Football is undoubtedly the most popular sport in the world. It is easy to understand and has universal appeal. The sport is ardently played and followed in over a hundred countries. No wonder it is called ‘The Beautiful Game.’ The modern game has advanced tremendously, since its formal inception in the late 1800s.
It has just been a year since we witnessed the FIFA World Cup Finals in Russia and almost half the world’s population tuned in. Perhaps, the biggest thing after the FIFA World Cup is the UEFA Champions League. UEFA is football’s governing body in Europe. It hosts 2 competitions each year- namely the UEFA Champions League (UCL) and the UEFA Europa League (UEL)- where Europe’s elites compete to win the coveted trophies. Over the past couple of days, as football fans, we’ve been fortunate enough to witness a historic European campaign of teams in both tournaments.
The semi-finals of the tournament were possibly the best we’ve ever seen. In the Champions League, Liverpool FC, came back from a 0-3 deficit, to beat the competition favourites- and the team that is home to football’s GOAT (Greatest of All Time) Leo Messi- FC Barcelona, to thrash them 4-0. The dark horses of the competition- Ajax Amsterdam were beaten 2-3 but Tottenham Hotspurs of North London, after a dramatic injury time winner. In the Europa League, Arsenal’s Pierre-Emerick Aubameyang scored a hat-trick against Spain’s Valencia CF in the second leg to take them to the finals. On the other hand, Chelsea’s Kepa Arriabalaga made 2 incredible saves against Eintracht Frankfurt in the penalty shootout, to ensure a finals spot.
So, for the first time in the history of the game, are all 4 finalists from the same country- England. The Champions League Finals take place on the 1st of June, in Madrid, between Liverpool FC and Tottenham Hotspurs. Meanwhile, the Europa League Finals take place on the 29th of May, in Azerbaijan, between the London clubs Chelsea and Arsenal.
With such high stakes, the money being flushed into the sport is increasing by the day. An insane amount of money is splashed on deals and players, by some of the world’s biggest corporations and wealthiest businessmen. In 2017, Neymar Jr. moved from FC Barcelona to Paris Saint Germain (PSG), in shocking move which cost PSG 198 million pounds (or 222 million euros). All this money for one player; ONE PLAYER. In 2014, Manchester United signed a deal with Adidas worth 750 million pounds, over a period of 10 years. While Real Madrid remain in talks with Adidas over a massive 1 billion deal, spanning over a decade. When one looks at the worth or value of some of biggest football clubs, they understand the scale of operations.
Football Clubs with Maximum Value in Football:
This pegs an important question, what are the Sources of Revenue for a Football Club?
Match day tickets: The club fixes the price of tickets according to its needs. In the Premier League itself, it ranges from 97 pounds per ticket charged by Arsenal, to 30 pounds charged by Huddersfield Town. The price of tickets varies from competition to competition.
Season tickets: Loyal fans of the club are entitled to the purchase of season tickets, where you get tickets to all 19 home games of a team- at a subsidized rate.
Stadium capacity: The price of tickets when multiplied with the number of seats, tells you the total revenue from ticket sales. Camp Nou, FC Barcelona’s home ground has a capacity of almost 1,00,000 seats. While Manchester United’s Old Trafford has about 77,000 seats.
Apart from ticket sales, food and drinks purchased by fans also contributes to matchday revenue.
Each football club has multiple sponsors. Collaborations with football clubs increases marketability and brand appeal of any company exponentially. Each team has jersey sponsors, whose logo is highlighted on the front of the shirt, below the team’s crest. Some popular collaborations are:
Manchester United- Chevrolet
Liverpool- Standard Chartered
Real Madrid- Fly Emirates
This has also gotten to a point of absurdity when teams have Official Tyre Partners and Official Lubricant Partners also.
The English Premier League is by far the most dominant league in the world, when it comes to Broadcasting Revenue. The current active TV deal in England, from 2016 to 2019, is worth a staggering 5.136 billion pounds- paid mainly by Sky Sports and BBC Sport.
Domestic TV Money in the deal was worth 1.76 billion pounds. This is divided into 3 key components:
Overseas TV Rights are worth 780 million pounds per season, which is divided equally among the clubs. By this, each team roughly earns 39 million pounds.
Player Sales form another important part of a club’s revenue. Ajax Amsterdam has a famed youth academy, and their revenue model primarily focuses on earning from player sales. The team recently sold a 21-year-old Dutch International Frankie De Jong to FC Barcelona for an incredible 75 million Euros.
Expenses of a Football Clubs
Non-Financial Reasons to Invest in a Football Club (example)
A lot of failing businesses look to football in order to reinvigorate their companies.
Popular Banks Who Have Invested in Football
Barclays- Between 2001 and 2016 Barclays enjoyed a great partnership with the Premier League as their title sponsor, and banker- when it was called Barclays Premier League.
They continued the relationship by agreeing to become the Banking Partner of the Premier League until the end of the 2018/19 season, a deal that has been renewed through to the 2021/22 season.
American credit card provider Capital One had a 4-year sponsorship deal with the English League Cup, which was worth 5.5 million a year. Although, after the expiry of the deal, it wasn’t renewed.
But Capital One now want to invest their promotional and marketing budget elsewhere — concentrating on television advertising. They believe the four-year football agreement will have achieved the recognition they wanted. People in the UK previously thought they were a radio station.
Standard Chartered have sponsored Liverpool since 2010, initially on a £20m-a-year deal. The current agreement, which runs to the end of next season, is worth £30m per season and the new deal is a significant upgrade.
United’s agreement with AIG was the richest shirt sponsorship deal in English football and was signed in April 2006 after Vodafone ended its £9 million-a-year deal.
The contract with AIG was worth around £14 million a year, with United was confident at that time that the company will be able to fulfil its commitment to the agreement.
With large transfer fees and huge wages in club football, clubs usually resort to debt financing.
Manchester United have a loan worth as much as 1-billion. The loan was taken by their owners- the Glazer family. But the club hasn’t faced a problem due to:
Hence, we can conclude that football and finances go hand in hand. Wherever there is opportunity, banks and corporates will find their way. Football will only become more cash rich, and the banking sector will capitalize on the opportunity.
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