At a time when the broadcast revenue stream which was once the primary growth driver for football clubs, seems to be plateauing, it’s time for the clubs to step up on their other revenue streams namely, ticketing or stadium-based and commercial revenue. Stadium-based revenue might require a push in the form of stadium redevelopment, which in the long run pays very handsomely as we have seen in the case of Real Madrid, Newcastle or Tottenham. It is the commercial revenue stream which includes sponsorship, licensing & merchandising that is slated to become the growth driver for the club’s overall revenue.
The important thing here is that commercial is largely controlled by the club and it would depend on how they would want to grow this stream. In this blog, we will look at how commercial revenue is the growth driver for the highest revenue generating clubs
Highest Revenue Generating Clubs
The accumulated concentration of brand-pulling power in the twenty highest revenue generating clubs is so strong that it corners half of the entire commercial revenue generated by 730+ top tier European clubs. In 22/23, of the estimated €8.5bn total commercial revenue, €4.43bn is accumulated by these twenty clubs.
The aggregate commercial revenue for these clubs have been increasing and reaching new heights year-on-year. Since the emergence from pandemic from the year 21/22, these 20 clubs have been recording a CAGR of 8%, reaching €4.87bn aggregate total. This is estimated to be in the range of 55%-60% of the total commercial revenue generated by the ‘big five’ league clubs combined (including other commercial as reported by Bundesliga and Ligue 1 clubs).
In the 23/24 list of highest revenue generating clubs as released by Deloitte Money League, the commercial revenue range starts from €43m recorded by Aston Villa to a whopping €482mn recorded by Real Madrid, almost 11X jump. Except 3 clubs, all other in the top 20 clubs posted commercial revenue in excess of €100m. A rough segregation can be put as:
- Four clubs posted commercial income greater than €400mn
- Three clubs in the range of €300m – €400mn
- Five clubs posted commercial income between €200m – €300mn
- Five clubs posted between €100m – €200mn
- Three clubs posted less than €100mn in commercial income
Diminishing Gap?
A very encouraging trend observed in analysing the commercial incomes of clubs is that the CAGR by the highest revenue grossing clubs (commercial income, big five leagues combined) is 6% (from 18/19 to 22/23) which is way less than that of the other clubs combined, 12% CAGR. This might imply that commercial income stream is being given due importance by the other clubs but that does not take away the vast gap observed between average commercial revenue recorded by the bigger clubs with the average recorded by rest of the clubs. This somewhat gives a glimpse of the financial inequality in the leagues. To illustrate the point, here’s a chart mapping the average commercial revenues recorded by clubs in 22/23.
Key points to note:
- The gap between Premier League’s big 6 clubs and & rest is 8X
- LALIGA demonstrates the most drastic picture with Real Madrid and Barcelona towering over with an 18X average commercial revenue value over the average revenue for rest of the clubs.
- In Bundesliga, the top 2 & rest, 4X, while for Serie A the gap between top 3 clubs & rest is 6X
- Ligue1, it’s almost 7X gap between PSG alone & rest of clubs
Way Forward – Be Creative
The term commercial incorporates a vast array of opportunities for the football clubs to explore and generate more revenue scopes. It is time to get out of the traditional sponsorship and licensing model and evaluate new methods. A few thought pointers could be:
- Segregate and utilise digital assets in their own way. A digital only content partnership for social media involving long-form videos for YouTube and short videos for TikTok / Instagram Reels and so on.
- A shared-revenue model can be explored. Not many brands have the capacity to sponsor a football club. Instead a shared-revenue model for some of the brands who are looking at a sales push through football clubs can be a win-win for all stakeholders
- Stadium naming rights is another example of underutilized asset. Amongst 730+ European top tier league clubs, there is a visible lack of efforts towards utilizing stadium naming rights as revenue source.
- Only 18% across 700+ top-division clubs have stadiums with naming rights
- Top-division clubs of 19 countries still don’t have a single stadium sponsor
- Countries with highest percentages of stadiums with naming rights: AUSTRIA – 83% & GERMANY (Bundesliga) with 78%
- The situation in the rest of the big five leagues are as follows:
- Premier League – 25%
- LALIGA – 30%
- Serie A – 20%
- Ligue1 – 22%
In Conclusion
The power of commercial revenue can make a club stronger and go global. Need of the hour is to revisit existing strategies and plan, implement and review an objective led marketing plan to develop the club’s commercial aspect.
This will help the smaller clubs to increase their share of commercial revenue and at the same time open bigger clubs to newer territories
