football meets finance vi

Football meets finance Edition VI

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The authors

Prof. Christoph EhrhardtPartner Ernst & Young Real Estate GmbH

Neil Patey Partner Transaction Advisory Services Ernst & Young LLP

Arnd HovemannManagerErnst & Young GmbHWirtschaftsprfungsgesellschaft

Alastair Nuttall Partner Assurance Ernst & Young LLP

3Ernst & Young Football meets finance VI

About Ernst & Youngs Global Media & Entertainment Center Whether its the traditional press and broadcast media, or the multitude of new media, audiences now have more choice than ever before. For media and entertainment companies, integration and adaptability are becoming critical success factors. Ernst & Youngs Global Media & Entertainment Center brings together a worldwide team of professionals to help you achieve your potential a team with deep technical experience in providing assurance, tax, transaction and advisory services. The Center works to anticipate market trends, identify the implications and develop points of view on relevant industry issues. Ultimately it enables us to help you meet your goals and compete more effectively. Its how Ernst & Young makes a difference.

Foreword

Football has proven over the past few years to be a critical content provider for the media industry and increasingly attractive to the telecoms operators. As trusted advisors, we are happy to contribute to the continuing discussion of media rights and the impact on competitive balance.

Bruno Perrin, EMEIA Media & Entertainment Leader, Ernst & Young

Content

Foreword 3

The main findings 4

Competitive balance in the major European leagues 5

Balanced competition versus international success 38

4 Ernst & Young Football meets finance VI

Europes top leagues are becoming more predictableThe last 15 years have seen clear signs of a sharp drop in competitive balance in the five most important European leagues. Leading clubs in most countries are increasingly pulling ahead of the rest of the pack, achieving more consistent results from season to season. One fundamental reason for this is the growing gap in income between the leading clubs and the rest of the league.

The Champions League in particular divides the leagues into two groupsIn 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. A reform of the distribution of revenues to benefit non-Champions League participants seems urgent to end this trend.

Bundesliga and Ligue 1 are by far the most exciting and diverse There are significant differences in the competitive situation of the leagues in the top five countries. According to our compre-hensive analysis using a range of indicators to determine competitive balance in the national leagues, the leagues in Germany and France are the most balanced by a wide margin. While the leagues in Italy and Spain trail well behind, the Premier League in England is by far the most predictable. One

main reason for the positive distinction of the Bundesliga and Ligue 1 in France is the central marketing of broadcasting rights and the resulting relatively even distribution of revenue between clubs. The high volume of money spent by investors in England has had a significant impact on competition.

The main findings

Level financial playing field requiredUEFA (Union des Associations Europennes de Football) has already announced the creation of a commission charged with drawing up measures to create a level financial playing field among European clubs. This is to be based on German licensing practice, another factor in the competitive balance of the Bundesliga. This would be beneficial in terms of competitive balance at both a national and international level. The central marketing of broadcasting rights in Italy and Spain would even out competition in those countries. This is scheduled to be introduced in Italy in 2010.

More exciting national competition is detrimental to international success (and vice versa)Top German and French clubs generate significantly less revenue from broadcasting rights than the leading clubs in Italy and Spain, where rights are not marketed centrally. Moreover, some leading European clubs record high losses that are compensated by the clubs owners or presidents out of their own pockets. This is again to the detriment of clubs that finance their squads from internally generated cash flows. This goes a long way towards explaining the poor performance of German (and French) teams in the Champions League. However, it also shows that an exciting and diverse national competition generally comes at the expense of international success and vice versa.

An unbalanced league will not maximize the number of its spectators/viewers. Jos Lus Arnaut


BackgroundThis years study focuses on analyzing competitive balance (CB) in the five most important European leagues (England, France, Germany, Italy and Spain). This is to update the results of the Football meets finance IV study to take into account the last two seasons. Two significant additions have also been made. Firstly, the study now examines individual match days in order to investigate whether the situation in the respective countries regarding competition develops differently towards the end of the season. In addition, a range of analytical instruments place an increased focus on the dynamic team component.

Significance and aspects of CBIn team sports, CB refers to the equilibrium of the sporting competition between different leagues of one sport or within a league or competition. A long-term analysis of CB reveals two components.

What is referred to as the seasonal component concerns the competitive situation within one season. Here, the focus is on the different performance of teams within one season. A distinction can be made, for example, between uncertainties regarding the outcome of a match, the season, the championship, the relegation battle or qualification for international club competitions (UEFA Euro League, UEFA Champions League). The focus is on the uncertainty of the outcome, which corresponds to the excitement of the competition. The team component concerns the development of a teams performance over the course of a set period of time (several seasons). This deals with the question of whether individual teams can maintain their performance from season to season. The focus is on the degree of variation within a league.CB is often considered a key success factor for sports leagues. The central argument underlying this thesis is supported by

Competitive balance in the major European leagues

empirical evidence. Studies confirm that CB or more precisely, the resulting uncertainty of a match has a positive impact on the number of spectators at stadiums and television viewers. In his oft-cited report dealing with European sport published in 2006, the former Portuguese minister for sport Jos Lus Arnaut sums it up best: An unbalanced league will not maximize the number of its spectators/viewers.1

Moreover, other studies indicate three risks stemming from unbalanced leagues:

(1) Progressively increasing gap in the financial situation of individual clubs and the tendency to overinvest in squads

(2) Risk of insolvency of weaker clubs(3) Risk of top clubs leaving and

reorganizing into a competing league The creation of the Nordic League, an annual tournament for the best teams from the Scandinavian countries, and the controversial inclusion of the Scottish teams Celtic and Rangers in the Premier League are current examples of such a split.

One peculiarity of sport is that teams that are organized within a competitive structure (a league) have a fundamental interest in the competitive strength and survival of their competitors, in contrast to a company

within a branch of industry. Although the teams compete against each other for titles and rankings, they also have to cooperate in order to maintain the excitement of the competition (and therefore its appeal). However, as will be shown in the following, there are a number of factors that influence the situation within a league with regard to competition, jeopardizing CB within a league.

CB is therefore of crucial importance to football and is justifiably at the center of public interest. Current reports and contributions to the debate by Jos Lus Arnaut and Ivo Belet as well as the White Paper on Sport from the EU Commission led by the EU Commissioner for Culture and Sport Jn Figel highlight the weighty nature of the issue.

1 Arnaut, J. L. (2006). Independent European Sport Review 2006.

6+5 is all about putting the contest back into competitions.Jrme Champagne, FIFA Director of International Relations


Influential factors and instruments for maintaining CBCB is primarily dependent on the distribution of player quality and thus on the financial clout of individual clubs. There can be little doubt that a club with strong purchasing power assuming it acts effectively and efficiently can obtain a sporting advantage over financially weaker clubs by recruiting players. This is shown here in the diagram, which juxtaposes expenses for players (according to the press) with total points for the 200809 season in the Bundesliga. It therefore stands to reason that the earnings position of clubs is of central importance to CB. Another aspect stems from differences in the propensity to use external financing for investment in squads.

