The Real number one: How the financial industry ranks football clubs

THE FOOTBALL industry has grown extraordinarily over the past 20 years. The rise of leagues like the Premier, La Liga and the Bundesliga, along with globalisation and intensive mass media has transformed a sport that, in the 1980s, was ailing. In addition, the game has expanded, with developing football markets such as China, India and the US forming credible leagues that have rising spectator appeal. Football is now a sector that contributes about 1% to global GDP.

This growth and the importance of the sport as a universal language has stimulated the interest of the financial services industry in the game. Not only do bankers like to sit in executive boxes sipping Champagne and impressing their clients, but from corporate finance to capital markets, football has become a market of opportunity. Twenty five years ago, when gate receipts were the chief source of income for clubs, there was very little interest in football among banks and other financial institutions, although owners/chairmen like Tottenham’s Alan Sugar and the Hill-Woods at Arsenal had strong City of London links.

Little wonder that, in an age of soaring broadcasting income, global fanbases and growth in corporate appetite, investors have flocked to football, the sort of investors that investment banks like – oil billionaires, property developers, emerging market moguls and American tycoons. The financial affairs of football clubs have become a much-discussed sideshow to the game itself, thanks in no small way to excellent books like Soccernomics (Stefan Szymanski and Simon Kuper), The Billionaires Club (James Montague), Football Leaks (Rafael Buschmann and Michael Wulzinger) and anything by David Conn.

In addition, the football industry’s rising credibility has created a deep interest in producing reports and papers that offer some insights into the financial strength of the world’s leading clubs. These include Deloitte’s Football Money League (arguably the forerunner), Brand Finance’s Football 50, Soccerex’s Football Finance 100 and KPMG’s European Elite. Game of the People has been involved in providing editorial for such reports, including Brand Finance’s recent Football 50 and Soccerex’s Football Finance 100.

So, in order to bring together some of this information, we’ve compiled an index based on the reports produced by the aforementioned organisations and Forbes.

The top 20 clubs

    KPMG Football Benchmark

European Elite – May 2019

*Enterprise Value mid-point

Brand Finance Football 50 – May 2019

*Value of club brands

Deloitte Football Money League – February 2019
*Revenues
Soccerex Football Finance 100 – February 2019

*Combined methodology, including debt, ownership, tangibles, playing squad

Forbes Most Valuable football clubs – May 2019
*Club value
1 Real Madrid 1 1 1 6 1
2 Manchester United 2 2 3 8 3
3 Barcelona 4 3 2 7 2
4 Bayern Munich 3 4 4 3 4
5 Manchester City 5 5 5 1 5
6 Chelsea 6 7 8 10 6
7 Arsenal 8 9 9 5 7
8 Liverpool 7 6 7 11 8
9 Tottenham 9 10 10 4 9
10 Juventus 10 11 11 9 10
11 Paris Saint-Germain 11 8 6 2 11
12 Borussia Dortmund 12 12 12 15 13
13 Atletico Madrid 13 14 13 13 12
14 Schalke 04 14 16 16 55 14
15 Inter Milan 15 13 14 24 15
16 Leicester City 16 22 22 19 19
17 West Ham United 17 20 20 45 17
18 AC Milan 19 15 18 39 18
19 Roma 21 18 15 61 16
20 Napoli 18 26 21 23

With the exception of Soccerex’s Football Finance 100, which uses very broad measurements of a club’s financial well being, Real Madrid are number one in every study. It should be noted that the figures used in all of the reports are based on 2017-18 season, so the fact that Real had a relatively bad season in 2018-19 by their own lofty standards, means the impact of lower Champions League revenues will not kick-in until the next financial study. The club is also undergoing a major development of its stadium, which will also influence the financial position.

As you can see from the above index, there is a remarkable level of consistency among the different reports, but there has been the very clear creation of an elite band of clubs with 11 or 12 that can now be considered as the elite of world football. While the Deloitte report is widely quoted and considered to be a first among peers, it is predominantly based on revenues alone, just one criteria if you are trying to get a full picture of the financial condition of a club. Assets and debt can be very corrosive to the overall state of play.

There is something of a correlation between the financial structure of football and events on the field of play, proving that money breeds success and romantic tales, such as the Leicester City title win of 2016, are seldom experienced in the modern game. That said, Leicester are no longer a poor relation and feature in most top 20 lists of football finance, emphasising the economic power of the Premier League.

This correlation is also reflected, to a large degree, in UEFA’s club coefficients (based on a five-year stretch) which currently place Real Madrid at the top, with Barca and Bayern close behind. Others such as Manchester City, Juventus and PSG and Arsenal are also in the top 10. Football Database, which uses the so-called Elo rating system (named after Arpad Elo, a Hungarian-Austrian physics professor), currently has Liverpool at the top of the rankings.

It should be noted, however, that despite the apparent wealth and scale of a club like Real Madrid, in corporate terms many of the clubs in the index are relatively small compared to multi-nationals. Within the industry, though, clubs like Real remain way ahead of most rivals and its is difficult to see the status quo changing – football has created a set of behemoths built on the back of broadcasting, commercial opportunism, social media and marketing. The more imbalanced European football becomes, the more likely the formulation of a super league becomes, a concept that may upset the purists, but given the class divide in the sport, is almost inevitable.

Photo: PA

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