Comparison of economics of top Czech and Western
European professional team sports clubs1
Jiří Novotný* – Alexandr Ščiklin**
The aim of this paper is an economic comparison of the top professional team sports clubs
in the Czech with the Western European ones. We will focus especially on football, as it is
one of the biggest and most popular sports. Using available resources we will analyse the
financing and management of selected clubs to realise common features and the specifics of
their operation. We will also attempt to identify trends in the economy of professional sports
clubs. The advance it is essential to point out that, considering the nature and the
environment, substantial differences between Czech and foreign clubs should be expected.
Professional Czech sports clubs
Obtaining reliable information about the economic situation of the Czech professional
clubs is not easy because their managers often consider those being confidential. In addition,
there are differences between the clubs in the content of basic financial and accounting
reports. In balance, for example, the players (contracts) are not usually being recognized as
intangible assets, a number of professional clubs do not own stadium, there are differences in
the use of accruals, etc. Such facts make the comparison of domestic clubs to the European
ones very complicated. Therefore, it only makes sense to compare the amount and structure of
income and expenditures (costs respectively). It is necessary to be cautious in case of
comparing cash liquidity and debt.
Czech football clubs with their budgets far exceed most other domestic professional clubs
(branches), with the exception of ice hockey. The annual budgets of the poorest clubs in the
top football league – Gambrinus liga – are at around 20 million CZK. Financing of
professional clubs has evolved according to the changing conditions and standard of living.
The following table presents the economic position of selected Czech clubs in the form of
revenues and financial results in recent years.
Table 1: Financial results and revenues of top Czech football clubs (in mil. CZK)
AC
Sparta
SK
Slavia
Revenues
Profit/loss
Revenues
Profit/loss
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
555
-17
260
-96
523
46
71
-120
600
-59
154
-60
411
-72
125
-60
401
-157
606
237
326
-152
466
-66
Source: Clubs’ Income Statements
Table 1 shows that the highest sales, and therefore the budget had AC Sparta. Slavia
caught up in season 2007/08, when going through the first round of the Champions League
1
Covered by VZ MSM 6138439905, KPE, FPH, University of Economics in Prague, Czech Republic
Doc. Ing. Jiří Novotný CSc. – Associated Proffesor at Department of Business Economic, Faculty of Business
Administration, University of Economics, Winston Churchill Sq. 4, 130 67 Prague 3
**
Ing. Alexandr Ščiklin – PhD candidate at Department of Business Economic, Faculty of Business
Administration, University of Economics, Winston Churchill Sq. 4, 130 67 Prague 3
*
and then got into the UEFA Cup. Losses of Sparta exceeding 150 million suggest that the
actual budgeted is around 500 million CZK. The budgets of other major Czech football clubs
are between 60-110 million CZK. Teams from the bottom of the league tables have budgets of
20-35 miles CZK.
Phenomenon that is common to many clubs, regardless of size or budget, is the trade with
the talented players. Investments in the purchase of sports stars are so huge that many clubs
have calculated that it is worth raising new young players and selling them to enhance
revenues. Clubs, which do not raise new talents, must allocate significant resources to
purchase of stars. In the Czech conditions, only a few clubs can afford such strategy.
On the other hand the Czech clubs did not use the option of IPO, which some foreign
clubs have chosen to obtain additional funds.
Comparison of AC Sparta and other Czech football clubs
It turns out that it is difficult to make economic comparisons between Czech clubs
themselves, and it will be even tougher to make it the international level. Comparison of
profitability is highly misleading, because there are considerable differences in the reporting
of assets (players, stadiums, temporary items) mentioned above. Some clubs (like Slavia)
started showing players‟ contracts as part of intangible assets from 2008, but other Czech
clubs do not. Another problem is in different accounting periods - season versus the calendar
year (or in England accounting year ending in March).
As can be seen from Table 2, Sparta has, except for season 2004/05, all other indicators of
profitability negative. This is obviously due to regular negative balances in income statement.
