Stats & Links: Commercial champions of Europe

FC Bayern has recently released their financial statements for their fiscal year 2018. Swiss Ramble analysed these results in a series of tweets.

Marc

December 21, 2018

Overall Results

“FC Bayern’s profit before tax fell from €66m to €46m (profit after tax €29m). Revenue (per Bayern’s definition) rose €17m (3%) to a record high of €657m including €28m profit on player sales, mainly Douglas Costa to Juventus. The board described the figures as “outstanding”.”
(Image: Swiss Ramble)

Even on a cursory inspection of these statements, it’s easy to see why the board is pleased with their results. Revenue increased overall by 7.0%, while expenses only increased by 6% leaving Earnings Before Income Taxes Depreciation and Amortization (EBITDA) at a 12.2% increase over 2017.

Furthermore, operating income rose 104.3% to €14.1 million from €6.9 million in 2017. The decline in Profit/Loss after tax, is almost completely due to the 46.4% decline in Profit on Player Sales. Given the tenuous nature of player sales, an increase in operating profit is a much better indicator of financial stability.

Comparison to the rest of Europe

“FC Bayern are one of the most profitable clubs in Europe. Indeed, they have the highest profit before tax (€46m) of any of the leading clubs that have published 17/18 accounts to date. Indeed, only Tottenham & Arsenal beat this figure in 16/17, but both likely to be lower last season.”
(Image: Swiss Ramble)

In this graph we can see that of all the clubs that have reported their 2018 numbers, Bayern are the most profitable and just behind Tottenham and Arsenal when looking at their 2017 numbers. Additionally, Bayern only benefited from €28 million in player sales which is second lowest of all clubs in 2018 and fourth lowest when including Paris and Arsenal’s prior year results.

“FC Bayern’s broadcasting income rose €30m (20%) from €147m to €177m with increases in both domestic TV (€18m) and Champions League (€12m). In 2016/17 Bayern were only 15th in the Money League in broadcasting, due to the small German TV deal, relative to England and Spain.”
(Image: Swiss Ramble)

Broadcasting income plays a large role in revenue streams for football clubs these days. Bayern’s income from these sources is significantly lower than the other major clubs in Europe, behind nearly the entire English Premier league, Real Madrid, Juventus, Barcelona, Athletico Madrid and even such teams as Napoli. Notably they are still above PSG, BVB, Inter and Schalke.

This makes their comparatively strong overall performance more impressive as they are forced to make up for this disadvantage by other means. The vast majority of that difference is made up in Commercial income, in which Bayern leads the rest of Europe coming in at €343 million.

“Champions League revenue rises by 54% in 2018/19. There is also a new UEFA coefficient payment (based on performance over 10 years), where FC Bayern has the 3rd highest ranking, guaranteeing them €33m. Will benefit them at the expense of clubs from countries with large TV pools.”
(Image: Swiss Ramble)

The new Champions League coefficient should help to marginally reduce the gap in television revenue over the coming seasons, though the Bundesliga deal, which is the lowest of the 5 big leagues in Europe, will continue to hinder Bayern’s growth in this area.

“On the international stage, FC Bayern’s €303m wage bill is the fourth highest in Europe, though the two Spanish giants are miles ahead (Barcelona €487m and Real Madrid €395m), followed by Manchester United €337m.”
(Image: Swiss Ramble)

Bayern’s wage bill has also continued to rise coming in at 4th in all of Europe and €116 million more than Dortmund’s €187 million. Conversely, Bayern’s Wages to Turnover ratio was at 48% which is significantly better than Barcelona who were at 70%, the highest in Europe, and even BVB who came in at 59%. While wages have risen 14.2% since 2017, their proportion to revenue has risen a modest 3% year over year.

“Using the broadest definition of debt, FC Bayern’s total liabilities are only €280m, which is one of the lowest of the leading European clubs. Manchester United are almost €1 billion higher at €1,234 million, followed by Juventus & Tottenham (€700m), then Real Madrid & Arsenal (€600m).”
(Image: Swiss Ramble)

Bayern’s debt is the second lowest of the top clubs in Europe with only Dortmund coming in below them. Bayern’s cash balance of €200 million is €141 million higher than that of Borussia Dortmund and is the is the 2nd highest in Europe for clubs who have reported in 2018, or 4th when including 2017 numbers for clubs who haven’t.

Domestic Comparison

“The FC Bayern revenue advantage over Borussia Dortmund, their closest domestic challenger, increased to €312m in 2017/18, the highest ever gap. In fact, Bayern’s €629m revenue is almost twice as much as Dortmund’s €317m.”
(Image: Swiss Ramble)

Domestically, Bayern’s 2018 revenue is nearly double that of Borussia Dortmund who is their closest competitor. For the last 10 seasons, Bayern have generated between 41% and 67% more revenue than Dortmund, with an average of 49% over that time.

As discussed earlier, Bayern’s revenue increased by 7% in 2018 compared to a 5% decline for BVB. Since the 2014 season Bayern’s revenue has increased by 22% compared to 17% for Dortmund. Over the last 10 years however, Borussia has increased their revenue by 67% compared to Munich’s 54%.

“FC Bayern have earned significantly more revenue (€284m) from European competition than any other German club in the last 5 years. The closest challenger is Dortmund with €166m (i.e. €118m lower), followed by Leverkusen €123m, Schalke €80m and Mönchengladbach €64m.”
(Image: Swiss Ramble)

Bayern have also continued to outperform their rivals in terms of television revenue from European competition over the last five years coming in €118 million more than BVB. Match Day revenues came in at €104 million, up from 2017 when they were 5th in all of Europe at €98 million.

“Traditionally, FC Bayern spend much more on players than their German rivals, but their €33m net spend over the last 3 seasons is actually behind both RB Leipzig €80m and Wolfsburg €33m, though considerably more than Dortmund’s €106m net sales.”
(Image: Swiss Ramble)

In contrast to popular opinion, Bayern’s net spend on players was not the highest in the Bundesliga with both Wolfsburg and Leipzig spending more, though it was still significantly higher than that of Borussia Dortmund who lead this category with a €106 million net profit on player activity. On a gross basis however, BVB outspent Bayern €306 million to €197 million.

Historical Results

“Amazingly, this is the 26th consecutive year that FC Bayern have been profitable. In fact, 2018 was the 3rd highest profit in their history, though it was lower than the previous two seasons. Up to this season, profits had been steadily rising (€244m profit in last 5 years).”
(Image: Swiss Ramble)

While Profit/Loss declined in 2018, it was still the third most profitable year in their history and the decline was primarily due to the decrease in profit from player sales. Player sales have become an increasingly important line item for Bayern as their average annual profits have increased from €11 million between 2009 and 2013 to €41 million over the last 5 years. However, the significance of Player Sales in operations will lead to fluctuations in profit since player movement is unpredictable year over year.

“Excluding player sales, FC Bayern’s revenue has grown by a third (€155m) in the last 3 years from €474m to €629m, mainly from broadcasting €71m (67%) and commercial €71m (25%) with match day up €14m (16%). Revenue has doubled since the €321m reported in 2011.”
(Image: Swiss Ramble)

Revenue streams have also continued to grow and diversify with the percentage of Commercial revenue declining to 55% of total revenue from 60% in 2014. Unsurprisingly, Sponsoring and Marketing as well as Broadcasting have seen the largest growth over the last 3 years.

Overall, Bayern’s financial performance both year over year and historically are very strong. Solidifying this view, Bayern compare favorably to the rest of Europe as well as their domestic competition. While things have not always gone smoothly on the pitch in the last few months, the board is certainly putting the club in a very good position financially.