The Business of Soccer: How Football Clubs Make Millions

Highlights

• Match day revenue is a crucial source of income for soccer clubs, with the popularity of the club and the size of the stadium playing a significant role in the amount generated.
• Commercial revenue, including merchandise sales and sponsorship deals, is another key source of income for soccer clubs, capitalizing on the global appeal of star players and the emotional connection fans have with the club.
• Television and broadcasting rights are a commercial goldmine for soccer clubs, with networks and streaming services paying significant sums to broadcast live games, and the popularity of the team playing a role in how much they earn from these rights. The transfer market is a significant indicator of the financial magnitude of the sport, with clubs buying and selling players for exorbitant amounts of money, serving as both an investment on the pitch and a source of significant profits.

From multimillion-dollar player transfers and lucrative sponsorship deals, the business brains behind the world's most popular sport (football, or soccer) have mastered the art of turning their love for the game into cold, hard cash.

The excitement and entertainment value preset on the football pitch is mirrored by colossal financial ecosystems surrounding the world's top soccer organizations. With a global fan base of over four billion people, it is no surprise that the round leather game has seen exponential commercial growth in the last two decades.

From Manchester United and FC Barcelona to Inter Miami FC and Angel City FC, these soccer clubs not only compete for trophies, but also vie for the top spot on the revenue chart through multiple and diverse income streams.

Match Day Revenue

Match day revenue is the oxygen of any soccer club; a survey from 1992 on the business side of soccer clubs in Europe showed that match day income, on average, represented 43 percent of total revenue – and today that number is significantly higher. The electrifying atmosphere of a stadium and entertainment value during games are essential components that contribute to game day revenue.

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Needless to say, the more popular the club is, the more money they make on match days; top soccer clubs in Europe have turned into tourist centers more or less, drawing fans from across the globe. The amount generated from match day revenues not only depends on the club's popularity but also the stadium's size and number of games played in a season.

Consequently, top clubs (playing in more frequent competitions with large stadiums) make a fortune in a single game. The revenue stream from match days varies; for example, in the English Premier League, the average match day revenue for the top six soccer clubs was over $3.6 million, with Manchester United topping the chart for the highest average at $5 million per game.

During COVID-19, soccer clubs in the English championship alone recorded a staggering loss of $1 billion in total; most of this loss was attributed to match day revenue loss, as games were played behind closed doors for over 18 months in 2020 and 2021.

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Commercial Revenue (Also Known As 'Merch')

The business hierarchies in soccer clubs understand the power of their global appeal; to capitalize on this, they turn their star players into global stars. The sales of merchandise featuring popular players, from jerseys to posters and more, at mega stores (owned by the clubs) is a significant revenue source.

These products effectively turn loyal fans into customers; football clubs understand the emotional connection fans have with the club, and they cash in on it. After soccer superstar Lionel Messi signed with the David Beckham-owned Major League Soccer (MLS) club Inter Miami in the summer of 2023, the club witnessed unprecedented success; after going from a second-rate organization to a financial colossus in the league, merchandise sales soared by an astounding 700 percent.

Sponsorship deals are the largest part of a club's commercial revenue; these deals provide not only financial support, but also offer valuable global exposure through kit sponsorships, stadium naming rights, and other means. Football clubs often enter into agreements with companies, ranging from sportswear brands like Adidas and Nike to top corporations like Emirate Airways and Spotify.

These deals go beyond simply displaying logos on jerseys; many sponsors also collaborate with clubs on various marketing campaigns and events. Spanish giants Real Madrid has the most lucrative partnership with Emirates, as it pours the sum of $85 million annually into the club's coffers.

Television And Broadcasting Rights

Distance is barely a barrier when a fan wants to watch their club play; in today's digital age, millions of fans worldwide tune in to watch their favorite teams compete on television or through online streaming platforms. This widespread viewership affords football clubs a commercial goldmine.

Television networks and streaming services pay colossal sums for the privilege of broadcasting live games, which in turn translates into substantial earnings for the clubs. In top European leagues, the league associations own the distribution rights of all the games, and sell these rights to the highest bidders – like BT Sports, SuperSports, BEIN Sport, and DAZN.

Payments made by these services to the league are then distributed among the clubs based on their performances; the more popular a team is, the higher they earn from broadcasting rights.

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The Transfer Market

Transfer fees paid for players' services are the most obvious indicator of the financial magnitude of the sport. Clubs buy and sell players for exorbitant amounts of money, which serves as an investment both on and off the pitch.

A successful transfer can improve the team's performance and bring in substantial profits; interestingly, even smaller clubs can generate grand profits from selling an emerging talent to a top club. Over the years, the transfer market has witnessed severe inflation, which has adversely impacted clubs.

The first seven figure transfer fee was made in 1992 (for Jean-Pierre Papin), and the market has come a long way since. In 2021, the average transfer fee for a player was more than $36 million.

Clubs have made enormous profits from the transfer market; in 2017, Spanish club FC Barcelona received $235 million in payments after selling Neymar Junior to Paris Saint-Germain. Transfer fees are not limited to player sales, as they often include endorsement contracts from the player's sponsors and the player's image rights.

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