In addition to factors with a direct impact on CB, factors with an indirect influence can also be identified. These include unequal access to public infrastructure funded by federal, state or municipal governments. If public funding (e.g. for the construction of stadiums) is not provided equally to all clubs, differing levels of capital may be available for players. A lack of integrity on the part of members or substance abuse can distort competition, affecting CB. Factors affecting CB also include aspects with a direct link to the sporting competition, such as relegation rules or the size of the league. Recently, the so-called

Bundesliga: More money, more goals(Diagram 1)

Logarithmic trendSource for personnel expenses: press

Quelle Personalaufwand: Presse

Poin

ts in

200

809

sea

son

Personnel expenses for players

Saison 2008/2009

Verein Personalaufwand Punkte

1 Bayern Mnchen 77,5 67

2 FC Schalke 54,5 50

3 VfB Stuttgart 46,5 64

4 Werder Bremen 42,5 45

5 Hamburger SV 40 61

6 VfL Wolfsburg 36,5 69

7 Bor. Dortmund 34 59

8 Hertha BSC Berlin 30,25 63

9 Bayer Leverkusen 30 49

10 Hannover 96 27 40

11 1. FC Kln 31,5 39

12 Bor. M'Gladbach 27 31

13 1899 Hoffenheim 25 55

14 Eintracht Frankfurt 25,5 33

15 Karlsruher SC 17 29

16 VfL Bochum 17,5 32

17 Energie Cottbus 14 30

18 Arminia Bielefeld 16 280

10

20

30

40

50

60

70

80

0

10

20

30

40

50

60

70

80

10 20 30 40 50 60 70 80 90

6+5 rule has come to the fore in the public domain. There is heated discussion over whether limiting the number of foreign players in a clubs starting squad for league games could improve competition in the national leagues. FIFAs view in this regard is clear: 6+5 is all about putting the contest back into competitions.


intuitive and takes account of the fact that these clubs are able to generate additional income from international competition (which tends to reduce CB). The indicator can be modified in order to take into account changing circumstances within a league. The ratio of concentration rates (RCR) is defined as the ratio of actual CR to ideal CR (of a completely balanced league). For all previously described indicators, the higher the value, the less balanced the league is. Because this is not intuitive (high values are often seen as better), it is possible to calculate the inverse value of the RCR. If this value is compared with the value for a completely balanced league, this gives the empirically tested EY level of excitement, as described in detail in the study Football meets finance IV.

From a competition economics perspective, however, a league is also deemed unbalanced if the same teams are always competing either for the title/qualifying positions or against relegation. The study of this component was taken up by the scientific community, where it is referred to as dynamic competition analysis. The team component can be modeled based on the season standard deviation (SD) of the total points obtained by each team from the average points reached by the team over an observation period. The number of teams in a particular cluster (such as the top five) over a particular period of time is also often used to model the team component. The higher the value, the more balanced the competition.

Some suggestions for improving the game of football would usually end up harming CB if implemented. These include introducing a fourth referee, introducing video replay, enlarging the goal, putting a chip in the ball, etc. These developments would eliminate chance, meaning that stronger teams would prevail more often, to the detriment of CB. There is a wide range of instruments available for maintaining CB, which, at the very least, act on the direct factors discussed above. The following are some examples:

Instruments for maintaining CB:

Salary caps

Distribution of revenue (e.g., broadcasting revenue)

Licensing procedure

These instruments have become the frequent subject of the discussion on competition in football leagues. Please refer to the study Football meets finance IV for further information on this subject. Our Football meets finance III study focused on UEFAs club licensing procedure. The extent to which the oft-cited 50+1 rule in Germany, which prevents investors from gaining a majority interest in a German club, helps maintain CB is at the very least questionable.

Measuring CBWin rates, league rankings and points can be used as indicators in instruments to measure competitive balance in sporting

competitions. Win rates are primarily used to measure CB in North American leagues, where games can only be won or lost. However, win rates can produce a distorted image in sports that can end in a draw (such as football). Rankings are a suitable indicator for measuring CB within a league. However, it makes comparison between divisions difficult, although the rankings are used in connection with another CB instrument. If points are used to measure CB, results from the time when two points were awarded for a win (in France up to and including 199394, in Germany, Spain and Italy up to and including the 199495 season) should be adjusted to the three-point system to enable inter-seasonal comparison. The problem with this approach, however, is that the rankings of certain teams from the time when the two-point system was in place are changed as a result of the adjustment. Overall, it should be noted that all indicators have certain advantages and disadvantages that must be taken into consideration when using them according to the circumstances of the individual case.

By analogy to general empirical competition analysis, various measurements of variance and concentration are used in the analysis of the competitive situation in sporting leagues. A detailed picture of the competitive situation within a group of teams in the same league is provided by the concentration rate (CR). This indicates the share of the total number of points awarded in a league that is obtained by the top clubs. The CRs of the best five clubs in a league are usually calculated in order to determine CB in sporting leagues. The CR is

Table 1


Are these saying the same thing? Maybe: this study uses a wide range of indicators and encompasses many diverse factors. The discussion begins with the excitement value, as well as the SD of the total points scored by the top five teams over the last 15 years. In order to give a more detailed impression of the competitive situation with regard to team identities, the number of teams involved in the respective sub-competitions (title, CL qualification, relegation/promotion) is then analyzed in detail. The examination of the CBs development towards the end of the season relates to the number of teams that still have a stake in a relevant sub-competition.


The competitive situation in the top five leagues

The seasonal componentThe level of excitement factor already developed in the study Football meets finance IV is based on the share of points held by the five top-ranked clubs in relation to the entire league. The level of excitement is based on the inverse values of the RCR indicator. The question is asked

how close any given league is to being completely balanced based on these values (represented by 100% on the y-axis). In a completely balanced league, all teams would have the same number of points at the end of a season, while in a completely unbalanced league the best team would win all of its matches and the worst would lose all of them (i.e. scoring zero points). This illustrates that such extreme values are purely theoretical.

Seasonal component: excitement in decline Measured using the ratio of points scored by the best ve teams to the rest of the league.The higher the value, the more exciting the league.(Diagram 2)

1994

95

1995

96

1996

97

1997

98

1998

99

1999

00

2000

01

2001

02

2002

03

2003

04

2004

05

2005

06

2006

07

2007

08

2008

09

Moving five-year average GermanyMoving five-year average EnglandMoving five-year average FranceMoving five-year average ItalyMoving five-year average Spain

20

25

30

35

40

45

50

55

60

65

0,200,250,300,350,400,450,500,550,600,65

France

England

Italy

GermanySpain

Num

bers

giv

en a

re p

erce

ntag

es

Owing to the strong seasonal fluctuations in values, the moving average is calculated for the respective countries and its development presented. The moving average is defined as the average value for the last five seasons in each case. The higher the percentage value reached by a league, the greater the approximation to a completely balanced league (i.e. the more exciting the competition).


The (average) gap between the leagues was very small in the 199899 season. Based on the measure, a similar competitive situation predominated in the five leagues in this season, since the top five clubs in each of the countries analyzed had a similar points advantage over the rest of the league. The values for the individual countries drift apart after this point. Only in France has there been a slight increase in the level of excitement (i.e. decrease in the share of points won by the top five clubs) over the last 15 years. However, the last two French seasons not covered by Football meets finance IV also reveal a similar decline in excitement. According to the measure, the degree of excitement in France has fallen sharply over the last two years. However, this strong downward trend is still relatively weak when depicted as part of a five-year average.

In the other countries, excitement has been falling for the last 15 seasons. While the fall in excitement in Germany and Spain has been relatively slow, the measure shows that the competitive situation in the Italian and German leagues in particular has deteriorated drastically. Compared to the overall league, the five best clubs in these countries were able to win an increasing share in points leading to a sharp decline in excitement. While the excitement value

in England has nosedived once again since study IV, excitement in Italy has stabilized at a relatively low level.

