Over time, soccer will become more careful with money. - www.sorrentosweets.com

Soccer will eventually become more financially responsible.

December 8, London Breaking perspectives from Reuters Soccer might be on the verge of financial collapse. European behemoths like Jude Bellingham's Real Madrid and Erling Haaland's Manchester City could find themselves unexpectedly under increased regulatory scrutiny and with stagnating TV-rights earnings after years of extravagant spending. 

The teams must either improve their ability to raise money from their diverse fan groups or tighten up on player wage and movement regulations. The expense of European soccer has increased dramatically in the previous ten or so years.  

For instance, in the summer of 2023, clubs in the English Premier League spent 2.4 billion pounds, or $3 billion, on players. That nearly quadruples the same amount from 2013, according to Deloitte data. Pay increased in the interim.  

In June 2022, Newcastle United, a Saudi Arabian-owned team with players like Bruno Guimarães, ended their fiscal year with salaries representing 95% of income. A leaner moment may be looming. In Europe, the rise in television deal revenue has leveled off.  

The ever increasing costs of the auctions have been stopped by telecoms and pay-TV firms, who used to battle tooth and nail for the rights to screen games. Large streaming providers like Amazon.com (AMZN.O) haven't completely filled the gap, though.  

The value of the live rights increased by barely 4% from the previous round as part of the Premier League's most recent TV-rights package, which was revealed in early December and is worth 6.7 billion pounds over four years—much less than the rate of inflation. 

Global TV revenue continues to increase. But recently, the pandemic has contributed to a slowdown in the top lines of notable clubs. Between 2010 and 2019, the combined revenues of Real Madrid of Spain, Manchester United (MANU.N), Bayern Munich of Germany, and Manchester City of England increased at a compound annual rate of 10%. The annual growth rate decreased to 4% as of 2019.  

Furthermore, the football authorities' attempts to impose financial discipline are at last taking a more serious turn. This season, a cost cap will be implemented for the first time by the Union of European Football Associations, the body that oversees the sport in Europe. The new regulations prohibit clubs, in general, from devoting more than 90% of their overall revenue and player-trading profits on player transfers, agent fees, and salaries.  

The following season, that maximum ratio will drop to 80%, and the year after that, to 70%. According to an estimate by Consultancy Football Benchmark, the average percentage for 20 of the top clubs in Europe in 2021 was 86%, indicating that many teams were far from adhering to the future, stricter criteria. 

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