- Football club business models once relied on the sale of game day tickets to drive revenue. As the operating budgets of the most successful teams increase, teams are now finding other ways to make money to remain competitive.
- Revenue from television rights deals and championship prize money can be extremely lucrative, with the club that can win the most games enjoying the largest slice of the pie.
- Player transfers can be a way for smaller clubs to make money, particularly if they become adept at identifying talent early and moving them on to other clubs to collect a sell-on fee. Merchandise sales and other perks like stadium tours are also sources of revenue that are worth pursuing.
Understanding Football clubs business models
According to Forbes, Manchester United star Lionel Messi was the world’s best-paid football player with earnings of approximately $125 million in 2021.
While football is the most popular sport in the world, fans could be forgiven for wondering where the money or justification for Messi’s salary comes from. This is especially true in a pandemic-affected world with consumer confidence at record lows and crowd sizes severely restricted in any case.
Most would argue that football clubs exist to win championships, but they are also businesses whose very survival depends on turning a profit that can be difficult to achieve. According to a 2015 study titled New Business Strategies Of Football Clubs, the viability of a European football club’s business model was impacted by several industry trends, including:
- Globalization of the sport and the player transfer market.
- Increasing human resource costs such as player transfer fees and support personnel wages. As costs rise, clubs without a solid financial foundation may not be able to attract the necessary talent in the future.
- Increasing operating losses, and
- The concentration of sports and/or financial success to a select few clubs. The study reported that just 24 of the 237 clubs reported revenue exceeding €100 million annually.
Matchday revenue was a source of revenue most football clubs relied on before football evolved into the money-making juggernaut it is today. Ticket sales are the most obvious form of matchday revenue, with clubs that play in the largest stadiums able to command the most revenue.
To supplement income in smaller stadiums or where demand for seats otherwise exceeds supply, many clubs offer corporate boxes for business clients and other VIP packages that include more comfortable seating and access to private bars and restaurants.
Revenue resulting from television rights is a significant source of income for football clubs, with the broadcast rights to the English Premier League in the United States alone secured for £2 billion in a six-year deal.
The more matches a football club wins, the greater the slice of television revenue it earns. Despite only making it to the semi-final of the Champions League in 2015-16, Manchester City earned over £76 million from this source.
The winner of the 2022 FA Cup, for example, receives a total of $4.625 million with bonuses awarded for each win as they progress toward the final. However, it’s worth noting that prize money varies markedly between the various competitions that take place around the world.
At the introduction, we noted that player transfer fees were on the rise. While this could be seen as a negative, it is important to remember that for every buyer there is a seller who reaps the rewards. Indeed, a football club may purchase a talented but inconsistent player and then sell them for a higher price once they have more experience.
Some clubs also incorporate a sell-on fee into a player contract that is applicable if the player in question decides to move to a larger club. Queens Park Rangers negotiated a 20% sell-on fee with Liverpool for Raheem Sterling, which netted the club approximately £10 million when Liverpool on-sold Sterling to Manchester City.
Merchandise and other perks
While it seems like every second football fan owns a shirt from their favorite club, the amount of money football clubs make from merchandise sales is relatively small. Manufacturers such as Nike and Adidas take most of the sale price of a jersey, for example, with a club such as Liverpool collecting only 20%. Most fare much worse at around 7.5%, but this can still result in millions of dollars in revenue for the most popular players.
Other sources of income include fan perks such as stadium tours where individuals can experience the player change rooms, walk on the pitch, or visit the club museum. Perks also encompass match day enhancements which we mentioned in a previous section.
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