Gulf money, fans make football clubs recession-proof

The top 20 Money League clubs together earned €4.4 billion, or $5.8bn in 2010/11 – over a quarter of the European football market. The combined revenues are 3 per cent more than the previous year despite the economic downturn biting into almost every other economic activity.

This is among the findings of the 15th edition of the Deloitte Football Money League, which profiles the highest earning clubs in the world’s most popular sport.

According to the report, continued growth in revenues of the top 20 emphasises the strength of football’s top clubs in these tough economic times.

While clubs have undoubtedly had to adjust their approach in certain areas, the large and loyal supporter bases, ability to drive strong broadcast audiences and continuing attraction to corporate partners has made them relatively resistant to the economic downturn.

While seven of the top 20 clubs experienced a drop in revenue in their home currency, this was mostly due to less successful on-pitch performance, particularly in European competition, and the resulting decreases in central distributions and match-day revenues rather than wider recessionary impacts.

Nine of the 20 clubs enjoyed double-digit percentage revenue growth in 2010/11, the report said.

Click here for The Top 20 Money League Clubs The Top 3 Real Madrid tops the Money League for the seventh successive year with an impressive €41m (9 per cent) revenue growth to €480m in 2010/11. “One more year in top position will match the dominance of Manchester United during the first eight years of the Money League,” the report states.

The club’s commercial revenue looks set to remain strong with Real recently securing a five-year partnership with Dubai’s Emirates Airlines from 2011/12.

FC Barcelona retain second place, maintaining a Spanish one-two for the third successive year, with a €53m (13 per cent) growth driving revenues beyond €450m. Nonetheless they remain €29m behind their arch rivals and Money League leader Real Madrid.

The full impact of Barca’s shirt sponsorship deal with the Qatar Foundation worth an average of €30m a season and $5m (€3.5m) prize money gained from winning the FIFA Club World Cup will boost the club’s revenue in 2011/12. This may allow it to narrow, or even bridge, the gap to Real.

Nevertheless, relative on-pitch performance particularly in the Champions League, may determine next year’s top two Money League placings. The study, however, maintains that with both clubs are closing in on revenues of €500m, they are likely to pass this threshold within the next few years. Each club’s annual revenues have grown by almost €200m compared with five years before, a remarkable achievement.

In third spot with revenues of €367m is Manchester United, whose disappointing Champions League performance in 2011/12 means it is unlikely to close the €84m gap to the Spanish clubs. The gulf may widen to over €100m next year, believe Deloitte analysts.

GULF MONEY

The emergence of Manchester City within European club football’s elite (at #12, with earnings of €169.6m), supported by heavy investment from the club’s Abu Dhabi-based owners, and participation in the Champions League in 2011/12 means that the club looks set to break into the Top Ten from next year, at the expense of Schalke who missed out on Champions League qualification in 2011/12 but was the biggest gainer last year.

As a result of the club’s run to the semi-final of the UEFA Champions League German club Schalke was last year’s biggest climber, jumping six places and breaking into the Money League top ten for the first time. Not since the first edition covering the 1996/97 season has another German club, Borussia Dortmund, joined Bayern Munich in the top ten.

A batch of new sponsorship deals commenced from 2010/11, including those with Heineken and Jaguar, to expand Manchester City’s portfolio which already includes Etihad Airways, Umbro, Aabar, Abu Dhabi Tourism Authority and Etisalat.

The club has secured a ground breaking new ten-year partnership with Etihad covering shirt sponsorship, stadium naming rights and other commercial opportunities, which will further substantially boost commercial revenues from 2011/12.

Mancher City’s match-day revenue increased by £2.2m (9 per cent) to £26.6m (€29.5m) primarily due to the 29 games hosted at the Etihad Stadium (compared with 24 games in 2009/10). Over the past two seasons the club has regularly achieved near capacity attendances for league matches, with an average of 45,880 (96 per cent utilisation) in 2010/11.

The club’s heavy squad investment has secured Champions League football for 2011/12. This, when combined with the new Etihad arrangement, will rovide substantial growth across all three revenue sources, and will see City enter the top ten in the Money League next year.