If the development of the curves is presented over a 15-year average, the differences between the leagues become more pronounced. According to the

measure, the French league is the most balanced and has the highest level of excitement, followed by Spain and Germany. The Italian and English leagues are least exciting. In both countries, the five best teams are on average the furthest ahead of their competitors in the rest of the league.

Ligue 1 most exciting15-year average of level of excitement(Diagram 3)

3032343638404244464850

Figu

res

give

n as

a p

erce

ntag

e

France

46.6

Spain

43.5

Germany

41.1

Italy

34.8

England

34.4


The team componentAs already discussed, the team component must be considered alongside the seasonal component. From a competition-economics perspective, a league is also deemed unbalanced if the same teams are always competing either for the title/qualifying positions or against relegation. Team components can be modeled based on the season SD of the total points obtained by each team and the average points obtained by a team over an observation period. The higher the value of this component, the more varied a league is. Wide deviations of individual teams over the years effectively mean that the clubs competing for the top league positions are constantly changing. However, the value is lower if the top five clubs are able to consistently reproduce their results.

Variation in the performance of the top five clubs is particularly high in Italy. However, the impact of the sanctions imposed for 200506 season must also be taken into account. Consequently, the points achieved by Juventus in the 200506 season were interpolated to the 200607 season, thus ignoring the relegation that was enforced on the club. Otherwise the results would be heavily distorted. By contrast, adjustments were not made for the points penalty imposed on AC Milan (eight points) and

S.S. Lazio (three points) in the 200607 season. Adjustments (i.e. addition) to take these penalties into account would further reduce the relatively high average seasonal SD. The other placings are occupied by Germany, England, France and Spain in that order.

6,06,57,07,58,08,59,09,5

10,010,511,0

Team component: monotony in Spain Measured using the SD of the top ve teams from their average points total.The higher the value, the more varied the league.(Diagram 4)

Num

bers

giv

en a

re p

oint

tota

ls 1

5-ye

ar a

vera

ge

Italy

10.3

Germany

9.6

England

9.4

France

9.3

Spain

7.6


# Champion

1994

95

1995

96

1996

97

1997

98

1998

99

1999

00

2000

01

2001

02

2002

03

2003

04

2004

05

2005

06

2006

07

2007

08

2008

09

Total

1 FC Bayern Mnchen x x x x x x x x 8

2 Borussia Dortmund x x x 3

3 1. FC Kaiserslautern x 1

4 Werder Bremen x 1

5 VfB Stuttgart x 1

6 VfL Wolfsburg x 1

# Champion

1994

95

1995

96

1996

97

1997

98

1998

99

1999

00

2000

01

2001

02

2002

03

2003

04

2004

05

2005

06

2006

07

2007

08

2008

09

Total

1 Manchester United x x x x x x x x x 9

2 Arsenal x x x 3

3 Chelsea FC x x 2

4 Blackburn Rovers x 1

Table 2: Title-holders in the last 15 years in Germany.

Table 3: Title-holders in the last 15 years in England.

Interest value of sub-competitionsDo certain teams dominate sub-competi-tions, or is it always the same teams competing for the title or Champions League qualification, or fighting relegation? Data from the last 15 seasons is used to show: (1) the title-holders, (2) Champions League qualifiers, (3) relegated teams and (4) promoted teams in the separate countries. This is to examine whether there are country-specific peculiarities.

Competition for the titleWith six teams holding the title in recent years, France and Germany have the greatest number of different teams, followed by Spain (five), Italy (five) and England (four). While the series of titles held by the most successful German team, FC Bayern Mnchen, has been repeatedly interspersed with other national champions, relatively long periods where the title has been

dominated by one team have been seen in recent years in France (Olympique Lyonnais: seven), Italy (Inter: four) and England (Manchester United: three).On the basis of these results, the competition for the title in Germany is considered the most varied. Spain and France come second and third respectively, followed by Italy and England.


# Champion

1994

95

1995

96

1996

97

1997

98

1998

99

1999

00

2000

01

2001

02

2002

03

2003

04

2004

05

2005

06

2006

07

2007

08

2008

09

Total

1 Olympique Lyonnais x x x x x x x 7

2 FC Nantes x x 2

3 AS Monaco FC x x 2

4 FC Girondins de Bordeaux x x 2

5 AJ Auxerre x 1

6 RC Lens x 1

# Champion

1994

95

1995

96

1996

97

1997

98

1998

99

1999

00

2000

01

2001

02

2002

03

2003

04

2004

05

2005

06

2006

07

2007

08

2008

09

Total

1 Juventus x x x x x x 6

2 Inter x x x x 4

3 AC Milan x x x 3

4 S.S. Lazio x 1

5 AS Roma x 1

Table 5: Title-holders in the last 15 years in France.

Table 4: Title-holders in the last 15 years in Italy.

# Champion

1994

95

1995

96

1996

97

1997

98

1998

99

1999

00

2000

01

2001

02

2002

03

2003

04

2004

05

2005

06

2006

07

2007

08

2008

09

Total

1 Real Madrid CF x x x x x x 6

2 FC Barcelona x x x x x 5

3 Valencia CF x x 2

4 Club Atltico de Madrid x 1

5 RC Deportivo La Corua x 1

Table 6: Title-holders in the last 15 years in Spain.


The competition for Champions League qualificationIn each of the countries examined in this study, there is a small group of clubs that have qualified many times within the last 15 years. The clubs that most often qualified for the Champions League were: Manchester United (14 times), Real Madrid CF (14), FC Barcelona (12), FC Bayern Mnchen (12), Arsenal (12), Juventus (12), Olympique Lyonnais (11), AC Milan (10) and Inter (10).

The following diagram shows the unequal concentration of individual teams with regard to qualification for the Champions League. It looks at the three clubs that most often qualified for the Champions League at a national level over the last 15 years in the respective countries. The ratio of success is the ratio of the maximum possible frequency of qualification for the Champions League to the actual frequency. The theoretical maximum frequency is the product of the number of years examined and the number of teams examined 15 (years) 3 (teams) = 45. Country-specific circumstances are ignored in the interest of comparability between countries. The value for the theoretical maximum frequency of qualification for the Champions League is assumed to be the same (three) for convenience.

While, in the course of 15 years, the three clubs that qualified most often in France and Germany accounted for 47% and 56% respectively of the total qualification places between them, the same figure for Italy, Spain and England comes to over 70%. Increasing CRs with regard to Champions

League qualification have been observed across all leagues with the passage of time. This can be interpreted as reflecting the fact that, particularly in recent years, the same teams have been qualifying for the Champions League within the national leagues. This concentration becomes extremely clear when considering a shorter period in England. The three teams that most frequently qualified for the Champions League were able to qualify every year without fail in the last five years. The CR for the last five years is therefore 1.00. Even though this analysis is aimed at the three teams that most frequently

qualify, it should be noted that Manchester United, Arsenal, Chelsea and Liverpool have occupied all national qualification places for the last six seasons (including the current one).

In a comparison of leagues in terms of CB, France came first, ahead of Germany. Italy and Spain are joint third. England is in last place.

The following tables give a detailed over-view of Champions League qualification in the last 15 seasons.

