The Gentrification of European Football? How COVID-19, an Evolving Fanbase, and Stadium Renovations Influence Matchday Revenue

DBRS Morningstar released a commentary entitled “The Gentrification of European Football? How COVID-19, an Evolving Fanbase, and Stadium Renovations Influence Matchday Revenue”, the last in a three-part series that explores the main revenue streams for football clubs and their impact on evolving player costs and club profitability. This commentary explores the importance of matchday revenue, which includes ticketing revenue for clubs, and how it is gentrifying stadia but also the impact of the Coronavirus Disease (COVID-19) on the game and on football clubs’ finances and creditworthiness.

Key highlights include:
-- The impact that over a year without fans in the stadium has had on European clubs’ finances. Europe’s 30-richest football clubs reportedly missed out on EUR 2 billion of revenue in the 2019–20 and 2020–21 seasons. Many of these clubs reported an operating loss over this period, pressuring their credit ratings.
-- In spite of broadcasting income overtaking matchday revenue as the major source of cash for clubs, revenue at the gate is still important in keeping a diverse set of revenue streams. The English Premier League’s recent deal to maintain its GBP 5 billion domestic broadcasting contract and the collapse of the French domestic TV deal demonstrate that clubs may not be able to rely on ballooning broadcasting contracts to support future growth. As such, it is prudent for these clubs to invest in increasing stadium capacity and improving the experience for match-going fans to continue to support revenue expansion.
-- Matchday revenue once relied on match-going, blue-collar support and what those fans were prepared to pay to attend, but the explosion in the sport’s global popularity has allowed clubs to charge far higher ticket prices than in the past. This demographic is now complemented by wealthier fans, including older patrons, tourists, or corporate attendees who typically spend more than the more traditional fans.
-- The changing nature of the match-going fan who might not attend every game has caused clubs to innovate and broaden their matchday offerings at higher price points. Tottenham Hotspur’s state-of-the-art new ground, opened in 2019, contains a 180-bedroom upscale hotel, microbrewery, restaurant run by a Michelin-starred chef, and retractable pitch, which enables the club to host National Football League games.

“Looking to the future, research shows that the average age of a season-ticket holder is above 40 in England’s top division. In terms of medium-term prospects for leagues and clubs across Europe, it is important that younger fans continue going to games rather than becoming content to follow their teams online or on TV. This will benefit clubs’ matchday revenues and, more importantly, the value of their brands, which DBRS Morningstar views as key in generating sales over the longer term. In the short term, there is hope that, by the time domestic seasons in Europe start again in August, fans will be able to return in more substantial numbers. DBRS Morningstar forecasts that attendance will average 80% of capacity across the major European leagues in the 2021–22 season,” notes Michael Goldberg, Senior Vice President of Sports Finance at DBRS Morningstar.