Commercial Revenues: On the Rise
In the truest sense, commercial revenue is completely dependent on the club. Rest of the revenues are dependent or are factored by external sources like broadcast depends on the number of games telecast, league ranking etc. Similarly, for ticketing revenue, its bound by the stadium capacity etc. Commercial revenue is independent of all external factors
It is the commercial revenue stream which can build the club profile strongly.
How much does commercial revenue contribute to the total revenue?
As per data from Deloitte Annual Review of Football Finance, commercial revenue comprising of sponsorships, licensing, retail including merchandising contributes to approx. 30%-35% of total league revenues in 2021/22
As we look into the revenue share by club, we see a very interesting trend. The more popular / global a club is, that is a club with a bigger fan base, has a higher share of commercial revenue. This is implying the direct connection between fan base and commercial revenue.
Below chart shows the contribution share of Premier League clubs in 2021/22
It can be observed that the share of top 6 clubs is over 35%
Equation with Social Media Following
As we stated before, Commercial revenue of a football club is directly proportional to its fan following.
To understand this in a better manner, we corelate social media following from teams in Premier League 22/23 season and analyse with their commercial revenue (21/22 season). Here are the interesting observations
- Top 6 clubs, >90m SM followers (87% of total followers) – 78% commercial revenue
- Next 5 clubs, 10-25m followers (8% total followers) – 11% revenue
- Bottom 9 clubs, <10mn followers (5% total followers) – 11% revenue
This reiterates the fact that more global appeal leads to higher commercial revenues
Dominance of the Bigger Teams
The gap between average commercial revenue of big clubs and average of the rest of the clubs comprising the league is very big, to some extent disturbing the financial equality in the league
To illustrate the point, here’s a chart mapping the average commercial revenues of big clubs with that of the balance league and we get a very insightful picture
- The gap between Premier League’s top 6 clubs and & rest is 7X
- Similarly, for LALIGA, top 3 & rest is a whopping 17X
- In Bundesliga, the top 2 & rest, 5X
- For SerieA, Top 3 & rest is 5X
- Ligue1 presents an even more stark comparison, the gap between PSG alone & rest is 11X
The power of commercial revenue can make a club global and vice versa. The focus is to strategise, plan, implement and review an objective led marketing plan to develop the club brand. This will help the smaller clubs to increase their share of commercial revenue and at the same time open bigger clubs to newer territories