Every year, Deloitte releases its “money league,” the list of the world’s richest soccer clubs by revenue (don’t mention the L-word!). It’s a valuable tool in European club football’s propaganda war; clubs can swing their big dicks to the scared public. After all, money is power, and it’s in clubs interests to show off to the world they have lots of it, and everything’s going great!
Note the list is based on revenue, rather than turnover, which would involve a lot of minus signs and red ink. Even so, these lists should be placed in context as to how small potatoes soccer actually is. First, the list:
1. Real Madrid, Spain, $636.5 million (1).
2. Barcelona, Spain, $598.3 million (2).
3. Manchester United, England, $487.2 million (3).
4. Bayern Munich, Germany, $426.6 million (4).
5. Arsenal, England, $333.3 million (5).
6. Chelsea, England, $331.6 million (6).
7. AC Milan, Italy, $312.1 million (10).
8. Inter Milan, Italy, $280.6 million (9).
9. Liverpool, England, $269.9 million (8).
10. Schalke, Germany, $268.7 million (16).
11. Tottenham, England, $240.3 million (12).
12. Manchester City, England, $225.1 million (21).
13. Juventus, Italy, $204.3 million (10).
14. Marseille, France, $199.6 million (15).
15. AS Roma, Italy, $190.5 million (18).
16. Borussia Dortmund, Germany, $183.8 million (-)
17. Lyon, France, $176.3 million (14).
18. Hamburg, Germany, $171.0 million (13).
19. Valencia, Spain, $155.0 million (-).
20. Napoli, Italy, $152.5 million (-).
WOW! The money! My eyes!
Until we realize that most “Money League” companies in the real business world—the one that doesn’t allow wage to turnover ratios in the 60-70% percentile range—generate revenue in the billions. With a ‘b.’ Which, maybe you’re thinking, includes Apple and McDonalds.
Well, how about Sobeys, with revenues of just under $15 billion across 1,300 stores? Or the bankrupt and struggling Eastman Kodak, which generated $7 billion in revenue and still turned a profit but declared bankruptcy to service its considerable debt?
Well, those are big companies. Clubs are single, atomized brands with a limited scope. Okay, then what about Kathy Ireland? The former Sports Illustrated swimsuit model, by simply slapping her name on a brand that sells everything from ceiling fans to ottomans, generates $2 billion in revenue for the company Kathy Ireland Worldwide. To give you a sense of the scope, that’s three Real Madrids.
But, you know, soccer is big business, just one that rarely makes a profit, operates deeply in debt, and whose top twenty earners combined generate just over 1/3rd of the revenue of a Nova Scotia-based grocery store chain. We know this because Deloitte created a league of the richest ones, and because Richard Scudamore says so.
While I understand your point, and it’s valid, each of those companies actually retail goods and services, at any time of any day. A football club has no tangible asset to sell 24/7/365.
I’d also like to know if these revenue numbers include other sport teams within the clubs (basketball, hockey, etc).
Look up Forbes’ annual sports club rankings. Soccer teams do very well for themselves in terms of revenue, but the top North American teams beat the hell out of them in terms of profits (largely because their salary caps hold down the player-to-turnover ratio mentioned above; the NBA is *capped* at 50% of basketball-related-revenue as of the most recent CBA, for instance).
The Raptors (for instance), per Forbes’ 2011 rankings, were the 10th-most-valuable NBA team, on revenues of $138 million and profits of 25.3 million. Still not comparable, really, to Apple, but the ratio of profits to revenue would be, at least, fairly reasonable for a corporation.
Again, the TOP teams generate a lot more money in soccer. But in terms of franchise value overall, Forbes seems to lean towards the NFL – massive TV revenues, worldwide marketing, and a good salary cap make them, by far, the most lucrative enterprise. All 32 NFL teams made their list of the most valuable franchies.
http://www.forbes.com/sites/kurtbadenhausen/2011/07/12/the-worlds-50-most-valuable-sports-teams/
You’d have to think that if these top 20 clubs played in a league that only consisted of other top-20 clubs, their revenues would compare to that of the NFL. Just imagine the size of THAT broadcasting contract.
But even still, the Dallas Cowboys are the most valuable NFL franchise, and $1.8 Billion wouldn’t even buy 1% of Apple. The correlation is just not realistic enough to be made between sports franchises and blue chip corporations.
But what about comparison to performing artists who don’t sell cds/mp3s but rely on “selling” broadcast rights? I imagine that most Broadway shows still have better profits off smaller revenues than the global EPL and La Liga giants.
They’ve got that revenue, though, via the Champion’s league. What did United lose by failing to make it through again, 4 – 8M Euro? The stacking of multiple competitions helps to make up for the lack of a true elite league.
Ok, I agree that OVERALL it is pretty funny to see a list of companies by revenues and make them out to be titans when quite a few are bleeding money. I also giggle a little bit when some idiot goes on a rant about club “x” (usually Man U or Barca) being the most valuable business in the world when that’s clearly not true.
I will say though (this is coming from someone with a financial background) careful with the use of ratios across industries, the comparisons can be of little relevance. Just because you’re spending 70% of revenues on wages does not necessarily mean it’s a bad business.
In this case, it appears spending 60-70% of revenues on wages while running a soccer club is detremental…. but it can work in other places.
For companies organized as nonprofits, that actually is the norm. I see no problem with revenue paying the salary of the people who actually do the work – only publicly traded companies should fret about generating profit and shareholder reactions. Nobody holds their breath waiting for that Real Madrid dividend….
Okay, so what about Benfica, Lazio, and ManUtd from 1991 – 2005? :)
Oh, “losses”. I thought you meant the TV show
This is the same story for drugs and arms sales – the government and police cry about the billion dollar market, but most organized crime entities would make more money selling wickets to be used in cash registers (even though cash registers are a dying market)