As mentioned earlier, FC Barcelona has been one of the major beneficiaries of Gulf money. Commercial revenue increased significantly from €122.2m in 2009/10 to a club record €156.3m (£141.1m) in 2010/11, boosted by a €15m contribution from the new shirt sponsorship deal with the Qatar Foundation.

The agreement was announced mid-season and will be worth an average of €30m per season until the end of the 2015/16 season. The club reports that the other key factors in this increase in commercial revenues were contractual bonuses from winning the Champions League, increased stadium tour visitors (1.5m), and the development of their new Seient Lliure ticket exchange service in Barcelona.

Barcelona will benefit from a full season of the Qatar Foundation agreement, as well as prize money from winning the FIFA Club World Cup, during 2011/12. If, in addition, Barcelona can continue their on-pitch success both in La Liga and the UEFA Champions League, this may allow them to further close the revenue gap on Real Madrid and to challenge them for the top position in the Money League sooner than later.

On the other hand, Money League topper Real Madrid looks determined to defend its top slot with the club recently securing a five-year partnership with Dubai-based Emirates Airlines from 2011/12.

Click here for The Top 20 Money League Clubs Emirates also sponsors fifth-placed Aresenal, which earned revenues of €251.1m for 2010/11. The club narrowly remain in fifth place in this year’s Money League after recording revenues of £226.8m, which in sterling terms, is a £2.4m increase on the £224.4m earned in 2009/10.

Whilst football-related revenues remained stable, Arsenal generated a further £30m (€33m) in property development revenue, despite a sharp though anticipated decrease, from the £157m reported in 2009/10. The Deloitte analysis focuses on football-related revenue only. Although the Gunners reached the League Cup final, this was their sixth consecutive season without winning a major trophy or finishing in the top two of the Premier League.

Arsenal continue to benefit from excellent facilities and full capacity attendances at the Emirates Stadium, with a league match average of 60,025 in 2010/11. However, there were two fewer Champions League fixtures in 2010/11 and, as a result, a small reduction of £0.8m (1 per cent) in matchday revenue from £93.9m to £93.1m (€103.2m).

Nonetheless, this still represents the fourth highest amount from this source of all Money League clubs and Arsenal are the only club in the top 20 who accumulated more revenue from matchday than any other source.

In contrast to their strength in matchday revenue, commercial revenue only accounted for 20 per cent of Arsenal’s total football related revenue. In absolute terms this is over £57m behind the leading English club, Manchester United.
The Gunners are bound to their long term (£90m) agreement with Emirates, which runs until 2020/21 for stadium naming rights and 2013/14 for shirt sponsor. Given the financial values of the shirt sponsor deals agreed by some of the other top clubs in the Money League, Arsenal will have a significant opportunity to boost commercial revenue when this deal expires.

At #7, leading Italian club AC Milan too benefits from Emirates’ sponsorship. AC Milan sits one place above city rivals Internazionale (#8), after achieving revenues of €235.1m (£212.3m) in 2010/11. Milan won the Serie A title in 2010/11 for the 18th time, the first since 2003/04, and reached the Round of 16 in the Champions League for the second successive season, losing to Tottenham.

Matchday revenue increased to €35.6m (£32.1m) even though the club played the same number of home matches (25) as the previous season. Commercial revenue also improved significantly in 2010/11 to €91.8m (£82.9m). This was driven by the first season of a shirt sponsorship deal with Emirates, worth a reported €12m per season, as well as several new partnership deals including those with Audi, Dolce&Gabbana, MSC Crociere and Taci Oil.

Click here for The Top 20 Money League Clubs Another top 20 club that benefits from Emirates’ largesse is the German club Hamburg SV. The lack of European football in 2010/11 saw Hamburger SV drop five places to 18th, with a decline in revenues of €17.4m (12 per cent) to €128.8m (£116.3m).

A disappointing eighth place finish in the Bundesliga, combined with no European football, saw Die Rothosen drop behind Schalke and Dortmund, to be the fourth placed Bundesliga club in the Money League.

Hamburg’s commercial revenues are supported by an extended deal with shirt sponsor Emirates, running until 2014/15, and the six-year stadium naming rights deal with Imtech, worth a reported €4.2m (£3.8m) per season through to the 2015/16 season.

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