Slavia is in similar situation, as well. Interestingly, the ratios of the medium sized football
clubs in terms of profitability and cash liquidity are slightly better. Positive indicators in ROA
(Return on Assets) have been reached by Liberec, Mlada Boleslav and Teplice. Not forgetting
the fact that Teplice and Liberec always had stable and reliable patrons.
Table 2: Profitability indicators for AC Sparta
PROFITABILITY
EBIT
ROA
ROE
ROS
2003/04
-10.791
-0.0176
-1690
-0.0324
2004/05
61.362
0.0948
0.2276
0.0597
2005/06
-41.508
-0.0692
-0.5116
-0.0777
2006/07
-49.950
-0.0748
-11.773
-0.1182
2007/08
-128.309
-0.2205
-0.3753
2008/09
-123.339
-0.2302
-0.4106
Source of data: Annual Reports
Slavia‟s ROA from 2004 to 2009 was almost regularly –50%, a record loss of the 2004/05
season caused decline up to -88.54%. The only one profitable season 2007/08 on the contrary
showed appreciation of assets by almost 29%. Throughout the tracking Slavia scored worse
than Sparta. But it should be noted that the comparison is unfair because the assets structure is
different in both clubs.
Due to the negative economic results, nearly every Czech club is facing problems with
cash liquidity. Here, however, is also essential to point out that the business of professional
sports from different from traditional business. The clubs' balance sheets do not show big
volumes of current assets, inventories are very low and therefore it is really important to
monitor cash-flow and cash liquidity. At both – Sparta and Slavia cash liquidity is so low that
the typical firm would be unable to survive under such circumstances in the long term. In
2004 and 2005 Slavia reached only 0.0035 for cash liquidity values. Other football clubs are
doing slightly better, but still unsatisfactory from the business administration point of view.
Table 3: Trend in cash liquidities in AC Sparta
CASH LIQUIDITY
Total cash liquidity
Current cash liquidity
Financial
cash liquidity
2003/04
0.38
0.34
2004/05
0.52
0.49
2005/06
0.36
0.34
2006/07
0.70
0.68
2007/08
0.49
0.36
2008/09
0.36
0.20
0.04
0.09
0.04
0.01
0.01
0.01
Source of data: Annual Reports
Majority of Czech clubs commonly reported value of cash liquidity below bound of 1. The
only exception was Liberec, where cash liquidity ratios ranged even above levels
recommended for normal business.
Hand in hand with financial losses the clubs holding their debts, which in recent years
even deepen. Capital is being obtained thru so-called aggressive financial policy, i.e. paying
their obligations after due dates. It subsequently starts secondary insolvency between the
clubs. Other sources of capital include private investors – owners willing to lend the clubs the
funds interest-free so clubs do not have to pay on the cost of such capital. Loans from banks
are being rare, mainly because of regulations and the creditworthiness of clubs. In case clubs
decide to use bank loans after all, they are using those as a short-term bridging loans and
trying to pay those off as soon as possible.
Credit and Bankruptcy models
Application of credit and bankruptcy models to professional sports clubs remains a
problematic issue. According to application of Altman model, Tafler bankruptcy model, IN5
and IN2000 indexes or Kralicek‟s rapid test, the Czech football clubs are (considering the
recommended standards for traditional businesses) heading towards bankruptcy. This again
demonstrates the specifics of sports industry. The vast majority of businesses in such situation
would have probably disappeared. In sports, however, is a not unusual seeing negative value
in Z-score of Altman model (well below the recommended grey zone). Slavia Prague scored
Z-score values from -17.3 to - 33.5 in 2004 to 2007. AC Sparta was a little better; the Z-score
achieved in the last 5 years was of negative values, but never fell below bound of -5.
Structure of revenues and expenditures
To better illustrate the situation of professional clubs in the Czech Republic we need to be
aware of the significant revenue and expenditure items. In football, there are significant
differences between the clubs, which have qualified for the European competitions, and those
that have failed.
