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The Moneyed League - SBI Barcelona

The Moneyed League

 

Naming a set of twenty highest revenue generating clubs ‘The Moneyed League’ is not for nothing. In 21/22, the cumulative revenue generated by these twenty clubs is almost 54% of the total revenue generated by the all the 98 clubs of ‘big five’ leagues combined. That, in a nutshell, is the reason why we are forced to call them ‘The Moneyed League’

 

Every year, Deloitte releases a report profiling the top 30 revenue generating clubs. We sank our teeth in the last few year’s reports and got some interesting insights. This article is their compilation

 

The Revenue Growth

 

The moneyed league clubs have been displaying a consistent cumulative revenue growth to the tune of 9% CAGR over the last 3 years. The chart displays the values per season and its growth

 

The Moneyed League - SBI Barcelona

 

Looking further into the growth story the question arises, how much did each revenue stream contribute?

 

The answer might be surprising, it is the commercial revenue stream growing at a consistent 8% CAGR which led to the overall revenue growth. We can leave the matchday revenue for 20/21 (it was severely affected by the pandemic) but still the absolute value is quite insignificant compared to that of the commercial revenue. The chart shows the comparison

 

The Moneyed League - SBI Barcelona

 

 

Further down the insight stable, looking at the contribution by stream:

  • Matchday revenue stream contributes 18% of the total revenue
  • Broadcast income contributes 40% of the total revenue
  • Share of commercial income is highest at 42% of the total revenue

 

League Within the League

 

It is a big surprise to understand that there is a league within the league J

 

15 clubs have REMAINED IN TOP 20 over the last 3 years. Between them they contributed about 86% of the total revenues. Incidentally, 9 clubs out of these 15 were a part of the erstwhile Super League.

 

That’s not all. The top 10 clubs contribute 68% of the total revenue generated by these top 20 money league clubs

 

Not only are the revenue gap between ‘the money league clubs’ and others increasing but even within themselves, there is a big gap and that is increasing y-o-y.

 

  • The revenue gap between top 10 and next 10 is about €3.8bn in 22/23
  • In 20/21 it was €2.7bn, in 21/22 it was €3.3bn which increased to €3.8bn presently
  • As per data (given in chart) commercial revenue is the reason behind the increase in this gap. It has steadily increased over the last 3 years

 

The Moneyed League - SBI Barcelona

 

The Private Equity Connect

 

When there’s big money involved, can private equity be left behind? Same principle at the moneyed league clubs. 47% or 14 of the 22/23 top 30 money-league clubs are backed by investors with a private equity (PE) connect.

Now, here is a more interesting fact, private equity investments have been spawning multi-club ownership (MCO) structure in the football industry, the tentacles of which have engulfed the moneyed-league clubs too

 

  • 57% or 17 of the top 30 money-league clubs are part of the multi-club ownership (MCO) network
  • 33% or 10 of the top 30 money-league clubs are part of both, the MCO network as well as PE connected

The chart gives us a picture

 

The Moneyed League - SBI Barcelona

 

The trend is set to expected to continue at a faster pace.

 

Clubs with Maximum Growth

 

Here are the clubs which grew most in revenues in the 5-year period

 

Manchester City – 35%

PSG – 26%

Tottenham Hotspur – 21%

Arsenal – 20%

Chelsea – 15%

 

Each have their own contributing reason for growth

 

  • Manchester City – Commercial revenue grew by 53% in this period where as for PSG, it’s the increase in broadcast income by 59%. For Tottenham, it’s good performances leading to increase in commercial income by a whopping 72% & matchday income by 47% while for Arsenal, it’s the increase in commercial income by 55%
  • For Chelsea, all streams contributed equally by increasing 15% leading to overall increase. They will, of course, be hit badly by the lack of European competition broadcast money in 23/24

 

The Moneyed League - SBI Barcelona

 

Financial Sustainability Check

 

Wages to revenue ratio is considered a good measure of the football club’s financial sustainability. Looking at the moneyed league clubs’ data from Deloitte Money League reports and gathered some insights:

 

Average wages/revenue (W/R) ratio in 22/23 is 60%, down from 70% in 21/22 (19 clubs are considered for 22/23 as one club has not reported W/R ratio data). Also, in 22/23, 4 clubs reported > 70% W/R ratio which has substantially improved from 9 clubs in 21/22 when 6 clubs had reported a very high W/R ratio of >80

 

The difference has been with FC Barcelona & Chelsea who have reported an increase in their W/R ratio

 

On the other hand, maximum reduction or optimization has been achieved by

  • PSG: 34 percentage points (pp)
  • Inter Milan: 21pp
  • Juventus & Real Madrid: both by 19pp

 

The Moneyed League - SBI Barcelona

 

Conclusion

 

As is said, people follow the leaders, in this case can the same be said about the other clubs? That is for time to tell but one thing is for sure, the leader’s growth path isn’t likely to slow down in the near future.

 

Image Source: 90min.com

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