Sub-competition Champions League qualificationConcentration ratios of the three clubs that most frequently qualify for the CL(Diagram 5)

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80

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-yea

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rage

France

46.7

Germany

55.6

Italy

71.1

Spain

71.1

England

75.6


# CL qualifiers

1994

95

1995

96

1996

97

1997

98

1998

99

1999

00

2000

01

2001

02

2002

03

2003

04

2004

05

2005

06

2006

07

2007

08

2008

09

Total

1 Bayern Mnchen x x x x x x x x x x x x 12

2 Borussia Dortmund x x x x x x o 7

3 Bayer Leverkusen x x x x x x 6

4 Werder Bremen x x x x x 5

5 FC Schalke 04 x x x o 4

6 VfB Stuttgart x x o 3

7 Hamburger SV x x 2

8 1. FC Kaiserslautern x 1

9 Hertha BSC Berlin x 1

10 1860 Mnchen o 1

11 VfL Wolfsburg x 1

Table 7: Distribution of national Champions League qualification places in Germany in the last 15 years (examined: year of qualification, x = direct national qualification for the group phase of the following season; o = national qualification without reaching the group phase of the Champions League for the following season, or qualification has not yet taken place (200809)).

# CL qualifiers

1994

95

1995

96

1996

97

1997

98

1998

99

1999

00

2000

01

2001

02

2002

03

2003

04

2004

05

2005

06

2006

07

2007

08

2008

09

Total

1 Manchester United x x x x x x x x x x x x x x 14

2 Arsenal x x x x x x x x x x x o 12

3 Chelsea FC x x x x x x x x 8

4 Liverpool FC x x x x x x x x 8

5 Newcastle United x x o 3

6 Blackburn Rovers x 1

7 Leeds United x 1

8 Everton FC o 1

Table 8: Distribution of national Champions League qualification places in England in the last 15 years (examined: year of qualification, x = direct national qualification for the group phase of the following season; o = national qualification without reaching the group phase of the Champions League for the following season, or qualification has not yet taken place (200809)).


# CL qualifiers

1994

95

1995

96

1996

97

1997

98

1998

99

1999

00

2000

01

2001

02

2002

03

2003

04

2004

05

2005

06

2006

07

2007

08

2008

09

Total

1 Juventus x x x x x x x x x x x x 12

2 AC Milan x x x x x x x x x x 10

3 Inter x o x x x x x x x x 10

4 AS Roma x x x x x x 6

5 S.S. Lazio x x x x x 5

6 AC Fiorentina x o x o 4

7 Parma FC x o o 3

8 Udinese Calcio x 1

Table 9: Distribution of national Champions League qualification places in Italy in the last 15 years (examined: year of qualification, x = direct national qualification for the group phase of the following season; o = national qualification without reaching the group phase of the Champions League for the following season, or qualification has not yet taken place (200809)).

# CL qualifiers

1994

95

1995

96

1996

97

1997

98

1998

99

1999

00

2000

01

2001

02

2002

03

2003

04

2004

05

2005

06

2006

07

2007

08

2008

09

Total

1 Olympique Lyonnais o x x x x x x x x x o 11

2 Olympique Marseille x x x x x 5

3 AS Monaco FC x x x x o 5

4 FC Girondins de Bordeaux x x x x 4

5 Paris St. Germain x x x 3

6 OSC Lille x x x 3

7 FC Nantes x x 2

8 AJ Auxerre x x 2

9 Racing Club Lens x x 2

10 FC Metz o 1

11 Toulouse FC o 1

Table 10: Distribution of national Champions League qualification places in France in the last 15 years (examined: year of qualification, x = direct national qualification for the group phase of the following season; o = national qualification without reaching the group phase of the Champions League for the following season, or qualification has not yet taken place (200809)).


# CL qualifiers

1994

95

1995

96

1996

97

1997

98

1998

99

1999

00

2000

01

2001

02

2002

03

2003

04

2004

05

2005

06

2006

07

2007

08

2008

09

Total

1 Real Madrid CF x x x x x x x x x x x x x x 14

2 FC Barcelona x x x x x x x x x x x x 12

3 Valencia CF x x x x x x 6

4 RC Deportivo La Corua x x x x x 5

5 Club Atltico de Madrid x x o 3

6 FC Villarreal x x 2

7 Real CD Mallorca o x 2

8 FC Sevilla x x 2

9 Real S. San Sebastin x 1

10 Celta Vigo x 1

11 Betis Sevilla x 1

12 Atletic Bilbao x 1

13 CA Osasuna o 1

Table 11: Distribution of national Champions League qualification places in Spain in the last 15 years (examined: year of qualification, x = direct national qualification for the group phase of the following season; o = national qualification without reaching the group phase of the Champions League for the following season, or qualification has not yet taken place (200809)).


Fight for promotion and to avoid relegationThe 45 promotions and relegations seen in Germany over the last 15 years are distributed among 25 teams. Of the 45 promotions, 12 were relegated from the Bundesliga within a year, and 7 within two years. The average rate of swift relegation (number of promoted teams relegated within two years of reaching the top league as a percentage of total number of promoted teams) is 42.2%.

In France, the 43 promotions and 45 relegations seen in the last 15 years are distributed among 33 teams. Of these promotions, 14 were relegated from the top league within one year and 6 within two years. The swift relegation rate is 43.5%. In Italy, the 54 promotions and 52 relegations seen in the last 15 years are distributed among 38 teams. Of these promotions, 13 were relegated from the top league within one year and 11 within two years. The swift relegation rate is 44.4%.

In Spain, the 46 promotions and 48 relega-tions seen in the last 15 years are also distributed among 33 teams. Of these promotions, 16 were relegated from the top league within one year and 8 within two years. The swift relegation rate is 52.2%.In England, the 44 promotions and 46 relegations seen in the last 15 years are distributed among 34 teams. Of these promotions, 21 were relegated from the top league within one year and 5 within two years. The average swift relegation rate is 59.1%.

The diagram above gives a comparative overview of the average national swift relegation rates.

In Spain and England in particular, when looking at the values for the last 15 years, the chances for a promoted team to be swiftly relegated again is very high. In Germany and France, on the other hand, promoted teams have a much higher chance of establishing themselves in the top league, at least for the medium term. This can, for example, be explained by the fact that broadcasting revenue in these two

countries is distributed between the first and second leagues. This 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 great discrepancy between the first and second leagues with regard to television broadcast revenue. The following tables give a detailed overview of the promoted and relegated teams as well as the points they scored in the year following promotion.

Relegation battle sub-competitionAverage percentage of swift relegations over a period of 15 years(Diagram 6)

35

40

45

50

55

60

65

Num

bers

giv

en a

re p

erce

ntag

es15

-yea

r ave

rage

Germany

42.2

France

43.5

Italy

44.4

Spain

52.2

England

59.1


Table 12: Teams promoted and relegated in the last 15 years in Germany (grey: relegation, yellow: promotion, figure: points scored in the first year following promotion).

# Promoted/relegated team

1994

95

1995

96

1996

97

1997

98

1998

99

1999

00

2000

01

2001

02

2002

03

2003

04

2004

05

2005

06

2006

07

2007

08

2008

09

# Re

lega

tions

by

team

# Pr

omot

ions

by

team

1 1. FC Kaiserslautern 68 2 1

2 1. FC Kln 46 23 30 39 4 4

3 1. FC Nrnberg 37 34 38 3 4

4 1. FSV Mainz 05 43 1 2

5 1860 Mnchen 1 0

6 Alemannia Aachen 34 1 1

7 Arminia Bielefeld 40 30 36 40 4 4

8 Borussia Mnchengladbach 39 31 2 2

9 Dynamo Dresden 1 0

10 Eintracht Frankfurt 37 32 36 3 3

11 Energie Cottbus 39 41 2 2

12 FC St. Pauli 38 22 2 2

13 Fortuna Dsseldorf 40 1 1

14 Hannover 96 43 0 1

15 Hansa Rostock 49 30 2 2

16 Hertha BSC 43 0 1

17 Karlsruher SC 43 2 1

18 KFC Uerdingen 05 1 0

19 MSV Duisburg 4 27 29 4 3

20 SC Freiburg 39 38 3 3

21 SpVgg Unterhaching 44 1 1

22 SSV Ulm 1846 35 1 1

23 TSG 1899 Hoffenheim 55 0 1

24 VfL Bochum 53 27 45 45 4 4

25 VfL Wolfsburg 39 0 1

# Promotions by season 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3


Table 13: Teams promoted and relegated in the last 15 years in England (grey: relegation, yellow: promotion, figure: points scored in the first year following promotion).


