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Money and Football: The Rich Are Getting Richer!

Football is a money sport. This is neither a news worthy observation nor a provocative statement. But once in a while numbers and figures pop up which makes you wonder about the influence of money in the game. And what the consequences might be.

Spanish Supremacy

For a financial power house like Real Madrid C.F. their business has become so strong that even though they fail to keep as high on pitch performance rate - especially in the international tournaments - as their Catalonian rivals they are still second to none when it comes to generating revenues.

In fact the Sports Business Group at Deloitte states in their annual report about football and finance that Real Madrid’s €161m revenue from broadcasting is greater than number 20 to 11 on the list of top earning clubs combined. Especially broadcasting rights is what drives the income in national and international leagues.

The list of the 20 most revenue generating clubs in Europe fails to surprise since the clubs represented are more or less the same year after year. The report focuses on the season 08/09 and in the top five earning clubs only one team is different from the 07/08 season.

Qualifying For Football Heaven

Qualifying to the group stages of the UEFA Champions League continues to be the closest thing to the promised land football can offer. When the league was launched in 1992/93 the total commercial revenue was €45m. For the 09/10 season that number is expected to be €1.1 billion.

Worth noting is how the percentage of Champions League related revenue in each club differ from 9-23%. When generating annual revenues above €400m rich clubs like Real Madrid are of course less dependent on what Champions League adds to the books compared to what they make from their brand related activities.

Besides making a huge profit from broadcasting and commercials, merchandising is one of the other ways to monetize the club brand. And when it comes to merchandising Real Madrid is once again above the rest.

“Merchandising revenues increased from €12m to €54m as Figo, Zidane, Ronaldo and Beckham arrived in successive summers. Sponsorship increased from €23m to €46m”.

-Deloitte

Excitement At Risk?

The top 20 earning clubs consists of clubs that dominates their domestic leagues. But maybe the gab between top earners and the poor clubs entails some kind of risk for the game. A British study from 2004 concludes that the competitive balance between Premier League clubs is decreasing thus leading to more predictable results. In 2004 the five leading clubs took 35% of the points compared to only 29% in 1993.

The main concern based on these findings was that the lack of competition could lead to a kind of indifference from football fans. And declining figures for numbers of sold stadium seats supports the claim. If this really is the case then why shouldn’t the increasing apathy apply to football in general?

Two Answers

People not turning up doesn't mean they don't watch the games. The gigantic increase in broadcasting revenues can be interpreted as such. As I'm sure many of you do too, I really enjoy watching football on the telly. And my HD plasma hasn't made the experience any less watchable. In fact I find myself going less and less to the stadion.

On the other hand the real problem for the poorer clubs losing or missing out on potential 23% of the revenue can cause serious financial problems. Depending on the broadcast agreement for the domestic league failing to qualify for the CL can start a downwards spiral. Too much dependency on CL results thus becomes a risky business.