Five Ways Football Clubs Make Generate Profit
Football is one of the most popular sports across the world, and it is also known to be one of the most lucrative sports due to the huge numbers it generates in profit. Football’s immense popularity translates into financial power for the clubs that captivate fans worldwide. Beyond the jaw-dropping transfer fees and player salaries, a network of income sources fuels these clubs’ financial success.
While throwing money at players can be a shortcut to success in modern football, it’s not the only path. Well-managed smaller clubs can punch above their weight, generating revenue through strong performance. This allows them to attract talent, fueling a virtuous cycle of on-field success and financial growth. Sustainable management, not just big budgets, can be a key to achieving footballing glory. So, how do football clubs generate profit? Below are five ways they achieve this.
Commercial
Commercial revenue is a financial powerhouse for football clubs, encompassing income from sponsorships, merchandising, tours, friendly matches, and other partnerships with third-party brands. Retail sales of jerseys and other branded items also fall under this category. So, while football fans play games at casinos not on GamStop in their new jersey, the clubs continue to generate profit from each jersey they buy.
This revenue stream emerged in the 2000s and revolutionized the business model of football clubs, particularly for those with a large and engaged global fanbase. Teams like Real Madrid, a powerhouse in commercial revenue, generated over £335 million in this category according to the 2021 Deloitte Football Money League. This highlights the potential for successful clubs to leverage their brand and fanbase, transforming themselves into global entertainment businesses beyond just the sport itself. For top teams, commercial revenue can contribute a significant portion of their overall income, often reaching 30-50%.
Shirt Sales
Major teams understand the power of a star player on merchandise sales. Estimates suggest clubs earn between 7.5% and 10% on each shirt sold.
Take Cristiano Ronaldo’s high-profile transfer to Juventus in 2018. Juventus paid Real Madrid nearly £100 million for the player, but the financial windfall extended beyond the transfer fee. Within 24 hours, Adidas, Juventus’ kit sponsor, sold an estimated 500,000 Ronaldo jerseys. This translates to a potential revenue of £3.6 million to £4.8 million for Juventus – a significant sum highlighting the synergy between clubs and apparel companies.
While the demand for jerseys can be immense, managing the logistics of printing and distributing millions globally can be a challenge. This is where kit manufacturers step in. With their global network of stores, they handle the heavy lifting, boosting both their brand and the clubs’ sales. The arrival of a superstar like Messi at PSG exemplifies this perfectly. In 2022, PSG reportedly generated a staggering $130 million from Messi shirt sales alone.
Matchday Sales
For English clubs, particularly those in the Premier League, matchdays are a significant revenue generator. These clubs strive to create a dreamlike experience for supporters, offering value through tickets, food, and beverages.
The Premier League season consists of 19 home games for each team. Season tickets offer fans discounted entry for the entire season, typically purchased before the season begins. For those who can’t commit to a season ticket, individual match tickets go on sale closer to the game date.
Broadcasting Rights
Television rights are the biggest moneymaker for top European football clubs and leagues. Broadcasters compete fiercely to secure the rights to air matches, turning fans around the world into a massive revenue stream. Take the Premier League, for example. In 1992, its international rights were worth a mere £40 million. Today, that figure has ballooned to a staggering £3.83 billion.
Domestic rights are auctioned in packages, with the most expensive costing Sky Sports nearly £9.3m per game. Revenue is then split – 50% equally, 25% based on league position, and 25% as a fee per televised game.
Transfer Market
As a football fan, you were probably flabbergasted about how much Neymar Jr cost PSG in transfer fees, and how much Juventus paid for Cristiano Ronaldo to Real Madrid. Many still think that the fee is outrageous. Yes, the transfer market has been quite outrageous ever since Napoli bought Giuseppe Savoldi from Bologna for £1 million in 1975.
Many football clubs make huge amounts of money from the transfer market including Tottenham Hotspur who was paid £82million for Harry Kane by Bayern in 2023. The point is that the transfer values continued to rise over the years, with players becoming more valuable than ever before.
Conclusion
Football’s immense popularity translates into financial power for the clubs that captivate fans worldwide. But success isn’t solely measured by trophies. Well-managed clubs, big or small, can generate revenue through strong performance, attracting talent and fueling a virtuous cycle. However, financial success hinges on a diversified approach.
Clubs leverage their global fanbase through commercial deals, merchandise, and matchday experiences. Television rights are the biggest moneymaker, with broadcasters battling for the right to air matches. Finally, the transfer market allows clubs to capitalize on player development and strategic acquisitions. Understanding these revenue streams unveils the intricate interplay between passion and profit that fuels the beautiful game.
