How do Football clubs make money?
Foreign countries buy the rights to broadcast live games. Recently China paid out £560 million in a contract with the Premier League and Sky Sports/BT Sports agreed a record £5.1 billion venture to show live games. Clubs take 95% of domestic TV revenue so it’s a big pay out.
When players get bought or sold in the transfer window this is another way clubs can make money, and Paul Pogba was bought by Manchester United in 2016 for £89.3 million.
Sponsorship is a big money maker for clubs too. Chevrolet pay Manchester Utd £47 million a year to have their name on their shirt which is relevant to Manchester Utd’s recent performance in the premier league because Chevrolet’s were pulled from European car market at the end of 2015 because of continued losses for its parent company GM.
Merchandise, New ownerships, Prize money and Ticket sales also help clubs rake it millions.
The wonderful world of football is a little more complex than we want to believe. On the surface, we see high level athletes becoming masters at their trade and clubs making huge amounts of money. Its complex because even though the clubs reap the benefits of these multi million or even billion pound deals some of Europe’s biggest teams have been struggling with hundreds of millions of debt for years. Any other company would have gone bankrupt by now but there’s something about the good old sport of football which people seem to love and want to keep afloat. Too popular to fail it seems.
Sprouting from the British in the 19th century, football is firmly embedded within the culture and part of the reason why its so popular is because it’s so easy to play and the rules are simple. Football, along with sports in general is a welcome distraction from life, providing spectators with entertainment and tribal association which stems back to our historical roots. Money has poisoned everything, not just football, but the exponential rate at which its grown in football is unlike anything else. In 1961 average footballer weekly wages were £20 and around 50 years later is well over £30,000 per week. We know where the money is coming from and as long as there is a demand for the sport the cash will continue to flow. As touched on before the reality is that this cash is borne out of debt.
Chelsea Debt – 1.1 billion
Man Utd Debt – £255 million
Sunderland Debt – £139 million
Liverpool Debt – £95 million
Newcastle – £81 million
The list goes on, and the difference between the well run clubs like Man City, Crystal Palace and West Brom can be seen from a financial point of view as these clubs have minimal debt if any at all. The clubs are reaping the benefits of overseas expansion and lucrative TV deals, but this can’t continue forever. Penetrating the US market is impossible even with the dashing but dumb David Beckham as the ambassador for football in the States, and eventually the popularity of football will cease to grow elsewhere as spectator saturation kicks in. The internet is providing people with a platform to view live games for discounted prices and even some cases its free. Once the super heroes of the net have figured out how to offer high quality live streaming of high level games for cheap (or free) then the jig is up. Technology has started to change the way we consume entertainment, and soon entertainment will be solely reliant on how efficient technology is. Football hooliganism, racism, team debt, players death on the pitch and lavish spending won’t be the biggest challenges football will have to face in the future, technology will be. If the teams in the most debt don’t turn it around soon, they could be facing a tough ride ahead. Money allows for teams to buy big name players and attract big name sponsors but I guarantee over the next few years we will start to see the first team victims in high level football.