1994

95

1995

96

1996

97

1997

98

1998

99

1999

00

2000

01

2001

02

2002

03

2003

04

2004

05

2005

06

2006

07

2007

08

2008

09

# Re

lega

tions

by

team

# Pr

omot

ions

by

team

1 Barnsley FC 35 1 1

2 Birmingham City 48 35 2 3

3 Blackburn Rovers 46 1 1

4 Bolton Wanderers 29 40 40 2 3

5 Bradford City 36 1 1

6 Burnley 0 1

7 Charlton Athletic 36 52 2 2

8 Coventry City 1 0

9 Crystal Palace 33 33 3 2

10 Derby County 46 11 2 2

11 Fulham FC 44 0 1

12 Hull City 35 0 1

13 Ipswich Town 66 2 1

14 Leeds United 1 0

15 Leicester City 47 33 3 2

16 Manchester City 34 51 2 2

17 Middlesbrough 43 51 2 2

18 Newcastle United 1 0

19 Norwich City 33 2 1

20 Nottingham Forest 30 2 1

21 Queens Park 1 0

22 Portsmouth FC 45 0 1

23 Reading FC 55 1 1

24 Sheffield United 38 1 1

25 Sheffield Wednesday 1 0

26 Southhampton FC 1 0

27 Stoke City 45 0 1

28 Sunderland AFC 40 58 15 39 3 4

29 Watford FC 24 28 2 2

30 West Bromwich Albion 26 34 32 3 3

31 West Ham United 55 1 1

32 Wigan Athletic 51 0 1

33 Wimbledon FC 1 0

34 Wolverhampton 33 1 2



Table 14: Teams promoted and relegated in the last 15 years in Italy (grey: relegation, yellow: promotion, figure: points scored in the first year following promotion).


1994

95

1995

96

1996

97

1997

98

1998

99

1999

00

2000

01

2001

02

2002

03

2003

04

2004

05

2005

06

2006

07

2007

08

2008

09

# Re

lega

tions

by

team

# Pr

omot

ions

by

team

1 AC Chievo Verona 54 38 1 2

2 AC Fiorentina 42 1 1

3 AC Perugia 37 39 2 2

4 AC Reggiana 19 2 1

5 AC Siena 34 0 1

6 Ancona Calcio 13 1 1

7 AS Bari 38 2 2

8 Ascoli Calcio 1898 43 1 1

9 AS Livorno Calcio 45 1 2

10 Atalanta Bergamo 39 44 35 50 3 4

11 Brescia Calcio 35 44 3 2

12 Cagliari Calcio 41 44 2 2

13 Calcio Catania 41 0 1

14 Calcio Padova 1 0

15 Como Calcio 24 1 1

16 FBC Treviso 21 1 1

17 FC Bologna 49 37 1 2

18 FC Empoli 37 38 45 3 3

19 FC Genoa 48 1 1

20 FC Messina 48 1 1

21 FC Modena 38 1 1

22 FC Turin 36 43 40 4 3

23 Hellas Verona 27 43 2 2

24 Juventus 72 1 1

25 Napoli 36 50 2 2

26 Parma FC 1 1

27 Piacenza Calcio 37 42 2 2

28 Reggina Calcio 40 38 2 2

29 Salernitana Sport 38 1 1

30 Sampdoria Genoa 46 1 1

31 SSC Venezia 42 18 2 2

32 Udinese Calcio 41 0 1

33 US Cremonese 1 0

34 US Foggia 1 0

35 US Lecce 26 40 41 30 4 4

36 US Palermo 53 0 1

37 Vicenza Calcio 49 36 2 2



Table 15: Teams promoted and relegated in the last 15 years in France (grey: relegation, yellow: promotion, figure: points scored in the first year following promotion).


1994

95

1995

96

1996

97

1997

98

1998

99

1999

00

2000

01

2001

02

2002

03

2003

04

2004

05

2005

06

2006

07

2007

08

2008

09

# Re

lega

tions

by

team

# Pr

omot

ions

by

team

1 AC Ajaccio 39 1 1

2 AC Le Havre 38 26 3 2

3 AS Cannes 1 0

4 AS Nancy 37 39 48 2 3

5 AS Saint-Etienne 48 53 2 2

6 CS Sedan 48 35 2 2

7 EA Guingamp 53 44 2 2

8 ES Troyes AC 43 39 2 2

9 FC Gueugnon 38 1 1

10 FC Istres 32 1 1

11 FC Lorient 35 31 49 2 3

12 FC Martigues 1 0

13 FC Metz 42 24 3 2

14 FC Nantes 37 2 1

15 FC Sochaux 33 46 2 2

16 FC Toulouse 36 34 39 2 3

17 Grenoble Foot 38 44 0 1

18 HSC Montpellier 40 2 2

19 LB Chteauroux 31 1 1

20 Le Mans UC 72 38 52 1 2

21 OGC Nice 1 0

22 Olympique Marseille 49 0 1

23 OSC Lille 59 1 1

24 Racing Straburg 45 35 3 2

25 RC Lens 1 1

26 SC Bastia 1 0

27 SM Caen 37 42 51 4 3

28 US Boulogne 0 1

29 Valenciennes-Anzin 43 0 1



Table 16: Teams promoted and relegated in the last 15 years in Spain (grey: relegation, yellow: promotion, figure: points scored in the first year following promotion).


1994

95

1995

96

1996

97

1997

98

1998

99

1999

00

2000

01

2001

02

2002

03

2003

04

2004

05

2005

06

2006

07

2007

08

2008

09

# Re

lega

tions

by

team

# Pr

omot

ions

by

team

1 Albacete Balompi 47 2 1

2 CA Osasuna 42 0 1

3 CD Logros 33 2 1

4 CD Numancia 45 29 35 3 3

5 CD Teneriffa 38 2 2

6 Celta Vigo 64 2 1

7 Club Atltico de Madrid 47 1 1

8 CP Mrida 42 39 2 2

9 Deportivo Alaves 40 39 2 2

10 Deportivo Xerez 0 1

11 DU Almera 52 0 1

12 Extremadura 44 39 2 2

13 FC Cadiz 36 1 1

14 FC Getafe 47 0 1

15 FC Malaga 48 55 1 2

16 FC Sevilla 28 53 2 2

17 FC Villarreal 36 57 1 2

18 Hrcules CF 41 1 1

19 Racing Santander 44 1 1

20 Rayo Vallecano 44 52 2 2

21 Real Betis Sevilla 59 2 1

22 Real CD Mallorca 60 0 1

23 Real Murcia 26 30 2 2

24 Real Oviedo 1 0

25 Real Saragossa 48 2 2

26 Real Sociedad 1 0

27 Real Valladolid 45 1 1

28 Recreativo Huelva 36 54 2 2

29 SD Compostela 1 0

30 Sporting de Gijn 43 1 1

31 Tarragona 28 1 1

32 UD Las Palmas 46 1 1

33 UD Levante 37 42 2 2

34 UD Salamanca 33 45 2 2



Level of interest during the seasonThe focus of previous studies was on the final standings within a league in particular. However, viewing figures must be maintained constantly, i.e. throughout the season. As already discussed in the previous section, it is the sub-competitions in particular that make a league interesting. Level of interest is greater the more teams are involved in sub-competitions (or can theoretically be involved) and the smaller the difference in performance between those teams. The end of the season brings the outcome of these sub-competitions ever closer. The level of interest therefore increases. In addition to the highlights strewn throughout the season (derbies, high-level games), it is therefore also important to keep the sub-competitions such as the relegation battle or qualification for international club competitions (UEFA Europa League, UEFA Champions League) open until the end of

the season. This is the only way to hold the interest of the spectators.

