Most Americans, if asked, would tell you that either the New York Yankees or the Dallas Cowboys were the most profitable teams in professional sports and either of those would be a good guess for an American centric audience. However, those guesses don't take into account the worldwide phenomenon that is global soccer. No sport captures the imagination of sports fans around the world in quite the same way as soccer.For years, the revenues of the largest soccer teams in Europe have been growing exponentially due to ever increasing television revenue. Since not all European leagues distribute television money equally, or even negotiate league wide television deals, the disparity between clubs in the same league can vary even more widely than it does in Major League Baseball. The two teams sitting atop the Football Money League, compiled annually by Deloitte demonstrate just how much the powerful club at the top of perch make in comparison to the rest of the league. Real Madrid, the richest, highest grossing professional sports club in the world, generated 438 million euros (roughly $603 million at today's exchange rates) in 2009/10 about 40 million Euros more than second place FC Barcelona and a staggering 100 million Euros more than third place Manchester United.
Real Madrid had a relatively even split in revenue sourcing among the three main drivers: broadcast, commercial (sponsorship and merchandise) and gameday. For a sense of scope, Real Madrid received 158.7 million Euros in broadcast revenue pursuant to a contract it holds individually since La Liga allows its clubs to negotiate individually rather than through a centralized league contract as in the English Premier League, or all major North American leagues. That contract gives Los Blancos more broadcast revenue than half of the Money League clubs combined. Real Madrid receives over 150 million euros in commercial revenue, one of only two Money League clubs to do so. It has a 20 million euro contract with Bwin for jersey sponsorship that runs through 2012/13. However, that contract has recently been challenged in court as being contrary to Spanish competition laws.
In contrast, the highest grossing MLB club, the New York Yankees, made $441 million in revenue last year, $319 million of which came from gate receipts (gameday in paragraph above). That is less than Manchester United, the third place club on the Money League list.
The value of broadcasting contracts is significantly higher in the NFL than in MLB. In fact, the total value of the NFL's various broadcast contracts was in excess of $3.4 billion in 2009, and it grows annually, assuming no lockout this year. The Dallas Cowboys, the NFL's most valuable franchise grossed $420 million in 2009, of which only $112 million came from gate receipts. Could explain the recent interest of NFL owners in purchasing European soccer clubs.
Real Madrid had a relatively even split in revenue sourcing among the three main drivers: broadcast, commercial (sponsorship and merchandise) and gameday. For a sense of scope, Real Madrid received 158.7 million Euros in broadcast revenue pursuant to a contract it holds individually since La Liga allows its clubs to negotiate individually rather than through a centralized league contract as in the English Premier League, or all major North American leagues. That contract gives Los Blancos more broadcast revenue than half of the Money League clubs combined. Real Madrid receives over 150 million euros in commercial revenue, one of only two Money League clubs to do so. It has a 20 million euro contract with Bwin for jersey sponsorship that runs through 2012/13. However, that contract has recently been challenged in court as being contrary to Spanish competition laws.
In contrast, the highest grossing MLB club, the New York Yankees, made $441 million in revenue last year, $319 million of which came from gate receipts (gameday in paragraph above). That is less than Manchester United, the third place club on the Money League list.
The value of broadcasting contracts is significantly higher in the NFL than in MLB. In fact, the total value of the NFL's various broadcast contracts was in excess of $3.4 billion in 2009, and it grows annually, assuming no lockout this year. The Dallas Cowboys, the NFL's most valuable franchise grossed $420 million in 2009, of which only $112 million came from gate receipts. Could explain the recent interest of NFL owners in purchasing European soccer clubs.
UEFA has now adopted Financial Fair Play rules, to be phased in over a six year period, which will require that clubs break even over a rolling three year period if the clubs wish to play in the Champions League or Europa League. The clubs will also be assessed on a risk basis taking into account salaries and debt. While this new rule will not eliminate the advantage held by high revenue clubs like Man U and Real Madrid, it will restrain the spending of owners with virtually limitless funds who care more about winning than about the money spent to get there, such as the owners of Chelsea, Manchester City and AC Milan. It will begin to restore a modicum of balance to European soccer.
Whether the new rule will work as intended will not be known for a number of years. It is, however, the first attempt at bringing some element of rationality to player salaries in European soccer and is to be commended as such. There is no salary cap in any major European league that compares to anything found in any North American professional league and, at least partly as a result, the competitive balance of the major soccer leagues in Europe is non-existent. Each year, the battle for the championship and places in the Champions and Europa Leagues involve mostly the same clubs and the more interesting competition is found at the bottom of the league. The most intense competition comes at the bottom of the table at the end of the season as clubs battle to avoid relegation and the resultant loss of tens of millions of dollars. It is usually much more exciting than the same old fight at the top. Hopefully, over the next decade, this rule will begin to change that.
