Footfall

DECCAN CHRONICLE. | MOSES KONDETY
Published Dec 16, 2018, 12:00 am IST
Updated Dec 16, 2018, 12:11 am IST
Football is big business indeed.
Cristiano Ronaldo (Juventus)
 Cristiano Ronaldo (Juventus)

In fact, it’s an industry, with loads of money gushing through the stadium gates as well as sponsorships. The games might be intense on the field with raging rivalries but off it, there is no loser — everybody wins. A look at players’ salaries and the club’s books and you understand the money game. For academic interest, Manchester United is valued at $4.12 billion, followed by Real Madrid at $4.09 billion while Barcelona is a close third with $4.06 billion!

Then there is Juventus knocking on the door after acquiring superstar Cristiano Ronaldo from Spanish giants Real Madrid for a transfer fee of $140.80 million and generated close to half that amount in just 24 hours with his jersey sales — 5,20,000 shirts bearing Ronaldo’s name were lapped up by Juve fans at an average price of $122.95. The team’s Twitter account also gained one million new followers overnight. The club’s fortunes have taken an upward swing.

 

Transfer game
Ronaldo’s sale is a classic study. A 33-year-old player, Madrid got $140.80 million as transfer fee — two years later Ronaldo wouldn’t have got them half the amount; and with a player like him in the ranks, Juventus have suddenly moved up amongst the super rich and turned the world’s attention on them, taking the brand to new heights. Ronaldo’s millions of followers on social media are vital marketing assets for Juve’s sponsors, promising them invaluable exposure as they seek to boost their global image. Everybody benefitted,” says Novy Kapadia, football commentator.

On the other hand, Madrid got what they wanted out of Ronaldo — they won four Champions League trophies with him, the last three coming in consecutive years. They have proved themselves and made sure nobody is going to catch up with their overall 13 Champions League titles — their arch rivals Barcelona are far behind with only five.

“Clubs look at selling a player before his contract finishes to make good money for they get nothing once he serves out his contract as he becomes a free agent. Everything is looked at from a business point of view. So the club’s business official will talk to the football manager and say ‘can you do without Player X, as we can pick some millions if we trade him now; can you manage with another player whom we could probably get at half the price?’ No doubt the clubs are growing richer and richer. Lot of transfers are strategic, especially when the players get older, say past 30,” Novy says.

Ronaldo had been with Real for almost 10 years but the days of players being loyal to clubs are over. Barring an odd one or two, you don’t see the modern players doing it. Lionel Messi, 31, would probably stick on with Barcelona through his career; Italian club Roma’s Francesco Totti, who did not switch sides through his 25-year career between 1992 and 2017 during which he played 619 games and scored 250 goals for them is probably another player in this rare category.

Loan rangers
If transfer of players raises revenue, loaning players cuts costs for the club. Real Madrid coach Zinedine Zidane did not get on well with Colombia’s James Rodrigues, who was the top goal-scorer in the 2014 World Cup and so Real loaned him to Bayern Munich. When a club loans a player, they save his salary, which is paid by the loaned club. The player stays contracted with his mother club but plays for and gets paid by the other one. It saves salary when you have surplus talent in the team.

“Most of the top clubs do this because they have players in excess. They take in a lot of young players and loan them out. If the players prove themselves, they come back as finished products, else are sold out to the club they had been loaned to. This is another marketing aspect — you choose players for their talent, bring them up in the junior ranks and then loan them out when you can’t fit them in the senior side but want them to get match experience and time for you to reassess,” Novy explains.

Former and current England captains David Beckham and Harry Kane respectively, Dele Alli, Messi and Ronaldo are some of the big names that have been loaned to other clubs during their careers.

TV Rights
Television rights are the money bags that bring in the billions. However, the money earned from TV rights vary from country to country. Two contrasting examples being in Spain it’s dominated by Barcelona and Real Madrid, who get more than any of the other 18 clubs that play in the top division of La Liga. So understandably, the two are richer than anybody else.

In England it is much fairer — everybody gets a share down the line with a surplus slice reserved for teams finishing in the top six. From next season the present level of revenue from international TV rights sales of £3.3 billion will be shared equally among all 20 clubs. Any increase on that level, which the officials are confident of securing, will then be distributed according to where a team finishes in the league. “That way there is motivation for every club to keep giving their best till the last game — they know a better position could mean a couple of million pounds more, and the players have their bonuses in sights. That’s why the English league is so competitive and smaller clubs can afford to buy reasonably good players. Xherdan Shaqiri was in mid-table Southampton. He plays for Liverpool at the top now,” Novy points out.

Probably the best deal is the UEFA Champions League (top tier European club competition) where you get money for participation and also on the number of people who watch your matches on the ground as well as TV. “This is quite amazing. Some of the English clubs such as Liverpool, Manchester United, Manchester City, and Chelsea — which are popular worldwide and command huge viewership — would get more money than the actual winner of the event, even after losing maybe, at the semifinal stage,” Novy says.

