Ligue 1 has hit a “financial crisis”.
The league’s deal with broadcast partner DAZN collapsed, leaving the league scrambling to find a new broadcast deal for the second time in five years.
Ligue 1 is a top 5 European league, generating $2.53 B in revenue in 2023-24. Mostly from broadcast rights and player transfer fees.
The league’s ambition has been €1 B in rights revenue. But so far, the high point has been €660M.
The lower TV revenue has fed a downward spiral.
Lower domestic viewership has led to lower TV payments, feeding a reliance on transfer fees to make up revenues.
Player trading has undermined the league’s competitiveness in Europe. This has created self-fulfilling prophecies about business struggles, league competitiveness, and viewership stick.
Diversification of revenue streams has become a big point of focus.
The importance of diversification is gaining speed because this DAZN deal isn’t the first challenge Ligue 1 was faced.
In 2020, Mediapro pulled out a €3.25 deal that was to run until 2024.
Losing this deal put many clubs at risk of failure.
Because of this, Ligue 1 created a media rights business to manage future commercial efforts.
To help lessen the financial difficulties, 13% of this new entity was sold to private equity firm, CVC.
In the short term, clubs got cash.
But the deal is scheduled to last at least 99 years with the potential that the value of money owed could increase.
That’s a pretty steep price.
As an executive said, the bet was that media rights would continue to grow.
The only problem is that league broadcast revenues are declining.
Down 3% since the deal was signed.
What is the league to do?
The rumblings are starting for a strategic reset.
This situation makes it risky for the league to follow a “Me Too” strategy, defaulting to a standard playbook.
Ligue 1 must find its own path.
What does this mean?
Rugby Australia provides a good example of choosing your own path.
In December 2024, Rugby Australia released its new strategy called “From Green to Gold.”
It is an organizational reset.
The strategy is built on three pillars:
- Performance Excellence
- Participation Growth
- Promotion Effectiveness
Rugby Australia CEO Phil Waugh has highlighted the coming Women’s and Men’s Rugby World Cups as important opportunities.
RA has built its own path.
One key thing for me was how RA dealt with a financial challenge.
Instead of choosing the easy money of selling a share of its business to private equity, RA decided to take on debt.
This decision has paid off as RA has signed a new deal with Nine Entertainment for 5 years and AUD $240M.
A 40% increase.
This allows the RA to pay off the debt this year and reap all the rewards of their new strategy.
Early impacts of the reset are starting to show:
- 15% more kids played rugby in 2024.
- 29% more officials registered.
- 9% growth in coaches.
- 26% increase in school participation.
What about social media?
Followers on social media have increased 170%
These successes were built on a strategy specifically for Rugby Australia.
Not the generic thing that “everyone” is following.
How could we apply this thinking to Ligue 1?
Pillars to guide the thinking:
- Viva la France
- World Class in Every Way
- Our Game, Our World
Let’s look at each of these individually.
Viva la France: “Long Live France.
The French game has a rich history.
World Cup-winning sides.
Global brands such as PSG.
Famous footballers like Mbappe, Zidane, and Thierry Henry.
Amazing teams with global name recognition.
The French school of development trains coaches globally, sharing the French style of football with the world.
Embrace the French game.
It is the foundation for everything.
World Class in Every Way:
The French Senate released a report on Ligue 1’s challenges.
The report offered up 35 recommendations.
That’s a lot.
35 recommendations are too many to prioritize.
A couple stood out.
One, a lack of professionalization.
Two, a need for a more fan-friendly approach.
Three, a lack of lessons learned.
These combine to point to the need for a new direction.
“World Class in Every Way” is about rethinking the business.
Not just as a sports business.
But as a business to produce the revenues to make the French system work.
The recommendations highlight the importance of moving beyond a system where broadcast rights and transfer fees bring in over 80% of the revenue.
It points to creating new revenues and looking at ways to improve traditional lines of business-like tickets, merchandise, and hospitality.
This will require moving beyond traditional sports business ideas to bring the world’s best business ideas to the task of building up Ligue 1.
Our Game, Our World:
This is the capstone.
The French game has much to offer the world.
Great players of the past, the present, and the future.
Great teams with globally recognized names, crests, and identities.
Great stories.
The through line is the story of French football.
The potential market is the world.
This is about the brand of French football and Ligue 1.
That’s the theory.