In revenue structure of AC Sparta in 2009 the largest contribution came from participation
in the UEFA Champions League (41% overall). It comprised of income from gate receipts
(4% overall) and contribution by UEFA (37%, which is mainly income from the sale of TV
rights and advertising). The second most important source of revenues is sale of players
(31%), followed by contributions from sponsors. Gate income and the revenue from TV rights
from of domestic competition and cup with the other income accounted for only 8% of total
revenues. If the club does not qualify for at least preliminary stage in the European
competitions, there is a shortfall in income of almost 50% (including a reduction in revenue
from the trades of players).
SK Slavia has its players (players‟ contracts) booked in intangible assets. It is because of
club‟s former owner, ENIC Company, which wanted the reporting of assets to be in
accordance with the British standards. In income statement the players‟ salaries are “hidden”
in the item line Services, along with other costs. This item represents the largest share of the
costs of the club (85.5% overall). According to the financial statements the salaries of the
players make 23.65% of the total costs of the club. Taking into account the time resolution,
this share would have been increased by 10%. Depreciation of fixed assets in Slavia is below
0.5%, but it is being doubtful as well. Logically it should incorporate the player's contracts
and should be depreciated depending on the length of the contracts as it is common in western
European clubs.
In case of application of traditional principles of financial analysis we would conclude,
that the two largest Czech clubs – AC Sparta and SK Slavia – are on the verge of bankruptcy.
Other medium-sized Czech clubs are doing only slightly better. It results from the ratios
profitability, cash liquidity, and especially from bankruptcy models. Generally speaking, the
cash liquidity ratios of Czech clubs are low. Taking into account the specific business needs
only current cash liquidity is meaningful. Clubs are indebted operating with a high proportion
of loan capital, which is not usually obtained from the banking sector. Comparison of clubs
according to the profitability is difficult, because they are relatively large differences in the
conditions in which they operate.
Western European clubs
Before making an overall comparison, the selected top European football clubs are being
analysed in this section, focusing on their operations and economic situation.
Arsenal FC
Traditional British football club Arsenal FC is fully owned by parent company Arsenal
Holdings plc. This company is a holding group, whose primary objective is to ensure the
functioning of the football club, including all (more or less) related activities. Therefore a
total of 17 subsidiaries were established to provide all the necessary services. In April 2011
American investor Stan Kroenke acquired majority stake in Arsenal Holdings. According to
the annual valuation by economic magazine Forbes the value of Arsenal in 2010 was
£ 768 million.
Long-term assets are around 70 % of total Arsenal's assets, while current assets are just
the remaining 30 %. It can be explained by the nature of holding itself; the necessary longterm items are stadium player‟s contracts (intangible assets). A significant change in the
liability structure has been caused by the construction of a new stadium, or rather by fundings
of it. In late 2006, top executives of Arsenal Holdings decided to re-finance the entire
construction of stadium by issuing bonds, because of inefficiency and expensiveness of longterm bank loans.
Revenues include three main sources of income typical for Western European clubs Matchday Revenues, Merchandise and Broadcasting rights. Revenues from secondary
holding activities, such as property development and investment activities are worth
mentioning. The total club‟s revenues for 2010 were £ 380 million, which is an unimaginable
amount for Czech clubs.
Table 4 shows a noticeable upward trend in profitability indicators from 2007 to the
present. Taking into account the changes concerning the ownership structure a positive trend
of ROE (Return on Equity) could ultimately play a vital role when the new owner Stan
Kroenke decided to take a controlling stake in the club.
Table 4: Profitability indicators and ratios of Arsenal FC
Data source: Arsenal Holdings
Indicators of the overall company‟s cash liquidity since 2005 are ranging between the
values of 1.4 and 3. It represents – considering the sector of sports – truly excellent results.
The value of total indebtedness of Arsenal since 2005 is more than 60%. This is mainly
due to the huge capital demands for building a new stadium and related (almost necessary)
use of debt financing.
Development of indicators of net working capital shows a positive trend and suggests a
stable holding position – in 2010 it was worth almost £ 160 million. Altman index values do
not exceed the notional limit of 1.6 indicating the area of bankruptcy (meaning the club is
about to go bust). However, using this model on sports clubs is very misleading, because the
calculation structure significantly penalizes companies with high capital intensity (stadiums).