This section therefore deals with an analysis of how the level of interest in sub-competitions develops over the course of a season.

On the one hand, the number of teams that are (theoretically) in a position to end the season within a predefined performance cluster prior to the fourth-to-last, third-to-last, penultimate and final days of play if the maximum (12, 9, 6 or 3 points) or minimum (0 points) number of points are scored, is examined. The performance clusters examined are the five highest-ranking (top five) and three lowest-ranking (bottom three) teams. These rankings are (at least approximately) relevant to the competitions in all of the leagues looked at, as they are either

linked to qualification for competition at a European level or to relegation. An analysis of how many teams are theoretically in a position to end the season among the top five or bottom three (given maximum or minimum points scored as described prior) is carried out before each day of play on the basis of the points scored by the teams in fifth place and third from the bottom. This only includes data from the last 14 seasons (199596 to 200809) in order to avoid potential distortion arising from the differing points system used in the 199495 season. An attempt is also made to compare the current season with the 14-year average.

We also analyze how the competition surrounding the top five and bottom three rankings develops over the course of the season. The study focuses on the 200809 season.


Number of clubs with a chance of achieving a place in the top five (Diagram 7)

Germany 14 seasonsEngland 14 seasonsFrance 14 seasonsItaly 14 seasonsSpain 14 seasons

Germany 0809England 0809France 0809Italy 0809Spain 0809

5

6

7

8

9

10

11

12

5

6

7

8

9

10

11

12

Fourth-to-last dayof play

Club

s

Third-to-last dayof play

Penultimate dayof play

Last dayof play

Competition for the top five rankingsThe following diagram shows the number of teams with the potential to enter the top five on the fourth-to-last, third-to-last, penultimate and final day of play by scoring maximum points, thereby participating in the competition for the title, Champions League qualification and Europa League qualification.

On average, over the last 14 years, three countries Germany, Spain and France had more than eleven teams with a chance to qualify for international competition with four days left in the season. England had 10, while Italy had only 9.

Throughout the last four days of play, France and Germany had the highest average number of teams still competing for the aforementioned qualification places. In all countries, almost all of the values for the current 200809 season are below the 14-year average. This means that, as we approach the end of the season, fewer teams than average are competing for the top five spots. While the top five rankings were already decided before the last day of the previous season in Spain and Italy, Germany and England had six teams each, and France even had seven that still had a chance of gaining a place in the top five going into the final day of play.


Rankings of the top five clubs during the 200809 season(Diagram 8)

Inter

Rank

ing

Juventus Milan Fiorentina FC Genoa

Day1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38

VfL Wolfsburg

Rank

ing

FC Bayern Mnchen VfB Stuttgart Hertha BSC Hamburger SV

Day1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34

0123456789

101112

123456789

101112131415161718

123456789

1011121314151617181920

Top German clubs most volatile, rankings in Spain set particularly earlyRankings of the top five clubs during the 2008/09 season(Diagram 20)

Inter

Rank

ing

Juventus AC Milan AC Fiorentina FC Genoa

Day1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38

VfL Wolfsburg

Rank

ing

Bayern Mnchen VfB Stuttgart Hertha BSC Hamburger SV

Day1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34

0123456789

101112

123456789

101112131415161718

123456789

1011121314151617181920

In addition to the number of teams involved, it is also interesting to look at the change in the rankings of the teams within the group at the

top of the league in the course of a season. A sub-competition is also imbalanced if teams hold on to their positions for extended periods

of time. The following diagram shows the rankings of the top five teams in the course of the 200809 season:


FC Girondins Bordeaux

Rank

ing

Olympique Marseille

Olympique Lyonnais

FC Toulouse OSC Lille

Day

Day

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38

Manchester United

Rank

ing

Liverpool FC Chelsea FC Arsenal FC Everton FC

123456789

1011121314151617181920

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38

FC Barcelona

Rank

ing

Real Madrid CF FC Sevilla Club Atltico de Madrid FC Villarreal

123456789

1011121314151617181920

123456789

1011121314151617181920

Day1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38

0123456789

101112

0

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18


According to the graphs, the top five teams in each country were roughly able to secure their place in the top five from the middle of the season. The exceptions are OSC Lille and FC Toulouse in France; FC Genoa in Italy, Everton in England; FC Villarreal and Club Atltico de Madrid in Spain; and in particular VfL Wolfsburg, VfB Stuttgart and Hamburger SV in Germany. Notably, many top teams occupied their final league rankings relatively early in the season. FC Barcelona headed the table since the ninth day of play. The same applies to Inter in Italy from the 11th and Manchester United in England from the 22nd day of play. In contrast, the top team changed with as few as nine match days left in Germany and three in France. Similar country-specific trends can also be seen with regard to rankings two to five. In Spain and England in particular there was hardly any change in the rankings within the top group. In contrast, the change in rankings among the top teams in the German Bundesliga is particularly lively. This observation is supported by an examination of the average country-specific SDs of rankings within the top group from the beginning of the second round (Diagram 8). Specifically, with an average value of 1.5, the SD of club rankings is highest among the top five clubs in Germany. This makes the competition

Top German clubs are the most volatileAverage SD of rankings of the top ve clubs in the second round 200809(Diagram 9)

0,0

0,2

0,4

0,6

0,8

1,0

1,2

1,4

1,6

Figu

res

give

n ar

e ra

nkin

g pl

aces

Germany

1.5

France

1.0

Italy England

0.5 0.5

Spain

0.4

among the top five in Germany the most entertaining, with clubs switching positions most readily. There is less interest in France (at least when looking at all five of the top positions). At 0.5 and 0.4 respectively, the average SD in Italy, England and Spain is a mere third of the value in Germany.


Fight against relegationCountry-specific differences can also be seen when looking at the situation in Diagram 10 over the last 14 years. On the fourth-to-last day of play, an average of more than eleven teams can slip into the last three in Spain. This number is the lowest in England. At the same point in the season, there are only eight English teams that could slide into the last three, putting them at risk of relegation. The figure for Germany is exactly between these two. In contrast to the competition for the top five positions, the end of the season tends to see convergence between the countries so that on average about four teams are involved in the fight against relegation. The results for the current 200809 season, on the other hand, deviate quite significantly from the 14-year average. While more teams were fighting relegation in France and particularly Spain, significantly fewer teams were involved in Germany and particularly Italy.

