Finances: The Stade Rennais plays wisely

Just over a week ago, the DNCG (National Directorate of Management Control) published its yearly report on the French professional clubs’ finance. As always on balance, thanks to the contribution of the Pinault Consortium, Stade Rennes has gone through a diminution of its resources, and followed an objective of costs-reduction. We will be looking at the evolution of the club’s turnover and of its salary bill.

In 2009-2010, Stade Rennais FC generated a turnover of 44.9 million euros. A clear drop compared to the 2008-2009 season, when the same figure had reached 50.5 million euros, and the lowest result since 2005-2006 (42.2 million euros).
This regression can essentially be explained by the disappointing sportive results achieved by Frédéric Antonetti for his first year at the reins of the professional squad. The TV broadcasting rights, which have taken such importance over the last few years (and are proportional to the sportive results) have logically gone down, dropping by 3.4 million between the two seasons. At the same time, the ticketing revenue has also regressed, since it had been boosted the previous year by a Coupe de France adventure all the way to the final and three European Cup games played at the Route de Lorient.
Generally, the share of the audio-visual rights (or “TV Broadcasting rights”) within Rennes’ turnover remains stable, between 59% and 60%. A proportion that has barely changed over the last three years, after increasing by ten points between 2004-2005 and 2006-2007.

Commentary: The audio-visual rights increase significantly for all professional clubs starting on the 2006-2007 season, allowing Stade Rennes to increase its turnover by about 9M€. This latest figure dropped during the 2009-2010 season however, after several years in the increase.

Stade Rennes remains within the average of other French clubs in this domain. Among eighteen of the twenty clubs involved in the 2009-2010 Ligue 1 season [1], the club lies in ninth position while two clubs are reaching proportions superior to 70% of the turnover made from Broadcasting rights, AJ Auxerre (77,8 %) and FC Lorient (71,9 %). Except for Lille, the richest clubs are also those whose turnover is the least dependant of the TV rights. Those, such as Paris Saint-Germain (38.6%) or Olympique de Marseille (49.7%) can also build on important ticketing, sponsoring and merchandising incomes, lowering the share of audio-visual rights.
They are the clubs, however, who get the biggest share of the TV package. Profiting of a huge media coverage, of their victorious campaign in Ligue 1 and of their participation to the Ligue des Champions , Olympique de Marseille has received 44.3 million more euros in TV rights than Stade Rennes, or over 10 million euros more than the Breton’s club yearly salary bill.

By observing the evolution of the turnover for the sixteen clubs remained in Ligue 1 every season since 2006-2007 [2], several trends are shaping.
The two clubs having recorded the biggest increase in turnover are logically Marseille and Bordeaux, with an increase over 50%. The Olympians have indeed seen an increase of their incomes by 50 million euros in 3 years, against 40 million for the Girondins. The first named are starting to approach Lyon, still the reference in France, but whose supremacy was dented over the last two seasons. The second should see a serious return to normal after failing to play the Champions League this year, and most likely next year. Other teams, comfortably installed in Ligue 1 over the last few seasons, have also profited of the occasion to increase their revenue. This is the case of Lorient (+29.1% of the turnover) and Valenciennes (+16.5%).
Beyond these examples, the evolution of the revenue is linked with the sportive achievements, and with the participation (or not) to European competitions. Thus, a club like Lille going from a Champions League participation in 2006-2007 to no European participation the following year, saw its turnover drop by 24 million euros at once

Commentary: The turnovers of Lille, Rennes and Lorient seem quite meagre compared to the revenue generated by Marseille, yet the second turnover in L1 behind Lyon. Marseille’s turnover increases in a sustained and continuous way. Lille’s receives a blow in 2007-2008 (no European competition) before rising again. In comparison, Stade Rennes’ remain mainly stable, while FC Lorient, despite an apparent stability, keeps on growing.

At the moment, Stade Rennes’s turnover positions the Breton club at the sixth position of these sixteen clubs, alongside clubs such as Monaco, Saint-Étienne, Auxerre and Toulouse. Unsurprisingly, Lyon, Marseille, Bordeaux and Paris trust the first positions and keep the gap constant with the rest. Lille comes between the two groups, but their current run of good results should allow them to go closer to the top four, and in particular Paris.
By missing the Arkéa opportunity in 2009 [3], Stade Rennes may have missed the opportunity to extract themselves from their group and follow the way paved by the LOSC.

A lasting increase of the revenues is clearly mandatory in order to afford an increased wage bill. At the moment, it is the main area of spending for the clubs, some of them having invested considerable sums in it.
This is the case of Marseille and Bordeaux, whose wage bills have increased quicker than their turnovers (Bordeaux’ turnover has increased by 55.2% over three years when the wage bill increased by 70.5% over the same period of time). The “expanding little clubs” have also invested massively in this area, with the prime example of Valenciennes, who nearly doubled their wage bill in three seasons. On average, the wage bill of clubs remained in L1 since 2006-2007 has increased by near 34%.

Commentary : The wage-bills are generally following the evolution of turnovers. Marseille’s is continuously increasing, even quicker than the turnover, while Lille’s knows a more relative but well real growth. Stade Rennais have reduced their wage bill, while Lorient’s grows I a regular fashion.

Stade Rennes is one of the rare clubs to have decided for a rather cautious approach to its wage bill. Although it increased by 18% since 2006-2007, it has been reduced over the last two seasons, and should diminish even more on the assessment of the 2010-2011 season, considering the reduction and the youth of the squad.
Between 2008-2009 and 2009-2010, only one club from the same « economical level » as the SRFC saw its wage bill reduced, Toulouse. The other three clubs to follow this way were all included amongst the smallest budgets in 2009-2010’S Ligue 1 (Nice, Sochaux and Le Mans). Over the last three years, only Monaco has truly considerably reduced their wage bill, a direct consequence of the bad results recorded over the last few years (-22.6% over three years).
The eighth wage bill in Ligue 1 in 2009-2010 as they still had the sixth in 2008-2009, Stade Rennes is expected to go further down in this particular ranking in 2010-2011. In the norm two years ago, the club’s wage bill is now near eight million euros below the average for the “regulars” in Ligue 1, amounting 43.5 million euros in 2009-2010 (35.9 million euros for the Stade Rennais).

Commentary : This graph represents the wage bill, in 2009-2010, for all sixteen clubs remained in Ligue 1 between 2006-2007 and 2009-2010. The gap between Lyon and Marseille and the other Ligue 1 clubs his abyssal. Bordeaux and Paris follow with reasonable amounts, but already quite far, while Lille remains in an interval position between the “big four” and the other clubs.

A bad strategy ? Not necessarily. With the eternal sportive uncertainty ( Bordeaux may well experience it the bitter way by failing to qualify for the Champions League for a second consecutive season, with the broadcasting rights likely to diminish and a predictable drop of revenues from players’ transfers, the clubs are likely to struggle always a bit more to afford an important wage bill.
A European qualification at the end of the season, however – meaning additional resources – should signify reinforcement to the squad in order to feature in multiple competitions, and a new increase to a wage bill the club worked on reducing since 2008. This is when the financial support of the Pinault Consortium could take all its importance, especially if the audio-visual rights were to be reduced. An advantage not so many clubs could rely on in the top flight.

Footnotes