It also does not reflect the specifics of the economic operation of professional sports clubs, as
mentioned before.
Arsenal Holdings appears to be in a very good situation considering the indicator of cash
liquidity, profitability, financial leverage and working capital. It can boldly be measured with
conventional businesses. Activity and debt indicators are not so clear as they partly reflect the
specifics and scope of the club. Restrictions appear in the evaluation of the holding‟s position
in the use of balance sheet business administration rules.
Juventus FC
Juventus is a traditional Italian football club, which is majority owned by IFIL S.p.A.
Club is a stable participant in the Italian Serie A, but in 2006/07 season it was relegated in
Serie B due to disciplinary punishment. Participation in the lower competition, of course,
affected the revenues, which fell by almost 20%. After returning to the elite competition the
income is steadily growing again. For example, the income for the club in 2007 was
€ 187 million, two years later it exceeded € 240 million.
Right after forced relegation to the Second Division club‟s management was forced to sell
most of its biggest stars. This has a positive effect expenses on wages of players, the largest
item of operating costs (in 2007 a decrease from the previous year by € 32 million). At the
same time, however, there was a decrease in revenues mainly from match-day and
broadcasting. Returning back to top competition caused faster growth in expenditure than in
income, so a negative EVA in 2008 was indicated. A year later it has turned positive and the
club begun generating economic value added again.
Juventus, likewise Arsenal, follows the recommendations for funding long-term assets
with long-term liabilities. The share of loan capital in the liabilities of both clubs is quite
similar as well, ranging around 70%. In case of Juventus it is due to faster growth in the
amount of loan capital than balance sum. It's mainly due to obligations to employees, which
since 2008 have increased by more than € 10 million, and also due to increasing commitment
to customers. Despite that, the maturity of short-term debts is relatively low, up to 3 months.
Olympique Lyonnais
Olympique Lyonnais is the French first league club, which is a stable participant in the top
domestic football competition. Its major owner is OL Groupe. In recent years Lyon was one
of the top French football clubs in terms of sports results, managing to win 7 league titles in a
row. Lyons also regularly participates in European cup competitions, but it is struggling to
achieve better results there. Every year the club is very active on player‟s trading markets.
The club's accounts are cleared on the 30th of June, as well as in the case of Juventus, which
makes it somewhat difficult to compare with others (not only Czech) clubs.
Revenues of the club have declined in recent years, in 2009 fell even under € 200 million
(to approximately € 192 million). It is interesting that, on a regular basis, long-term liabilities
are almost twice greater than the sum of fixed assets. This leads to the financing of current
assets from long-term resources, meaning that the club is literally consuming its capital from
long-term loans.
Unlike the vast majority of teams to the contrary, Lyon managed to keep the
recommended ratio of equity to total liabilities. This criterion is critical for getting additional
funds from external sources, but does not have direct (positive or negative) impact on
operations. With regard to cash liquidity management, we can deduce that Lyon follows
conservative strategy, unlike Arsenal or Juventus. For example, the ratio of club‟s current
assets to short-term liabilities in 2009 exceeded value 2, showing strong ability of paying all
the short-term debts.
However, generally speaking, Lyon is in difficult times. Since 2007 a gradual decline in
revenues, asset turnover ratios and related indicators of profitability club is noticeable. The
deteriorating financial and economic results are partly due to decline from previous successful
strategy. Club aimed on achieving a triumph in European Cup, which has so far failed.
Extensive investment in players„ squad has not led to the desired success and the whole
situation requires a swift action from the top management of the club.
Overall comparison
We now move ahead to an overall comparison of the leading Czech and West European
football clubs based on the findings and selected economic indicators presented above. First
we need to note that the financial results of Czech football clubs are relatively unstable and
volatile. This is due to local nature of the sources of income, relatively low match day and
merchandise revenues, as well as the great importance of revenue from UEFA competitions
(also because of relatively low budgets and total assets of Czech clubs – see Table 5).
