Top football clubs in Europe are earning record revenue but there are reasons to worry
“Money, money, money, always sunny, in a rich man’s world”.>
These immortal words of the singing group Abba could aptly apply to the world of elite club football in Europe nowadays.
It’s quite easy to forget that Europe’s economic applecart is almost losing its wheels if one entered the world of elite club football, which continues to look sunny. Never mind that the unemployment rate is doing a double digit at 11.1 percent, with Greece and Spain teetering at the extreme end of the spectrum notching 25.6 and 22.5 per cent respectively.
Such gloomy statistics have not in any way thrown any damper on the beautiful game as stadiums, in the just concluded season, especially during UEFA matches were packed full. Real Madrid’s cashiers should now be heaving a sigh of relief, after coping with an average attendance of 70,000 every match day. These just shows that live matches are one of the few things people are willing to pay premium price for irrespective of the economic outlook.
Television networks were also willing to pay an arm and a leg to acquire such rights to broadcast these matches, fattening the coffers of clubs. No wonder the English premiership, despite the backdrop of economic uncertainties hovering over Europe, was able to increase its domestic TV rights by 70 percent. It secured a record breaking deal of € 7.1 billion to run from 2016 to 2019. Whereas in the past when match day represented about a third of club’s revenue, such has fallen to about 20 per cent as TV income continues to increase.
Still, lucrative sponsorship deals with top companies are now common grist to the mills of elite clubs, as the likes of United, Manchester City and Paris Saint Germain, PSG, Madrid have pulled in hundreds of millions through such. Not forgetting that they also make truck load of money through merchandising of products.
It’s indeed money in the bank for top clubs as revenues have been improving year after year. The top 20 clubs according to Deloitte had a combined revenue of €6.2 billion in the 2014 ended season, a rise of 14 percent from the previous year, with Real Madrid and Manchester United earning over €500 million.
Many clubs have also embarked on stadium expansion, while the likes of Arsenal have moved completely to new and bigger stadium, lining their revenue base.
It’s very much a tea party in the world of elite club football as money continues to pour into their coffers from Match day tickets, TV broadcasting revenue and merchandising, proving that football is recession proof.
And the good news is that fans appetite for the beautiful game is insatiable, as they drown their present economic reality in two hours of escapism that not even ecstasy drugs or alcohol can match.
So what could possible go wrong? Well, a couple.
Even though revenues of top clubs have been rising in the last decade, football is up a gum tree due to spiraling cost. Clubs have now found themselves in the unpalatable situation where they have to pay a king’s ransom to attract a good player and, as a necessity, most also defray exorbitant weekly wages to keep ‘em happy.
In the early 2000s it was an aberration for players to collect €115, 000 per week, which Zinedine Zidane, then the best player at that time earned, after his record breaking transfer of € 54 million from Juve to Madrid. Now a day’s even defenders, the lowest in the money chain collect more than that, while clubs continue to break transfer records just to bring in top players. Gareth Bale for instance was signed for €100 million and earns about €358,000 a week and he is not even the highest paid footballer.
These rising cost of buying players and defraying their wages has made deep in roads into clubs revenue. Little wonder the share of revenue that goes to players’ wages in the premiership has risen from 44 percent in the 1990s to over 75 percent today, with other leagues faring no better.
It is therefore not surprising that many of the top clubs are drowning in debts. A case in point is United, whose unparralled genius of generating income through sponsorship and merchandising is matched by its debt size of €474 million. Many other top clubs are just marginally better.
There however seems to be no end in sight as the top clubs are in the rat race to sign the best players creating a catch 22 situation where cost and wages of players will continue to rise, thus eating up more and more of their revenues.
The present silver lining is that live football is still a type of Griffen good, which does not respond rationally to economic realities, evidenced by clubs’ rising revenue at a time when Europe’s economy is slowing down and companies are shedding jobs.
Even this silver bullet will lose its potency if the costs of attracting and paying players wages continue on the current rising trajectory, as it appears it would with UEFA recently relaxing its Financial Fair Play, FFP, rules. The regulation, tailored to address cost problems, a monster that was unleashed when petrol dollar sugar daddies started snapping up clubs like candy bars, was resisted by football hierarchy.
It’s however not too late for football clubs to cut the Gordian knot of spiraling cost. One way is to introduce caps on player’s wages just like in the NFL. But these would involve all stakeholders coming together, putting aside selfish individual interests for the good of the game. Is there the will power to do so?



















