The business of football clubs according to their owner’s pockets

November 5, 2018

Football Focus: The business of Football Clubs - Johan Cruyff Institute

Do club owners earn more money from football than from their other businesses? To really understand the football business, we must first know who its owners are

Written by Oliver Seitz

William McGregor, the founder of the English Football League and former president of Aston Villa FC, once wrote in a book: “Football is a Big Business!”. It was 1905 and he was discussing the gate receipts from the FA Cup Semi Finals of that year that generated almost $700 thousand in today’s money.

Since then, the phrase became a cliché whenever one refers to the size of the global industry of football. You probably heard or read it before whenever there is a discussion about the business. For McGregor, who owned a draper’s shop in Birmingham, it was indeed a lot of money. Compared to the nature of his own private company, the capacity to generate almost a million dollars in one match was indeed astonishing.

From McGregor’s book until today, the football business has changed a lot. The FA Cup Semi Final prize alone is worth well over $1 million. Aston Villa FC generated more than $100 million last year. Manchester United, the richest club in the world, had over $800 million in total revenues. The top 20 richest clubs in the world generated almost $10 billion together.

Yet, the top 20 football clubs in the world combined had less than 30% of the annual revenue of Nike. League of Legends, the multiplayer online battle arena, generates double the amount of revenues than Manchester United. In 2017, Real Madrid made less money than Wanzl, a German company specialized in manufacturing supermarket trolleys.

So, was McGregor right? Is football really a big business? Are football clubs financially relevant? The straight answer is: depends who owns them. The concepts of being “big” or “small” are relative on their nature. Football clubs today are certainly much bigger businesses than a hundred years ago, but their exact size and importance depends on the wealth of the owners. The size of the football business is a matter of context.

The mission and strategy of a football club are, or should be, designed according to the owner’s interests. However, the pathways available for these are highly connected to the owner’s wealth. For example, if a local entrepreneur, such as McGregor, owns a club that generates more money than he or she can make on other businesses, it is natural that the club will behave under tight financial constraint and pursuit on-pitch success under these limitations, and hopefully help the owner to make some additional money, who will see the club as a vital asset for his or her own wealth.

But, if the owner is an extremely rich individual, the importance of the club for his or her overall finances is small, so he or she tends to run it under a less strict budget, treating the asset as just a small luxury to have around. If the club goes well financially, great. If not, it is not necessarily a problem.

Therefore, it is important to contextualize the value of football clubs for their owners. Estimating how much a club is worth is interesting, but it is also important to visualise what this value represents for those who are ultimately responsible for the organisation. This analysis can provide fans and stakeholders valuable information in order to better understand what are the objectives, risks and possible strategies available for the club.

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