As Europe’s top football leagues continue to attract international audiences and consolidate their position as part of a global entertainment industry, the prospect of relegation is more painful than ever before. As well as spending to preserve their status, clubs striving for the top division also invest substantially in order to realise their aspirations. However, while always presenting a major challenge for any club, the reality of second-tier football differs greatly among the “big five” leagues.
In this article, the Football Benchmark team explores some of the main variations across second tier football in England, Spain, Italy, France and Germany.
In terms of commercialization, only two of the leagues under analysis, the English Championship and the Italian Serie B, operate separately from their respective top-tier. By contrast, Spain’s Segunda División, Germany’s 2. Bundesliga and France’s Ligue 2 are organised and commercialized alongside their first division and therefore, through different revenue distribution mechanisms, directly benefit from the recently increased value of centrally negotiated media rights.
However, despite the positive impact of more lucrative media deals, the gap between first and second tier clubs is expected to continue widening, which underlines the continued importance of parachute payments received by relegated clubs. As an example, as part of recent negotiations for the new media cycle, the German Bundesliga changed the regulation which assigned as much as 20% of the sale of domestic rights to their second tier, but at the same time implemented a revenue distribution system more favourable for relegated clubs.
Despite these structural differences, the attractiveness or format of these competitions, if measured in terms of stadium attendance, does not seem to be strictly related to their association with the wealthier top-tier. Indeed, in the 2016/17 season, the English Championship, part of the English Football League, and German 2. Bundesliga, recorded average attendances above 20,000 spectators per match. While these impressive figures were impacted by the presence of clubs such as Newcastle and VfB Stuttgart, the average crowds of comparable competitions in Spain (7,479), Italy (7,034) and France (7,496) were significantly lower.
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While the availability of better and larger stadium infrastructures undoubtedly impact these figures, fan behaviour also seems to differ across the analysed markets. For example, densely populated areas in England and Germany, such as Berlin, London, Hamburg, Munich, Nordrhein-Westfalen or the West Midlands, seem able to sustain a set of 2nd-tier clubs with sizeable fan bases, despite strong competition from more prominent clubs. This phenomenon does not extend to Spain, France or Italy.
Format and size also differ across the leagues. The need to increase interest for the duration of invariably longer competitions, along with pressure to reduce uncertainty within the top tier, have led leagues to explore different formats. As an example, most recently the French Ligue 2 reduced the number of automatic promotion spots from 3 to 2, by introducing a two-legged play-off involving teams placed between 3rd and 6th, with the winner then facing the 18th-placed club in Ligue 1 to fight for the final place in the top flight.
Play-offs adopt different formats in Spain, England and Italy. In Segunda División and Serie B the season ends with a two-legged promotion play-off involving 4 and 6 second-division teams respectively. In England, where the system remains unchanged since 1989, the 4-team play-off ends in a final at the iconic Wembley stadium. The only exception in this regard is the 18-team German 2. Bundesliga, which opted for a two-legged tie between the 16th placed team of the top-tier and the team that finished 3rd in the second tier to compete for the 3rd promotion spot.
Despite clubs increasingly developing more stable revenue streams, the impact of relegation on a club’s operation underlines the volatile nature of European football as a business compared to other sports – notably closed league structures – and the broader corporate world.
While leagues continue to refine competition formats and revenue distribution systems to increase the media value of second-tier competitions and soften the impact of relegation on club finances, it is increasingly important for clubs to operate on an efficient basis in order to maximize their chances of a quick return to the elite. The KPMG Football Benchmark team can work with clubs to identify and advise on the implementation of business improvement opportunities, allowing for a more efficient and effective use of resources.
Further investigation into this and related topics, as well as analysis of industry data, can be undertaken for you by KPMG Sports Advisory Practice. Our subject matter experts can also assist stakeholders in assessing and interpreting the potential impact on their organizations of any particular piece of research, identifying the underlying reasons behind specific trends or developing possible solutions and considering future scenarios.