Table 5: Total values of assets of selected clubs in thousands CZK
Total assets value in thousands CZK
AC Sparta Praha
Arsenal FC
Juventus FC
Olympique Lyon
2007
668 046
21 815 261
6 565 806
7 299 936
2008
581 857
24 888 391
6 891 746
8 820 943
Source of data: Annual Reports of clubs
2009
535 829
24 861 424
7 339 987
7 581 935
Comparing the European and Czech clubs in terms of ability to generate profits regardless
of its absolute amount, we can say that the Czech teams might not be much worse. Even in the
Czech competition there are profitable clubs and vice versa - in Western Europe we can find
many top clubs showing significant accounting losses. The difference is, however, the
absolute amount of the budget and thus potential profit. Also keeping in mind the extent to
which the numbers of Czech clubs directly depend on the sport results, especially in UEFA
competitions.
The instability of the economic figures is, of course, reflected in the profitability of assets,
in which negative values are nothing exceptional. But this is not just a case of Czech clubs, as
noticeable from Table 5. However, volatility and poor predictability of income is typical for
Czech clubs. It is being enhanced by their strong dependence on sports results and the
aforementioned imbalances in the sources of income. For example, the revenues of Sparta
from the sale of merchandise do not exceed 4% of total income (and it is, in the given sphere,
the best Czech team). On the contrary, the top European clubs are able to obtain far more
funding from this source – on both, absolute and relative bases.
Table 6: Return on Assets ratios of selected clubs
ROA = EBIT/Assets
AC Sparta Prague
Arsenal FC
FC Chelsea
FC Barcelona
Real Madrid CF
Everton
Olympique Lyon
2006/07
-10.75%
0.32%
-27.15
2.21%
N/A
-20.28%
9.98%
2007/08
-27.02%
8.01%
-22.02
1.89%
6.90%
-10.74%
8.80%
2008/09
-28.33%
1.37%
N/A
1.72%
2.84%
0.04%
2.81%
Source of data: Annual Reports of clubs
Tab. 6 illustrates the situation of selected European clubs using indicator of ROA. It is
obvious that even famous clubs, such as Chelsea or Everton, can score very negative values.
In some seasons, their indicators were even worse than ones of Sparta. In case of Chelsea in
recent years an overwhelming proportion of players‟ wages might have caused it. This
problem manifested itself in many Italian and other Western clubs. It is a chronic long-term
unsustainable issue highlighted by many sports economists.
We have already presented the main sources of financing for professional sports clubs in
general and the specifics of the Czech ones. If clubs do not generate profit, they need
additional funding often in form of loan capital (not every club has sugar daddy willing to
invest generously in their operations). We have already mentioned that Czech clubs do not use
bank loans too often, but there are many other sources of loan capital. For example, Arsenal
executives decided for the issue of bonds to to re-finance the construction of a new stadium.
For comparison of the indebtedness of the clubs it is good to use of the creditors' risk
indicator. It shows the percentage of assets that are being financed with loan capital. From
Table 6 we can see that in the case of Sparta creditors' risk indicator is getting worse during
the reporting period. Creditor‟ risk gradually increases from 70% in 2004/05 season to more
than 100% in 2008/09. Such situation would be untenable for traditional businesses. However,
banks are still reluctant to lend Sparta additional funds (also because of a warranty in form of
the stadium and other real estate owned). Furthermore, since 2006/07 season loans to Sparta
are being provided by J&T Bank and PPF Bank, which are directly connected with the
holding company that owns Sparta. Another thing is fact that Sparta does not use credit to
finance further investments, but to cover current operating losses and remunerations from
previous years, which can be considered being a big mistake.
Table 7: Creditors’ risk ratios of selected clubs
Creditors’ risk = Loan capital/Assets
AC Sparta Praha
Arsenal FC
FC Chelsea
FC Barcelona
Real Madrid CF
Everton
Olympique Lyon
2006/07 2007/08 2008/09
90.76% 96.79% 102.54%
81.76% 77.24% 62.31%
193.89% 203.50%
N/A
65.00% 77.16% 95.91%
N/A 76.14% 77.72%
142.57% 130.68% 142.28%
47.59% 52.72% 43.99%
Source of data: Annual Reports of clubs
Generally we can say that in the case of Western European clubs, the ratio of loan capital
to total assets is higher. For Chelsea, however, need to consider interest-free loans provided
by owner Roman Abramovich, which are reflected in high levels of creditors‟ risk ratios. We
can also discuss whether the mere fact, that the club (its owner) is able to cover loss from
previous years to cover, does not show more of its financial strength than weakness.
