiga Plan. This will mean an accelerated start to recovery in the short term and greater business potential in the longer term.
The outlook for the current 2021/22 season is that it will be the start of the recovery period, where revenue will once again surpass the €4 billion income mark, as well as a forecasted increase of +180% in EBITDA and +66% in terms of both EBIT and NR.
In short, Spanish professional football has overcome the most acute phase of the crisis caused by COVID-19, and has done substantially better than other leading competitions in terms of the impact on revenues and results, despite significant adjustments on an ad-hoc basis, especially in the last completed season, 2020-21. This has allowed the maintenance of gross debt levels in the season, keeping them at reasonable levels, with no liquidity strains and avoiding unexpected financial solvency difficulties at an aggregate level.
The high level of resilience shown at the economic-financial level highlights the proactive work carried out by LaLiga in managing the crisis with the audiovisual operators, as well as the value of the ‘LaLiga’ brand in general and of the clubs in particular, for the economic agents that project themselves
commercially to the market through Spanish professional football