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Bordeaux's Bankruptcy: A Lesson In Adapting to the Evolving Sports Media Landscape
Word that the historic French franchise Girondins de Bordeaux filed for bankruptcy recently rocked European football. Bordeaux, which began in the early 1880s as a sports club, previously competed in the first tier Ligue 1, winning six titles. But two seasons ago, Bordeaux was relegated to the country's second-tier league, Ligue 2. Various factors led to the team's downfall. But one force in particular poses an even broader threat to the sustainability of the elite level of French soccer: media rights.
The club's attendance remained reasonably strong despite relegation. On the other hand, a key source of income — sponsorships — suffered. Even before the club's demotion, that revenue source for Bordeaux paled in comparison to that of Ligue 1's top club, Paris Saint-Germain (PSG), by a factor of 12. But the larger consequence of demotion is a significant reduction in media rights revenue.
Yet English clubs relegated from the English Premier League, who suffer the same loss of media-related income, do not usually proceed to insolvency. English club owners are incentivized to "retool" and invest to be promoted back into the top tier to recapture that revenue source. Why the difference? The answer lies in the fact that Ligue 1 as a league is facing a devaluation of its overall media rights. So, investing to climb back to the top has decreasing rewards.
Importance of An International Following
Ligue 1 began the most recent broadcast contract renewal process by pursuing an auction with a goal of realizing a total of $1 billion annually. However, a lack of interested parties led to the auction's cancellation. Eventually, the league announced broadcast deals with DAZN and BeIN through the 2028-29 season for approximately $524 million per season, half of its stated goal and reportedly the lowest level in 20 years. Among the reasons cited for this devaluation are the recent departures of superstars Kylian Mbappé, Neymar and Lionel Messi to other leagues, increased violence at matches and a lack of success in European competitions by the country's clubs.
This devaluation of the league's media rights is believed to have precipitated Bordeaux's bankruptcy. This should be a wakeup call for the sport in France as there are more signs of financial distress among French clubs, with nearly half of the 18 teams in Ligue 1 rumored to be struggling. To reverse this trend, a more interesting and competitive sporting product should be created to boost viewership not only within the French market but also internationally.
In examining trends in European soccer, cultivating a global audience is key. The European Premier League is the best example. The most recent domestic media rights deal for that league increased only modestly by 4% per annum to around $2 billion (still almost four times more per annum than Ligue 1). However, the value of European Premier League's international rights increased by an impressive 20%. It is believed the European Premier League is now the only major sports league where revenue from international media rights exceeds domestic broadcast income. Spain's La Liga is the only European league that is currently generating a significant portion of its broadcast revenue from international viewers.
Media rights revenue for Italy's Series A and Germany's Bundesliga are mainly sourced domestically, and, like other leagues on the continent, have flattened — the exception being France, which has dropped significantly. Compared with the National Football League (NFL) — the most profitable U.S. sports league — around 98% of the media rights income is from the domestic market, albeit the most lucrative in the world.
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