With the football industry considerably and consistently multiplying its revenue stream from advertising partners to TV & image rights, football clubs and professional players have entered a new era. This augmented funding means that football clubs can afford to re-invest in tools and research necessary for the growth of the club and its players on a footballing level, which in turn can be transformed to enhanced performances on the pitch.
Anyone who watches football has at least some remote knowledge of the high amount of finances which are involved in the sport. Just to give you an idea of how much income the richest football clubs generate, here are some points to get us started:
- The top 20 clubs in terms of revenue have amassed an aggregated revenue of €6.6 billion during the 2014/2015 season
- The top three clubs surpassed the €500m revenue mark.
- Real Madrid, the world’s richest club, generated €577m in 2014/2015. They are followed by Barcelona with €560.8m and Manchester United with €519.5m.
Even though these figures don’t take taxes into account, the preliminary numbers present a healthy profit for the top 3 richest clubs in the world.
So, how do clubs make money?
There are three main revenue streams which make up a club’s financial profit:
- Match day revenue (gate receipts)
- Broadcasting revenue (domestic and international)
- Commercial revenue
Of €577m, Real Madrid made €129.8m of it from match day revenue, €199.9m from broadcasting deals, and €247.3m from commercial deals.
Barcelona’s €560.8m breaks down to €116.9m in gate tickets, €199.8m from broadcasting, and €244.1m from advertising deals.
Third-place Manchester United boasts €114m in match day revenue, €141.6m in broadcasting revenue and €263.9m in commercial deals, all adding up to €519.5m for 2015.
EPL Broadcasting Revenue
With the English Premier League as the most-watched football championship in the world, broadcasters Sky Sports have agreed to pay an average of £10.8m per game from 126 games spanning from the 2016-2017 season until 2018-2019, with BT Sport paying £7.6m for 46 games across the same period.
This amounts to a combined £5.1bn deal only accounting for domestic broadcasting, with foreign broadcasters paying a separate fee. At £81m per season for each top 20 football club, foreign broadcasters’ funding could push that deal over the £100m line per team; with over 95% (£4.9bn) of the total funds going to football clubs.
With matchday revenue and commercial deals pushing clubs’ overall income well into the tens of millions every season, the only factor of the three which is more or less volatile is the income generated from gate receipts; given the fact that the number of matchday attendees will vary from game to game.
Of the massive revenue model cited above, the top 20 English clubs spend about 70% of this income on player wages, which would equal to a collective of £3.42bn going into the pockets of Premier League players and their agents.
Under the current deal, £56m (or 5%) of the EPL TV income is reinvested in grassroots football, charitable causes, and community projects. With the augmented TV deal covering the 2016-2019 seasons, this potentially maintained 5% would translate to £256m across that period, or £85.3m per year.
Of the remaining funds, every individual club has different investment priorities. Some football clubs decide to improve their training facilities, carry out stadium renovations/refurbishments, invest in their data analysis department, or just spend the majority of their funds on player transfers.
Will football change? Yes. Will it ever return to ‘simpler’ times? Not a chance.
What’s set to happen? The game will continue to evolve. Contemporary football teams compete at a much higher level than the best teams of the 1970’s, 80’s or even 90’s. Training facilities will get more sophisticated which in turn will improve players’ levels; analysis will get more detailed which will result in improved scouting and less judgement errors; and clubs will get richer, therefore boosting the continual expansion of the previous two points, along with a hundred of other factors which form the whole makeup of a modern football club.
As much as the football purists would hate to admit, the reality of the matter is that a 21st century football club is a business almost as much as it is a football ‘family’. The fact that the sport’s popularity has grown immensely between 1990 and 2016 means that more businesses want to get involved and consequently, the price of demand rises over time. With football clubs and governing bodies opening their doors to investors — in turn allowing the former’s higher financial power to be reinvested for the purpose of competing with their peers.
Everyone wants a piece of the proverbial cake; with each slice coming at a hefty sum.