Financial challenges have become a well known concern for elite football clubs. Understanding the details in football clubs’ financial troubles is important, from TV deals, merchandise and commercial deals has an impact on a club’s potential to flourish and succeed on the pitch.
Manchester United : The Case of Commercial Success
Manchester United one of football’s most iconic brand or football club, they experienced amazing revenue growth over the past decade. Manchester United financial growth is down to securing lucrative commercial deals all around the world.
Manchester United’s revenue flywheel has seen its top line triple from £280 million in 2009 to nearly £600 million in 2022. A significant portion of this surge can be credited to the club’s unmatched proficiency in the realm of commercial revenue. This revenue stream, derived from private agreements with various companies, has seen exponential growth, quadrupling from £65 million in 2009 to nearly £260 million by 2022.
The differences between Manchester United and other clubs is its relentless pursuit of commercial partnerships. The club’s jerseys have sported the logos of globally renowned brands, from Vodafone to AIG, Aon, and General Motors, with staggering sponsorship amounts attached.
Manchester United’s responsibility to commercial success is highlighted by its decision to go public. In 2012 the club went on to the New York Stock Exchange. Manchester United financial success is proof that securing commercial deals and using their global brand to drive up revenue growth. While the focus on profitability and shareholders’ interests is evident.
This strategy suggests that, as long as the money keeps coming in, the owners and board members don’t care about on field performances or any of the facilities. This view has led to alot of criticism from fans, pundits and former coaches who have have said Manchester United as a “commercial club” rather than a football club.
Juventus: Balancing Commercial Growth and Financial Stability
Serie A though prestigious, has historically lagged behind the English Premier League in terms of global viewership and broadcast revenue. Juventus has adopted a strategy that mirrors that of Manchester United focusing on expanding its commercial revenue.
One of the most interesting moves in Juventus’ pursuit of commercial growth, Juventus signed Cristiano Ronaldo from Real Madrid in 2018. Of course Ronaldo brought undeniable attention and global appeal to the club, his addition came at an outrageous cost. They brought Ronaldo for his experience and mentally to boost the team morale and improve on-field performance, and also help its commercial revenue through increased shirt sales, sponsorships and international recognition.
The club had to fall back on capital injections from one of their owners Exor, to stay afloat. The situation took turn for the worst, they were under criminal investigation for alleged false accounting, revealing the extent of Juventus’ financial troubles. Prosecutors claimed that the club’s losses were far bigger than they had reported, suggesting under the table payments to players and to inflated player sale as attempts to mask the financial trouble.
Juventus’ pursuit of commercial growth, while successful in some aspects, highlights the fragility of football club finances. This highights the challenges that even well established clus faces in balancing financial stability with the demands in modern day football. In Serie A, its hard to get good or better boardcasting deal maintaining on-field competitiveness remains a central issue.
Juventus looked at other top European football giants for inspiration and guidance. Clubs like Barcelona and Bayern Munich who have managed to maintain their competitive edge while staying financially prudent, offered valuable lessons. Juventus began focusing on nurturing young talents from their own youth academy and adopting a more sustainable approach to player recruitment.
Barcelona: The Perils of Overspending
Barcelona’s revenue primarily consists of three main streams: matchday revenue, broadcasting income, and commercial revenue. Historically, the club has always in a powerhouse in generating money, particularly in matchday revenue, owing to its massive fanbase and iconic stadium, Camp Nou. The broadcasting income from domestic and international deals has also been substantial, as Barcelona’s matches were globally broadcasted, attracting millions of viewers.
Iit’s the commercial revenue that set Barcelona apart from other elite clubs. Barcelona has always secured lucrative sponsorship deals with the best brands and consistently around the top earners in the world. Shirt sponsorship from Rakuten and shirt manufacturing by Nike were just some examples of these lucrative deals.
One big factor contributing to Barcelona’s financial trouble is the excessive wages for players. A club like Barcelona always have and had some of the world’s best talents at the club, and they are paid very well. Contracts with astronomical wages, lucrative signing bonuses, clean sheet bonus, assist bonus or goal bonus all these add up and these have burdened the club’s finances.
Lionel Messi is probably one of the greatest footballers of all time, of course Barcelona will paid him well with big wages and big bonuses. While Messi’s contributions to the club were undeniable, his contract terms, combined with other high-profile signings, created a financial strain that Barcelona could not sustain.
One drastic measure the club took to address its mounting debt was selling a portion of its future broadcasting rights. This strategy shows a big problem the club are in, they sold off their future potential earning in the boardcasting TV rights. This deal will effect not just Barcelona but the whole of La Liga.
While success on the pitch is undoubtedly essential, it must be balanced with prudent financial management. Overspending and excessive player compensation, even for the most iconic players, can lead to severe consequences in the long run.
A club like Barcelona must focus on developing sustainable revenue income, to be able to control their expenses and show that they are financially stable. Some of the way to do this is stadium redevelopment, they are currently expanding Camp Nou, invest or develop in young talent, sometimes selling one or two players can generate crazy amount of money, commercial innovation, look for other way to get partnerships and sponsorships deals.
These clubs have become global brands, and their success on the field is intricately tied to their financial prowess off it. Man Utd’s commercial success shows how well they are doing without any success on the pitch. Juventus spend big to sign Cristiano Ronaldo to boost their commercial brand and deals. Meanwhile, Barcelona sold one of the best player Neymar than went and overspent on players and their wages, with Messi already at the club.
Striking the right balance between financial sustainability and on-field success is the ultimate challenge, one that clubs must navigate astutely. Financial Fair Play prevent professional football clubs spending more than they earn. It’s not just about winning trophies, FFP is trying to keep clubs from going under or in debt.
Catch you in the next one.