Another area in which the Czech clubs differ significantly from the Western European
(and lag behind them) is revenue from match-day. For the Czech professional clubs this
source of income is sometimes negligible. On the contrary, the top European clubs can obtain
from match-day more than a third of total revenue – see Figure 1. Note that in case of Arsenal
the new stadium plays a significant role (and thus can be considered a successful investment).
Note that only Lyon is “near” Czech teams in this area.
Figure 1: Share of match-day revenue on total income
45,0%
42,4%
40,0%
35,0%
30,1%
27,5%
30,0%
27,0%
25,0%
20,0%
15,0%
10,0%
10,3%
5,4%
5,0%
0,0%
AC Sparta
Praha
Arsenal FC
FC Barcelona Real Madrid
CF
Everton
Olympique
Lyon
Source of data: Annual Reports of clubs
The comparison of the structure and sources of income of the Czech clubs with European
is in general complicated. This is due to inconsistent classification of balance sheet and
income statement categories and items. So, for example, in case of many Czech teams, it is
not possible to distinguish between income from advertising, sponsorship, broadcasting rights
or players‟ transfers.
Another important difference from top European clubs is sponsorship. Apart from the few
largest Czech clubs, for vast majority it is not easy to obtain partner from the commercial
sector willing to spend larger sums of cash for the simple combination of his brand with the
club. It is partly caused by the sullied image of the competition due to the corruption affairs
and relatively low interest of fans. Czech clubs often have dozens of sponsors that are
constantly changing and contributing relatively small amounts. Model of building long-term
partnerships and links with the club's title sponsor, common in Europe, is still in its infancy.
Strong position and brand of the Western European clubs puts them into different
situation. The focus of (potential) sponsors is often enormous, which is well illustrated by the
period at the beginning of economic downturn in 2008. At that time, many companies at hint
of a slightly deteriorating economic climate reduced its sponsorship activities. As a result, the
football team could suddenly lose (even principal) sponsor. However, it turned out, that the
problem is not so serious for European clubs. For example, Liverpool or Manchester United,
which during a short time lost their main sponsors, were able to successfully replace those at
even better conditions2. Table 8 presents selected sponsorship deals from recent years.
Table 8: Selected sponsorship deals – main jersey sponsor
Club
New Sponsor
Annual revenue
Real Madrid
Manchester United
Bayern Mnichov
FC Liverpool
AC Milan
Hamburg SV
Bwin
AON Corporation
Deutsche Telecom
Standard Chartered Bank
Emirates
Emirates
€ 15-20 mil.
€ 23 mil.
€ 24 mil.
€ 23 mil.
€ 12 mil.
€ 7 mil.
Increase
compared to
previous deal
Up to 33%
42%
10 - 20%
167%
N/A
27%
Source: Deloitte
Tab. 8 demonstrates the strong position of Europe's leading clubs in terms of sponsorship.
Czech teams in this field are still lacking, except for a greater public interest and a stronger
brand, conceptual approach to building long-term partnership with major sponsors.
Further trends and development
In the years to come we can expect a gradual convergence of Czech clubs to model of
operations and financing typical for Western European clubs. This requires a joint effort to
raise the prestige of domestic competitions and of football environment. For Czech clubs it is
necessary to maximize revenues from traditional sources, as well as start taking advantage of
potential revenues typical for and so moving progressively to the system of financing typical
for top European clubs. Fan base, high-quality stadium facilities, ability to obtain media
coverage and strong sponsors / partners will remain the critical factors of success.
European football will soon have to deal with several chronic problems faced by many
clubs regardless the country or league. These include a high share of player‟s salaries on total
expenditures, lack of competition balance or uneven redistribution of revenues. It is not
2
Manchester United had to end up partnership with AIG, signing in almost no time new deal with AON.
uncommon when the club spends over 85% of revenue on player salaries. In this case, even if
it has secured all the other important aspects of existence, club is still at the edge of survival.
