How Professional Football Clubs Earn Money?
Modern football is different from the game of the early twentieth century in that it is no longer just a sporting competition, but a real industry. Football has become a business in which big money is spinning. Some clubs have very modest financial capabilities, while others are ready to throw hundreds of millions for a footballer to play in their team. Where do the football clubs obtain that kind of money? We have identified three main sources. Let’s geek them out.
A professional football club is a business. A large enough and a complex one. To stay afloat, clubs, in addition to football players and coaches, have a huge staff of managers and marketers who carry out diverse activities both within their own country and on the international market. But no matter how difficult it may sound at first glance, the income of any professional club can be divided into three main groups: match day, commercial and broadcasting.
Surprised that we have not mentioned the transfers? No, we are not mistaken. Transfers can sometimes bring huge profits, but their role in the club’s activities is not constant. No club in the world operates based only on possible transfers. Of course, there are such examples as the Portuguese Porto and Benfica, who earn huge money by cultivating future football stars from the Latin American young talents. The whole top division of the Netherlands is a potential pool of young talents, and the matches of Eredivisie are teeming with scouts from various clubs. But still, in the long run, transfer activity does not guarantee the club longevity. Therefore, we do not single it out as one of the main sources of income, but only note that at some point the club can profitably sell its young talent and replenish the club’s treasury.
- Match Day Revenues
So, the third most important source of income are match day revenues. The latter include the income generated during preparation for the match and on the day of the match itself. In other words, these are ticket sales as well as drinks, food, and club’s merchandise.
However, match day revenues bring more financial advantage to those clubs that attract bigger crowds due to their popularity, stadium capacity and ticket prices. The differences can be stark. For example, in the Premier League, Arsenal and Chelsea sell the most expensive tickets – 95 and 85 pounds respectively. At the same time, the most expensive match-day tickets among middle clubs do not exceed 40-50 pounds.
For this reason, many clubs in our time are interested in the reconstruction of their stadium or in moving to a new one. Think about how many clubs you know have changed their registration in the last ten years? Clubs are interested in selling more tickets, even if they are in the cheapest sectors. The holders of the cheapest ticket can potentially spend 5-10 times more buying drinks and food to brighten up their two-hour stay at the stadium.
Barcelona and Real Madrid are the most skilled in match day revenues – last season they earned 110 and 109 million pounds respectively. Spanish clubs compensate considerably lower ticket prices by their huge stadiums. Manchester United, Arsenal and Bayern Munich сlose the top 5.
- Commercial Activities
This source of income is the most diverse. It is often divided into sponsorship and marketing. Football clubs have lucrative sponsorship and advertising contracts, but in addition to that, they also sell football merchandise online or through their own stores. Don’t underestimate the power of the sold t-shirt. Sometimes, owing to the popular surname on the back, a club can beat off the cost of expensive player’s transfer in a few weeks. Of course, this option works mostly for top clubs.
By reach opportunities, advertising in sports has the widest audience. Companies from different niches have more instruments to promote their brand. Fans remember better those products that they see during the match.
Have you noticed how often the big clubs of different countries cooperate with the company Emirates Airlines? Arsenal, Real Madrid, Paris Saint Germain, Milan, and Benfica – all these clubs have “Fly Emirates” as their global sponsor. The company spends 35% of its advertising budget on advertising in football.
In general, Barcelona received the biggest sponsorship pie this year – almost 200 million pounds. At the same time, the lion’s share of this amount was obtained only through two major deals – with Nike on the part of the football kits and with Rakuten as the main global sponsor. Now hold on tight to your seat, according to the recently signed kit supplier deal, Nike will pay Barcelona 100 million per season over the next 10 seasons.
Not far behind, Real, Manchester United, Bayern Munich and Liverpool are on the top five list in terms of highest sponsorship incomes.
- Broadcasting Rights
Although sponsorship in football can bring huge sums, the level of sponsor revenues of a club directly depends on its popularity, size and squad. The smaller the club, the smaller role the previous two sources will play in the preparation of club budget. For this reason, in the first place, we put the incomes from the broadcasting rights sales.
In simple words, in order for the TV channel to show you a match, it must buy this right from the football league. Rights are sold domestically and abroad. The most profitable competition is the English Premier League. The nice thing about Premier League is that the revenues from broadcasting rights in the UK domestic market are distributed more or less equally.
In the next season, for example, the conditional newcomer to the Premier League can expect about 100-110 million in revenue. About 75 million the club will receive from sales in the domestic market, and another 20-30 from foreign packages sales. Still, in the global market, more income is taken by big clubs due to the size of their fan base.
However, for a club like Watford, these revenues can cover up to 80% of the total budget. For large clubs, this percentage will be more modest – nearly 20-30%. But do not forget that the top teams participate in European competitions, in which the broadcasting revenues are extremely decent. For example, Real Madrid earned 80 million pounds only by winning the Champions League.
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