Friday, January 24, 2014

Full 90: Madrid rated top revenue-generator by Deloitte Football Money League; 9th year running

Real Madrid sits atop Deloitte’s Football Money League for the ninth year in a row with €518.9 million in revenue last season. The Football Money report lists the top 20 revenue generating clubs worldwide as it examines three forms of revenue: broadcasting, commercial, and matchday. This 17th edition of Football Money features clubs from England (6), Italy (4), Germany (4), Spain (3), Turkey (2), and France (1). Yes I said, Turkey. The Money League is considered to be the “most contemporary and reliable analysis of the clubs’ relative financial performance” and is composed by Deloitte’s Sports Business Group.

Overall, this years 20 Money League Clubs saw a total combined increase in revenue by 8%, reaching a total combined revenue of €5.4 billion ($7.39 billion). The following are my noteworthy takeaways of the 2012/2013 Money League report:

   Real Madrid is ranked number one for the 9th year in arrow with €518.9m
   Bayern Munich surpassed Manchester United for 3rd place with €400m
   Two Turkish clubs, Galatasaray and Fenerbahçe made the Money League for the first time
   All Money League Clubs produced over €100m respectively 

The Money League report demonstrates football’s resilience within challenging market conditions. More so, it alludes to the notion that the business of football continues to grow, collectively, even in smaller markets. It is important to note that for the first time ever, to be placed within the top 20 revenue generating clubs, revenue totals needed to have exceeded €100m. In fact, if Deloitte were to expand the Money League to include thirty clubs, all thirty of the clubs would have surpassed the €100 million mark. To put that in perspective, in 1997/1998, the first edition of the Money League, Manchester United was the only club to have exceeded that total. It wasn’t until the 2008/2009 report that all twenty clubs saw revenues upwards of €100m.

Perhaps the biggest “upset” in the rankings goes to Manchester United who for the first time since 1998 has been bumped from the top 3. It is not surprising it was Bayern Munich who leapfrogged them in the ranks, as Munich was able to pull off the elusive treble last season. The treble is when a club wins the Champions League, league cup, and domestic cup. So long as Munich does not proceed to repeat the treble this season, expect Manchester United to regain its 3rd place ranking.

The rankings showcase the importance of Champions League and other tournaments in terms of revenue as it leads to more sell-out crowds, sponsorship bonuses depending on performance incentives, and increased television exposure. Galatasaray and Fenerbahçe are examples of this notion. Soccer enthusiasts aren’t shocked to see these Turkish clubs on the Money League as both of these sides had impressive results in tournament play last season with Fenerbahçe reaching the semis of Europa League and Galatasaray making in to the quarterfinals in Champions League.

In examining the revenue streams for the top 10 clubs in the Money League, it is interesting to note that each club listed in the top 10 received upwards of €100m in broadcasting revenue alone, with the exception of PSG who received €90.0m. The English Premier League is well represented in this edition of the Money League as six English clubs are listed, including four in the top eight. The strength of the Premier League teams listed can be partially credited to the league’s lucrative broadcast contract with NBC. Despite the EPL fostering the most valuable television rights for a league, Real Madrid and Barcelona rank comfortably ahead of clubs such as Manchester United and Manchester City due to their unique individually negotiated broadcast-contracts. As Madrid and Barca move away from dynamic broadcast contracts to orthodoxly formatted television deals at the end of this season, anticipate the gap in broadcast revenues between Money League clubs to tighten.

Paris Saint-Germain showed an 80% increase in revenue, the most growth at of any Money League club, as the club moved from 10th in 2011/2012 (€220.5m) to 5th for the 2012/2013 season with €398.8m in revenue. Of its total revenue, an astounding 64% or €254.7m, stemmed from commercial revenues including its sponsorship with Emirates Airline and merchandise sales. This is the highest ever single-revenue source in the history of the Money League. David Beckham’s 5-month loan with the French club is speculated to be the primary reason for the spike in merchandise sales at PSG.

Other clubs such as Man City are proof that in the business of soccer, it is possible to produce incredible levels of revenue even without winning a major tournament. Second-place finishers, City, bolstered its revenue by 17% from the season prior by remaining competitive in all competitions and negotiating large sponsorship deals. Of all clubs in the Premier League, City relies heaviest on commercial sales, which account for 53% of its total revenue (€316.2m)

In terms of matchday revenue, Manchester United accumulated €127.3m in revenue, far more than any other club. When discussing matchday revenue, it is crucial to consider the disparities in stadium sizes of each of these clubs. In comparison, the most popular Italian club, A.C. Milan, plays its home matches at San Siro, which has capacity of 80,018, only generated €26.4m in matchday revenue. Old Trafford, home to Manchester United, has a capacity of five thousand less at 75,765. In actuality, the biggest reason for the difference in matchday revenue in Italy compared to the rest of Europe is that fact that Italian clubs do not own their own stadiums, making it difficult to capture large portions of matchday sales.

For the time being, it remains to be seen if any club can surpass Real Madrid and Barcelona from a revenue perspective. It's simple: Madrid and Barca feature the two most marketable players in the world right now in Cristiano Ronaldo and Lionel Messi. While Deloitte's report reveals that players and trophies don't account for all revenue totals, these two players are an exception as they bring an unquantifiable amount of brand recognition to their respective clubs. Until one or the other departs from his respective club, I can’t see anyone besides Manchester United to leapfrog them in the rankings. While it was revealed in 2013 by Forbes that Madrid is the most valuable sport franchise in the world at $3.3 billion, United have the marketability and global allegiance to compete for highest revenue in next year’s edition. However, with the recent announcement by Barcelona to build a new stadium and United’s apparent lost hope for a trophy this season, don’t be surprised if the top 3 positions remain identical in the 2013/2014 report.  


No comments:

Post a Comment