It is obvious that FIFA and UEFA are aware of the seriousness of the whole situation judging
from regulatory actions in this area.
Summary and conclusion
The aim of this paper was to present economic comparison of the top Czech and European
professional football clubs. Such comparison is largely hampered by inconsistencies in
reporting financial information, different accounting periods or unwillingness to disclose
certain information. Generally, budgets of Czech clubs are volatile and unbalanced.
Participation in European competitions and players‟ trades playing major roles. Most clubs
are trying to bring up talents hoping for future revenues from their sales.
The application of principles of financial analysis, we conclude that the two largest Czech
clubs - Sparta and Slavia - are on the verge of bankruptcy. Other medium-sized Czech clubs
are doing only slightly better. It results from the ratios of profitability, cash liquidity, and
especially from bankruptcy models. It is worrying that even Sparta in recent seasons is unable
to have own business self-sufficient and is dependent on financial assistance and loans.
Participation in the European competitions is very important, but not guaranteed source of
income. Player salaries are the largest expenditure item, as well as in many European clubs.
The overall comparison shows that selected top European clubs are in quite a different
situation (than the Czech ones). This relates to the sources of financing, from which big clubs
receive disproportionately more money, especially from match-days and merchandising. The
fame, the club brand and the related interest of the sponsors play big role as well. Even top
teams as FC Chelsea can be managed with considerable loss. The difference is that their
owner is willing to invest enormous amounts to keep the club running and cover losses.
While comparing top European and Czech clubs, we have found a number of other
differences. From the perspective of financial analysis, Arsenal FC can be considered as quite
effective. Although the majority of the resources are in form of loan capital, the club makes
good use of it. The pace of sales growth regularly exceeds the pace of growth in investments.
Despite an aggressive strategy in cash liquidity management club is able to repay liabilities. It
also takes advantage of owning the new stadium.
Olympique Lyon has a relatively large proportion of own funds in total liabilities. A
conservative approach in cash liquidity management allows the club to pay all current
liabilities immediately, if necessary. The economic situation worsened after 2008, when there
was a massive investment in players' reinforcements, which, however, did not show expected
results and scores. For the successful operations executives need to reverse the negative trend.
The economic position of Juventus in recent years is closely linked with the club's
enforced relegation to a lower division. The management had to cope with difficult situations.
After returning to the elite competition and stabilization of players‟ squad since 2009, the club
has again generated profit. Like in case of Arsenal, there is a noticeable aggressive approach
in cash liquidity management. But according to information presented in the financial
statements it should not be a problem to pay club‟s obligations properly and on time. In
liabilities, there is a dominance of loan capital.
Overall we can state that the economic situation of the Czech clubs, in comparison to
Western European ones, is different and in many respects worse. In the upcoming years we
expect a gradual convergence of Czech model with the European model of funding. However,
it is complicated by the domestic situation, including the negative image of the competition
and low interest of sponsors.
European football (as a whole) needs to deal with chronic problems such as high
proportion of player salaries on expenditures, the uneven redistribution of income or low
competition balance. Even UEFA is aware of the problems proceeding to implement
appropriate regulations.
References
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In.: Refletes Perspectives de la vie économique. Trimestriel - Tome XXXIX - 2000 No2 - 3. De Boeck Université ISBN 2-8041-3414-8
[2] Andreff W., Staudohar, P. The Evolving European Model of Professional Sport
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[14.02.2011]
Comparison of economics of top Czech and Western European professional
team sports clubs
Jiří Novotný – Alexandr Ščiklin
ABSTRACT
The paper presents economic comparison of top Czech and European leading football clubs. It
discusses common features and differences in terms of financing and administration using
indicators of financial analysis. It analyses revenue sources, the importance of brand and
sponsorship. Current issues and problems of football clubs across Europe in general are being
analysed as well.
Key words: Professional Football; Economic Analysis; Revenue Sources; Liquidity;
Bankruptcy models.
JEL classification: L83