This week, the auditors Deloitte published their latest edition of the annual Football Money League, a comparison of football clubs’ earning power.
For the seventh year running, Real Madrid have taken the top spot, with Barcelona completing a one-two for Spanish football- leaving United into third place once again. So how have Real and the Catalan giants managed to eclipse United, who were at the head of the Money League for eight consecutive years (from the table’s inception in 1996/97 to 2003/04), and how can the Reds seek to reclaim their status as the highest earning club in the world?
1. Real Madrid: €438.6m
2. Barcelona: €398.1m
3. Man United: €349.8m
4. Bayern Munich: €323m
5. Arsenal: €274.1m
6. Chelsea: €255.9m
7. AC Milan: €235.8.m
8. Liverpool: €225.3m
9. Inter Milan: €224.8m
10. Juventus: €205m
Well, success on the pitch is usually a good strategy if one is looking for revenue growth. 14 of the top 20 teams in the Money League participated in the 2009/10 Champions League, with the other 6 all competing in Europe’s second tier competition, the Europa League. Barcelona have enjoyed phenomenal revenue growth while winning the Spanish Supercopa, 2009 FIFA Club World Cup, Champions League, and retained the Copa Del Ray & La Liga trophies. However, we are focusing on businesses here and in many respects success on the pitch is peripheral when it comes to revenue generation, as shown by Real Madrid’s continued dominance of the Money League, in spite of their competition disappointments. By contrast, Inter Milan emulated Manchester United’s 1999 Treble in 2010 but didn’t even improve on their Ninth position in the Money Table.
The football money league splits “revenue” into three broad sections: match-day, broadcasting and commercial. United’s breakdown is as follows:
Match-Day €122.4m (£100.2m) – 35% revenue
Broadcasting €128.0m (£104.8m) – 37% revenue
Commercial €99.4m (£81.4m) – 28% revenue
Not bad you might say, and you’d be correct. However, while our match-day revenues are superior to all clubs bar Real Madrid; our broadcasting revenue, of €128.0m, pales in comparison to Barcelona’s €178.1m, and our current commercial revenue streams seem miniscule compared to Bayern Munich’s goliath €172.9m. Why is there such a large disparity, and what can be done to correct it?
Barcelona’s broadcasting revenue is a result of Spain’s highly disproportionate domestic agreements, as clubs are left to negotiate their own deals, unlike the Premier League’s; a difference which means Barcelona earn double United’s measly €64.7m for broadcasting. In the Premier League, broadcasting revenue is distributed far more equally than La Liga, with even the bottom club in the 09/10 season, Portsmouth, receiving €38.8m from domestic broadcasting rights. The result of this is a far more competitive domestic league, as all the clubs have cash to spend. Nonetheless, for English clubs in Europe it is a hindrance as they must compete against teams with more advantageous deals.
Next year’s Money League will see substantial increases for English teams’ broadcasting revenue, as the income from a new three year overseas broadcasting deal comes in (with a 50% increase to €4.4 billion). However, Deloitte predict that this will still fail to compensate the English elite for their disadvantage, unless La Liga introduce a similar model of distribution- which they are currently contemplating with less even distribution.
In terms of commercial revenue, the 09/10 Money League does not see United’s increased revenue from their new €24m/year shirt sponsorship deal with Aon. United are continuing to aggressively pursue overseas revenue, from their new Mayfair offices, having recently signed agreements with Turkish Airlines & Singha Beer. Merchandising is an area that United could also improve, who still lag behind the likes of Bayern and Real in this area. Liverpool’s recent opening of an Academy in Malaysia is a seemingly good strategy for attracting new fans in the football mad Far East, and follows United’s Soccer Schools into the region. The Red’s corporate earnings have also improved with better utilisation of Old Trafford, with increased seating, enlarged corporate space and further letting of the arena commercially.
Finally, while match-day revenue at Old Trafford is impressive, the €122.4m received in the 09/10 season actually represents an 8% decline on the previous year. While United continue to achieve full-houses on a regular basis (and always seem to be increasing ticket prices), early exits in the Domestic and European cups meant Fergie’s side only played 28 home games, in comparison to 30 during the 08/09 season. With each match-day at Old Trafford pulling in £3.6m- that makes a big difference. While a home replay in an FA cup may represent a headache for Sir Alex, whose calendar is busy enough, I can imagine the Glazers rubbing their hands with glee. Hopefully a decent cup run and progress through to at least the Quarters of the Champions League will see the Old Trafford’s match-day revenue increase to at least levels two seasons ago.
Next year should see minimal movement within the top 10 of the Money League, with only City or Tottenham hoping to enter the top 10 for the first time, accompanying the probable fall of Europa League Juventus. United are likely to remain in third place, with little threat from below, as increased revenue is unlikely to help them overtake Barca or Real. We may see Barcelona pose a real threat to their rivals from Madrid, with their first ever shirt-sponsorship deal; a huge €165m 5-year deal with the Qatar Foundation.
Looking further into the future will see the implementation of UEFA’s Financial Fair Play Regulations. While their aim is to halt the huge debts mounting in European football, with some clubs (City & Chelsea etc) spending nearly all of their revenue on huge wage bills, and sometimes exceeding it. These regulations may actually cement the richest clubs’ positions in the Money League though, as they will stop any team attempting to break the dominance of the richest clubs (the top 20 teams in this year’s money league have won 43 of the past 50 domestic and European trophies in the big five European leagues), by stopping another Russian Oligarch or Arab Oil baron from coming in and investing silly amounts of money in a team. Whatever the effects, these regulations will hopefully stop the ridiculous inflation of the transfer market and encourage clubs to invest in youth, something many clubs will find alien. Luckily for us, United have been good at nurturing youth and getting ‘value’ in the market… The future is bright, the future is Red.