Number of clubs at risk of sliding into the last three places(Diagram 10)

Germany 14 seasonsEngland 14 seasonsFrance 14 seasonsItaly 14 seasonsSpain 14 seasons

Germany 0809England 0809France 0809Italy 0809Spain 0809

3456789

10111213

3456789

1011121313

12

11

10

9

8

7

6

5

4

3Fourth-to-last day

of play

Club

s

Third-to-last dayof play

Penultimate dayof play

Last dayof play


Rankings of the bottom three clubs during the 200809 season(Diagram 11)

FC Turin

Rank

ing

Reggina Calcio US Lecce

123456789

1011121314151617181920

Day1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38

Energie Cottbus

Rank

ing

Karlsruher SC Arminia Bielefeld

123456789

101112131415161718

Day1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34

0123456789

101112

0123456789

101112131415161718

We also examined changes within the relative positions of the three lowest-ranking teams within a season. The

following diagram shows the rankings of the bottom three teams in the course of the 200809 season:


SM Caen

Rank

ing

FC Nantes AC Le Havre

123456789

1011121314151617181920

Day1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38

Newcastle United

Rank

ing

Middlesbrough FC West Bromwich Albion

123456789

1011121314151617181920

Day1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38

Real Betis Sevilla

Rank

ing

CD Numancia Recreativo Huelva

123456789

1011121314151617181920

Day1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38

0123456789

101112

0123456789

1011121314151617181920


According to the graphs, the bottom three teams in France, England, Germany and Italy in particular already occupied the relegation places, or at least the bottom third of the table, in the last third of the season. In Spain, however, the ranking of Betis Sevilla throughout the season is atypical. In every league there is at least one team that occupies the bottom of the table constantly and from an early stage. In comparison with the top five teams, the bottom three teams generally see more change within their internal rankings. This is supported by examining the average country-specific SDs of rankings within the bottom three in the second round.

With an average value of 1.7, the SD of rankings among the bottom three clubs is the highest in Spain. The average SD in Italy is slightly more than a third of this value, at 0.7. The figure for Germany is average in an international comparison. According to this value, the interest in relegation in Spain is particularly high towards the end of the season and relatively low in England.

Relegation battle most interesting in SpainAverage SD of rankings of the bottom three clubs in the second round 200809(Diagram 12)

0,00,20,40,60,81,01,21,41,61,8

Figu

res

give

n ar

e ra

nkin

g pl

aces

Spain

1.7

France

1.3

England Germany

1.00.9

Italy

0.7


ConclusionIn the course of a detailed analysis, a range of indicators were used to determine CB in the national leagues. The intention was to supplement and update previous studies. The following table gives the final rankings of each league in an interdivisional comparison according to all seven indicators. Using this data, it is possible to determine the average ranks of the leagues with regard to all of the indicators.

According to the overall average ranking, competition is most balanced in the German league. The French league also fares well in a comparison of the five countries. It comes a close second to the Bundesliga. Spain and Italy trail well behind. Looking at all indicators, the Premier League is by far the lowest rated. This means that the English league is the least balanced among the top footballing nations.

# Leve

l of e

xcit

emen

t

SD

of

top

five

clu

bs o

ver

15 y

ears

Com

peti

tion

for

titl

e

Cha

mpi

ons

Leag

ue q

ualifi

cati

on

Num

ber

of

swift

rel

egat

ions

Vol

atili

ty a

mon

g to

p fi

ve c

lubs

in

200

809

Vola

tilit

y am

ong

bott

om 3

clu

bs

in 2

008

09

Aver

age

rank

ing

1 Germany 3 2 1 2 1 1 4 2.0

2 France 1 4 3 1 2 2 2 2.1

3 Spain 2 5 2 3.5 4 5 1 3.2

4 Italy 4 1 4.5 3.5 3 3 5 3.4

5 England 5 3 4.5 5 5 4 3 4.2

Table 17: Ranking of countries with regard to each CB indicator and average ranking.


Summary and outlookThe last 15 years have seen clear signs of a sharp drop in CB in some cases. This primarily concerns the sub-competitions of the top clubs, i.e. the competition for the title and Champions League qualification places. Leading clubs in most countries are increasingly pulling ahead of the rest of the pack, achieving more consistent results from season to season. One fundamental reason for this is the growing gap in income between the leading clubs and rest of the league. Diagram 13 shows this trend and the resulting personnel expenses for players

Personnel expenses for players in the Bundesliga(Diagram 13)

1994

95

1995

96

1996

97

1997

98

1998

99

1999

00

2000

01

2001

02

2002

03

2003

04

2004

05

2005

06

2006

07

2007

08

Average of top five clubs Average of bottom 13 clubs

0

10000

20000

30000

40000

50000

60000

70000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Figures given in K Euros

Season

paid out by Bundesliga clubs in the last 15 years. At the same time, scouting systems are increasing transparency on the market for recruiting players. Combined with the liberalization of restrictions on the transfer of foreign players, this means that financial funds can be more effectively transformed into competitive strength (see Diagram 1). The excessive transfer fees paid by some top European clubs conceal the fact that this trend has come to an abrupt halt within their domestic leagues.


In the past, the growing gap between 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. A reform of the distribution of revenue seems urgent if we are to put a stop to this trend. It remains to be seen whether the restructuring and central marketing of the Europa League (formerly UEFA Cup) will contribute to a more fluid transition for Champions League participants, or perhaps even reduce CB even further.

Table 18

Top earners of the Champions League since the 19992000 season

Manchester United EUR 272 million

FC Bayern Mnchen EUR 245 million

Arsenal EUR 234 million

Real Madrid CF EUR 228 million

FC Barcelona EUR 209 million

Olympique Lyonnais EUR 201 million

AC Milan EUR 198 million

Chelsea FC EUR 184 million

Liverpool FC EUR 166 million

Juventus EUR 148 million

Source: UEFA or own calculations


Overall, competition in the fight against relegation seems to be more balanced than the sub-competitions among the top clubs (title competition and Champions League qualification). This can be attributed to the fact that differences in income are not as stark in the bottom third of the league. In countries where the marketing of broadcasting rights is decentralized, a large number of clubs have similar levels of income, which explains why the relegation battles in their leagues tend to be more interesting. In countries with centralized marketing such as Germany and France, revenue is distributed between the first and second leagues, which blurs the boundaries between the two, in contrast to England. For example, the Bundesliga assigns 21% of its broadcasting revenue to the second Bundesliga, significantly more than it would receive if it marketed its own broadcasting rights. Accordingly, the life expectancy of clubs promoted to the highest level in Germany and France is much greater than in England.

The results show significant differences between the top five countries with regard to competition in their leagues. According to the analysis, the leagues in Germany and France are by far the most balanced. While the leagues in Italy and Spain trail well behind, the Premier League in England is by far the most predictable. One main reason for the positive distinction of the Bundesliga and Ligue 1 in France is the central marketing of broadcasting rights and the resulting relatively even distribution of revenue between clubs (see Table 19).

