Funny Money

The English media’s attention on the Football Money League (FML) published this week by Deloitte and Touche has been drawn by the stunning growth in Revenues achieved by Real Madrid over the last five years and their ascension to the top spot previously occupied by Manchester United. Whilst this is headline grabbing, it does not give the whole picture and misses some interesting issues raised by the report.

The growth Madrid has achieved is phenomenal. In 2001, their revenues were £83m, half of their 2005 total. Whilst that in itself is good performance, the truly incredible part of this in footballing terms, is that the growth has not come solely from increased broadcasting revenues. Indeed this has accounted for a mere £20m of the increase. The majority of the increase is due to commercial revenues, up by £58m on their 2001 base figure. Whilst the Galactico’s policy is not paying dividends on the pitch, it certainly is off the pitch. The layered sponsorship deals, overseas tours and merchandise sales driven by the acquirement of players like Zidane, Figo, Ronaldo and Beckham pay Madrid well. These players, whilst being amongst the best individuals in the world, also open up new markets such as the UK and Asia with their followers seeming to flock to buy the latest Madrid shirts. The other market opening up to Madrid is in South America where the constant flow of Brazilians, from Roberto Carlos to Cicinho, ensures brand loyalty to Madrid, probably the second best supported club in the country.

The FML is made up of 20 teams; 5 from Italy – Milan, Inter, Juve, Roma and Lazio, 3 from Spain – Real, Barca and Valencia; German sides Bayern and Schalke; French side Lyon and Celtic accompany 8 English teams – Manchester United, Chelsea, Liverpool, Newcastle and Arsenal are surprisingly in the company of such heavyweights as Everton, Manchester City and Tottenham. Whilst Everton have reaped the benefit of their very brief flirtation with the top 4, the appearance of the other two is indicative of how much money is actually generated by the top flight in English football.

Where the FML Report becomes interesting is reading between the lines and reviewing trends. This year is the first that Manchester United has not been top of the pile – what is apparent is that they are hamstrung by the current BskyB broadcasting deal. With the Italian and Spanish clubs able to negotiate their own TV contracts as opposed to the collective bargaining in the Premiership, in future years United and the other English clubs will fall further behind in this revenue stream. Indeed, of the Italian and Spanish clubs only Lazio and Valencia earned less.

Revenues from commercial enterprises find Real, Juventus and Bayern Munich earning more from this source than United. This flies in the face of the media claims that the Mancunians are the most commercially astute club in the world. They are not – their problem is that the brand is tired in its’ native land. As the team has under performed in recent years, with little sign of an upsurge, Chelsea are catching them as the team to be seen to support in the playgrounds, following their on the pitch success. This will hurt United further in years to come as generations grow supporting other teams. The Glazer family will be looking to their board to start increasing revenues elsewhere which will partially be delivered by the increased capacity at Old Trafford but will need to come through additional sponsorship income – the 99p All Day Breakfast McDonald’s Old Trafford, anyone? – and an increase in ticket prices. On the subject of expensive tickets, if you know of any Chelsea fans out there pass on the news that their club has the 2nd highest gate receipts in Europe. With a 42,000 capacity ground, roughly 75% of the capacity of Old Trafford, 55% of the Santiago Bernabeu and not even half of Camp Nou. Surely the club will now admit that their pricing policy is not competitive, just extortionate. What is more impressive is that Chelsea do not sell out Stamford Bridge every game, captured spectacularly earlier this season with their desperate adverts in The Evening Standard for the home game against West Bromwich Albion. This is the team that is Champions of England, and they are pricing their fans out of the stadium.

And what of Arsenal? Excluding Property Development, revenues were steady compared to the previous years although this was not enough for them to stay in 6th place, the 2005 showing being 10th. Should the revenues grow, as D&T believe they will do, Ashburton Grove will propel the club into the Top 5 through match days alone without taking into account the commercial opportunities arising from the extra punters, overtaking Chelsea into the bargain. Still, it will be nice to finish higher than them in one league table at least.

The FML is fairly fluid at the bottom, Lazio unsurprisingly propping up the table and expected to be replaced by any one of the following: (ahem) Middlesbrough, (cough) Rangers or (splutter) Bolton Wanderers. Whilst he has nothing to do with managing the finances, the success on the playing fields means that Sam Allardyce may well be in charge of one of the 20th Biggest Club In The World. Does this mean that the hacks will now stop whining about the top jobs never going to English Managers? Or maybe now the FA will ask him for a quick chat except maybe this time it won’t be the disciplinary panel calling him.

Todays tunes tie in with the Folk Britannia series on BBC4, come from a 1985 Peel Session by The Men They Couldn’t Hang

Ironmasters

Donald Where’s Yer Troosers