How Football Clubs Make Money? Football Business Analysis

Football (aka Soccer in US) is the most popular sport in the world. Basically, It is because if you want to play football, you just need one ball and something to make goal. This basic but universal sport started as passion and continued as business. In this article, I will focus on the business part of football.

Firstly, Football all over the world become a Business sector. In he past, football clubs were managing by some volunteers, rich supporters or respectful regional people. But today's football is completely different than what was before. Today's clubs are managing by professionals. Even specially in Spain, Football Management is Bachelor's Degree Program. Big clubs are now managing by professionals who see football as a business not hobby.

Millions of euros spending like cents in football industry which makes football more and more important in today's business. Lastly, Gareth Bale -welsh- right midfielder transferred to Spanish Real Madrid by 100 million euros. It is a new world record transfer fee. 100 million euro for just one player? You could say this is insane. But how much they are earning so they can easily spend 100 million euro for one player? Let's look;
As can be seen in the graph below, Real Madrid has the biggest revenue in Football Industry with 518,9 million euro. So, it is not so much problem for them to spend 0,2 of their revenue to one player for them.

Now, we have one question in our mind. How football clubs make that much money? Thanks to Deloitte Money League Yearly Reports  nowadays we can answer this question more easily with statistical data. As can be seen in Deloitte Money League 2014 Graph below, the sources for football clubs are; Matchday, Broadcasting and Commercial. Let's start with commercial source which is the major source of revenue for most of the clubs.




Commercial

This is mostly sponsorship and merchandise sales. Even sponsors can give a name to club or club's stadium for serious amount of money. (Red-Bull Salzburg - Etihad Stadium) Clubs took sponsorship  ads on their jersey's, stadium billboards etc. Why sponsors pay huge amount of money to football clubs? Because Football is universal as I mentioned before. Basketball, volleyball, ice-hockey, american football etc. Which of them is popular in every country? They are just very popular in certain countries. But football is football in Africa, Asia, Europe, Middle-east, Latin America everywhere. So, Fly Emirates made sponsorship deal with Real Madrid, which is Spanish team but actually it is more than just Spain or Europe because people in Africa, people in Asia watch Real Madrid's matches also. Nowadays, even some countries make sponsorship deal with teams to promote the country. (Azerbaijan-Atletico Madrid)

Merchandise part is just for popular clubs which has supporters all over the world. Because still there are regions on the world where football leagues are not so developed and quality like Malaysia. Yet. people love football and they support popular clubs and buy their jersey's etc in there. That's why some big clubs such as Manchester United make world-tour every summer and go USA, S, Korea This is the main reason of Globalization. Of course only globally known clubs make revenues from this source.

Broadcasting

Broadcasting revenues are mostly has 3 parts in major leagues such as English Premier League. First part is equal shares which shared by every club in the league equally. Second part is Facility fees, this is paid to each club every time when their matches on TV. Third part is merit payments which depend on club's league position at the end of season. Broadcasting is also very important source of revenue even some clubs' major revenue source is this. (Juventus-AC Milan) Other importance of Broadcasting is even you finished the league at the bottom, still you are earning at least 30 million pound. This is just the domestic part of the broadcasting revenue. International part is Europe Cup, Champion's League for Europe which is the source of another broadcasting revenue for clubs which participate.

Deloitte Money League's Sources of Revenue Graph

Matchday

This is the only source depends on %100 percent to supporters. Matchday revenue derived by tickets sold and annual club's memberships. As known, at the beginning of every season clubs are announcing their Annual Membership Fee which allows supporters to go every home-matches during season. Also, there are tickets for every match. Also, away-team supporters are buying this tickets.  As seen in the graph, this source has bigger part than broadcasting only for Hamburg SV in top 20.


Conclusion
All in all, football clubs are very big brands. They have supporters (customers) all over the world and they have serious revenues. Despite the fact that UEFA is trying to make revenues for clubs more equal, still like every business, it has no equality among clubs. Basically, we can not compare revenues of our local coffee store with Starbucks right? The same story in football; we can not compare Real Madrid and Legia Warszawa among revenues. So, in this article I tried to explain `how football clubs make money? ` but of course still there are some `not-official` revenues such as Club's owners donations etc.