Sponsorships
The sponsorship has gone to a different level. Earlier, you had one sponsor whose two hoardings were put up at the club’s games. Now you have sponsor slots all over — pocket, front of the jersey, back of it, shorts, suits, et al. There’s a kit sponsor, the shirt main sponsor, a shirt sub-sponsor. Big clubs have anywhere between 15 and 20 sponsors. And it’s also a matter of prestige for top notch companies to be associated with successful clubs as they trigger massive publicity and goodwill. While Manchester United earned $140 million from its sponsorship deal last year, Barcelona and Arsenal bagged $80 million each.

“The finances involved are unimaginable. A football club and the English League is a huge machine well lubricated by professionally run marketing and advertising wings. They are constantly looking at revenue. There’s a whole team working behind to pump it up,” says Victor Amalraj, former Indian football captain.

Most of the clubs have a very healthy wage-to-revenue ratio.

“The clubs also receive high match-day revenue via high merchandise sales. These days big clubs have partners in all continents because of significant fan base across the globe and they fully exploit every commercial opportunity, whether it is off season games or licensing fees,” says Shaji Prabhakaran, a former FIFA Development Officer for South Central Asia and a Senior Consultant of the Asian Football Confederation.

And they are all looking at new forms of sponsorship. “Europe has reached a saturation point, they can’t go beyond this, so will look for newer markets. I guess China and India are the next markets for them to get into even as India is far away from world standards. But the passion for these clubs is immense in the country. Manchester United has so many stores in India,” Novy observes.

Luxury Boxes
European clubs also do very well when it comes to sale of corporate boxes at stadiums. The more successful you are the more corporates will buy to entertain their clients at the games. For the record, Hospitality and Executive Boxes at Manchester United’s Old Trafford stadium are categorised as per prices: Centennial Club and Executive boxes — between £2,500 and £3,500. Prices for eight-seat boxes in different stands range between £60,000 and £90,000.

The modern clubs are also refurbishing their stadiums and making them business centres, like Chelsea’s Stamford Bridge where they have shops and malls which whip up rents. They do very well on match days when Chelsea fans wear their loyalty to the club on their sleeves and purchase merchandise. Everything is seen from a business angle.

Right on the money
I feel these clubs have done well to allow the footballers run the game while letting the hard core professionals control the business part of it. These people don’t need to have great insights into the strikers and stoppers on the field, but look at the club as a brand to be marketed. There are specialised staff who strategise all the time and are part of a huge system that runs the game behind the scenes — marketing, advertising, ticket booking, security, ground and stadium maintenance, et al,” Novy nails it.

“We have to understand that European clubs are like well established business houses. Everything is well structured and there is a clear cut long term strategy in every aspect of club operations. Fans are well organised and clubs are handling fans proactively in every respect,” he adds.

The club’s projects are carefully planned. “When players are picked at a young age, they are provided education too by the academicians on the club’s rolls. The European governments are very strict about that, because not everybody is going to make it as a professional footballer and should be able to earn a living. While the German team was here in India for the Under 17 World Cup, they were being supervised by a tutor who was monitoring their homework,” Novy reveals.

Messi joined Barcelona in 2000 when he was just 13 years old and has been playing for them since.

The Heavyweights
If club football is flourishing in Europe, the roles of ultra rich businessmen from the East, starting with Russian Oligarch Roman Abramovich cannot be ignored. The oil-rich Sheikhs from the Middle East followed and poured enormous amounts to propel the clubs to an entirely different level.

Abramovich bankrolled Chelsea after taking over in 2003 and spurred it to winning English Premier League and FA Cup titles on five occasions; three League Cups, two Community Shields; a Champions and a Europa League trophy each at the continental level. 

Sheikh Mansour bin Zayed al-Nahyan of the United Arab Emirates bought Manchester City for £210 million from Thailand’s former prime minister Thaksin Shinawatra in 2008. According to the club’s annual financial report in September, Sheikh Mansour has spent more than £1.3 billion on the club since he took over. City’s value has soared 10-fold to over £2 billion, according to Forbes. 

City also announced they had revenues of £500.5 million last season, in which they recorded profits of £10.4 million. The reigning EPL champions have won three Premiership titles, three League Cups, two Community Shields and an FA Cup since and remain a dominant force in England. Then there is Leicester City, which went from being relegation favourites to winning the 2015-16 title and gaining worldwide popularity. Sadly enough, manager Claudio Ranieri was sacked midway through the next season as the club slipped to 17th in the 20-team league. Evidence that money mattered — staying in the top flight would bring a lot of it via TV rights and sponsorship.

In came Vichai Srivaddhanaprabha, the Thai businessman whose King Power had exclusive rights to duty free stores at Bangkok airport, bought the club in 2010 and turned it into a champion side five years later from being rank outsiders. He passed away last month after his helicopter crashed at Leicester’s King Power Stadium.

This third front really separates the big players from the rest. These guys have lots of money. Manchester City and Paris Saint-Germain (of France) are the two big clubs the Arabs have splurged at a very high level even as several others control many smaller clubs. They have also secured stadium rights — Emirates at Arsenal and Etihad at Manchester City. The Qatar Foundation, a trust funded by Qatar’s ruling Al-Thani family, bailed out Barcelona — which was facing financial pressure because of spiralling wage costs — via sponsorship after the club decided to end their 111 year-tradition of not having a shirt sponsor, in 2010. Talking about high life, the Manchester United team also travels in its private jet, at its own convenience. The players are prized assets and are looked after very well… until it’s time to offload them. 

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