In practice, what could each of these pillars look like?
Some ideas.
Lean into the brands.
Private sector brands can be worth 40% or more of a business’s total valuation.
For a sports business, your brand can be priceless.
For Ligue 1, growing brand equity can drive broadcast revenues.
This would be worth billions in new revenue…per year.
Look at Serie A.
Serie A’s brand was built during the league’s glory days of the 1980s to early 2000s.
Despite a decline over the last decade or two, the positive impact of these glory days has helped Serie A maintain a € 500M revenue advantage over Ligue 1.
Serie A has a competitive advantage built on decades of success.
Despite Serie A’s decline from the pinnacle of global football, this advantage persists.
That’s one example.
Ligue 1 has serious ammunition in a fight with any league.
PSG is one of the biggest brands in the world.
A top 10 global team brand.
Lillie.
Marseille.
Monaco.
Lyon.
Rennes.
All top-tier football brands with tons of positive brand equity.
Never forget the sleeping giant of French football, Bordeaux.
Down now, but never out.
Don’t forget current players.
Mbappe at Real Madrid.
Hugo Lloris in MLS.
Ousmane Dembele at PSG.
Team stories.
History.
Players.
But don’t forget competition.
Competitiveness:
Ligue 1 took a big step reducing its size from 20 clubs to 18.
This move reduces fixture congestion.
Fewer fixtures give French teams more time to prepare for matches and tournaments.
PSG is in the semifinals of the Champions League.
Lyon made it to the quarterfinals of the Europa League.
Over time, continuing these successes will improve the image of Ligue 1 and French club football.
Competitiveness is key.
One way to do this is changing the incentives to limit the selling of young players.
Over the last few years, transfers have jumped to 27% of the revenues for Ligue 1 teams. Up from 18%.
That’s too much.
It creates incentives that undermine the competition in Ligue 1 and performance in Europe.
Why?
Because the French teams need the money to operate.
So, young players are sold before they are fully developed.
This means the developing club misses out on a player’s peak performing years and maximum sell-on potential.
There isn’t a short-term answer for this.
One idea to change the incentives could be using incentives attached to broadcast revenues.
Maybe it is featured matches.
Another one could be giving teams more money for a higher percentage of French players.
The goal is to encourage clubs to keep homegrown players longer.
Business Expansion:
Most of the attention in France is on broadcast revenue and transfer fees.
Deloitte’s annual review of sports business suggests ideas such as stadium improvements and brand monetization.
Stadium improvements are long-term solutions.
They are also so costly that they are difficult to make.
Teams need new ideas now.
In the short term, you can focus on expanding your traditional lines of business: ticket sales, food and beverage, and merchandise.
There are also opportunities in hospitality, tourism, and with brand partnerships.
The main one that many leagues and teams are focusing on is D2C.
I’m skeptical about the ability of the D2C model for a lot of leagues because of the resources it takes to be successful.
Plus, the numbers for a league might work, but the numbers for individual teams can be tough.
I do see D2C as valuable when it is a part of your revenue mix.
The Big Ideas:
Strategy is about creating a through line.
Your tactics change frequently.
The direction you are going should not change often.
You need to know what success looks like.
Then, you must commit to taking the right actions consistently to deliver on your strategy’s promise.
For Ligue 1, we see some challenges and some opportunities.
From a power standpoint, French football customers have the advantage.
5% of the population uses illegal streams.
The French market hasn’t adapted paying TV the same way markets like the US, UK, and Australia have.
Solving the customer challenge requires a two-speed approach, a short and a long.
In the short term, Ligue 1 needs to get eyes where they can.
This probably means some sort of over air option.
In the long term, Ligue 1 can create a combo of paid, over air, and streaming as a solution.
It will take time.
Ligue 1 does have strength against suppliers and the competition.
French football clubs are great developers of talent.
This will attract partners that want to be associated with these clubs.
It will attract buyers in the transfer market.
The key step: maintain this advantage so that French teams benefit and grow their performance in European competitions.
This strength of development enables Ligue 1 to maintain a strong competitive advantage because French football brands are amazing assets.
They do need nurturing and attention.
The same as any other brand.
Again, the example set by Rugby Australia is a good one.
When you put together a solid strategy, you can see results quickly.
I’m a fan of French football.
Ligue 1 can be the top 3 global football league with a few focused decisions.
What say you?