Table 19

Marketing of broadcasting revenue for 200809 season of the Bundesliga

Domestic marketing in EUR million

Foreign marketing in EUR million Total in EUR million

1 FC Bayern Mnchen 25.11 3.00 28.11

2 FC Schalke 04 24.42 0.69 25.11

3 Hamburger SV 23.73 1.00 24.73

5 VfB Stuttgart 22.34 2.00 24.34

8 VfL Wolfsburg 20.26 4.00 24.26

4 Werder Bremen 23.04 0.69 23.73

6 Bayer 04 Leverkusen 21.65 0.69 22.34

7 Hertha BSC Berlin 20.96 1.00 21.96

9 Borussia Dortmund 19.53 0.75 20.28

10 Hannover 96 18.79 0.69 19.48

11 Eintracht Frankfurt 18.06 0.69 18.75

12 VfL Bochum 17.28 0.69 17.97

13 Arminia Bielefeld 16.50 0.69 17.19

14 FC Energie Cottbus 15.67 0.69 16.36

15 Karlsruher SC 14.85 0.69 15.54

16 Borussia Mnchengladbach 14.03 0.69 14.72

17 1. FC Kln 13.29 0.69 13.98

18 1899 Hoffenheim 12.56 0.75 13.31

Source: Ernst & Young research


In comparison to the countries where the marketing of broadcasting rights is decentralized, there are considerable differences in the gap between the clubs with the highest and lowest revenues. While the weakest clubs in countries where the marketing of broadcasting rights is centralized still earn about half of what the strongest clubs receive, the situation in Spain and Italy is significantly different. There, small clubs receive only six or seven percent of the revenue of major clubs. In Italy, however, broadcasting rights will once again be centrally marketed from the 201011 season onwards. A distribution key has already been drafted, and the revenue of low earners will increase to around one quarter of the revenue of high earners. This will have a positive impact on CB in Serie A.

On the other hand, the poor performance of the English Premier League contradicts this argument. However, the sizable cash injections made by club owners in the latter have significantly affected competition. The same applies to overly generous club presidents in some European leagues, who often repay the high losses incurred by top clubs out of their own pocket. It is therefore reasonable to hold that the statutes of the Deutsche Fuball Liga, in particular compliance with the controversial 50+1 rule preventing investors from holding a majority interest in clubs, also have a positive influence on CB in the Bundesliga. On the other hand, the last season saw a great surprise in the form of VfL Wolfsburg, a club for which this rule has been suspended (as well as Bayer Leverkusen), which has benefited CB.

Another reason for the positive assessment of the Bundesliga is the relatively strict licensing procedure of the Deutsche

Range of media revenue within individual leagues200809(Diagram 14)

020406080

100120140160180

0

20

40

60

80

100

120

140

160

180

0,00,20,40,60,81,01,21,41,61,8

0

10

20

30

40

50

60

70

Max. revenue

Source: Ernst & Young research and estimations

England

EUR

mill

ion

59 %

France

56 %

Germany Italy

47 %

7 %

Spain

6 %

Min. revenueRatio of min. revenue to max. revenue within the league

Fuball Liga. This procedure bases the economic strength of an applicant on a calculation of liquidity, which is bound by strict criteria. Cash inflows, for example, are generally only taken into account if they are sufficiently documented. The clubs outlays are therefore also limited, and financial fair-play among clubs is ensured.

UEFA has already announced the creation of a commission charged with drawing up measures to create a level financial playing field among European clubs. This is to be based on German licensing practice. This seems beneficial in terms of CB.

It remains to be seen whether and to what extent the 6+5 rule planned for 2013, which requires the deployment of at least six local players, will have a significant, positive impact on CB. Developments such as video replay or the chip in ball, on the other hand, is likely to have a further detrimental impact on competition. This will likely go some way towards explaining what some perceive to be the dismissive attitude of the International Football Association Board, which is responsible for all issues relating to the rules of football.


UEFA five-year valuation

200405 200506 200607 200708 200809

1 England 15,571 14,428 16,625 17,875 15,000 79,499

2 Spain 12,437 15,642 19,000 13,875 13,312 74,266

3 Italy 14,000 15,357 11,928 10,250 11,375 62,910

4 Germany 10,571 10,437 9,500 13,500 12,687 56,695

5 France 11,428 10,812 10,000 6,928 11,000 50,168

6 Russia 10,000 10,000 6,625 11,250 9,750 47,625

7 Ukraine 8,100 5,750 6,500 4,875 16,625 41,850

8 Netherlands 12,000 7,583 8,214 5,000 6,333 39,130

9 Romania 5,500 16,833 11,333 2,600 2,642 38,908

Source: UEFA

in UEFA competitions at a considerable disadvantage.

Moreover, certain foreign clubs seek to attract players by offering considerable subsidies from generous club owners and presidents, or by going heavily into debt. These artificially boosted war chests also place those clubs at a disadvantage which finance their squad purely using classically generated revenue. And, in the same way as the decentralized marketing of broadcasting rights, these subsidies from club owners and presidents distort competition at a national level.

The UEFA Champions League is increasingly being dominated by a select few clubs from England, Spain and (with some exceptions) Italy, while German and French clubs generally reach the end of the road at the quarter-finals (see table and Football meets finance V). The search for answers reveals that this development is the result of financial advantages for exactly these clubs.

In Spain and Italy, TV broadcasting rights have been marketed by the individual clubs since the end of the 1990s, in contrast to most other European countries. Real Madrid CF and FC Barcelona now generate more than EUR 150 million each per year in this way, and the top Italian clubs well in excess of EUR 100 million. This makes it clear that decentralized marketing gives these clubs a financial advantage at a European level. However, we should not neglect to mention at this point that one other consequence of decentralized marketing is a relatively predictable national league, as clearly demonstrated in the previous chapters.

In the international competition to sign the top players, some European countries also offer tax advantages to the immigrant recruit. In Spain, for example, foreign football players income for the first five years is taxed at an extremely favorable, fixed rate. In the UK, foreign players that meet certain preconditions can benefit from what is referred to as the remittance basis of taxation. Under this system, the players salary is fully liable to taxation in the UK, but income from other sources such as advertising and interest may not be, unless the proceeds are brought into the country (the so-called remittance basis). If expertly applied, this can give the professional footballer enormous tax advantages, while also placing clubs in other countries participating

Balanced competition versus international success

Table 20

Table 21

Significant increases in revenue would be required to raise German and French clubs chances of success in the Champions League. The football fan should also be aware that leaving aside the high marketing revenue from foreign media rights generated by the Premier League the economic and sporting success of English clubs is primarily shouldered by the disposable income of domestic spectators. For example, gate prices and pay-per-view charges significantly exceed the prices paid in Germany. Imitating the English success story would heavily burden the wallets of German fans.

UEFA Champions League finalists

200405 200506 200607 200708 200809

Winner Liverpool FC FC Barcelona AC Milan Manchester United FC Barcelona

Runner-up AC Milan Arsenal Liverpool FC Chelsea FC Manchester United

Semi-finalistsChelsea FCPSV Eindhoven

FC Villarreal AC Milan

Chelsea FCManchester United

Liverpool FCFC Barcelona

Chelsea FCArsenal

Source: UEFA


A more radical distribution of broadcasting revenue in favour of top clubs or even the introduction of decentralized marketing would come at a high price for the Bundesliga or Ligue 1, namely the interest and variety of their own national competitions. This highlights the fact that a balanced national league generally comes at the cost of international success and vice versa.

Literature Andreff, W. and Bourg, J.-F. (2006). Broadcasting rights and competition in European football. In: C. Jeanrenaud and S. Ksenne

(eds.), The economics of sport and the media (37-70). Cheltenham (UK) and Northampton MA (USA): Edward Elgar. Arnaut, J. L. (2006). Independent European Sport Review 2006. Groot, L.F.M. (2008). Economics, uncertainty and European football: Trends in competitive balance. Cheltenham (UK) and

Northampton MA (USA): Edward Elgar. Michie, J. and Oughton, C. (2004). Competitive balance in football: Trends and Effects (Research Paper 2004 No. 2). University of

London: Football Governance Research Centre.

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