ANALYSIS
By Paul Macdonald

There is a familiar pairing heading Deloitte’s Money List. Based on figures accrued from the 2011-12 season, Barcelona and Real Madrid dominate the financial landscape, two overbearing giants once again solidifying their authority. Across Spain, Europe, the world, the marker has been laid down. As they streak ahead in the never-ending race to maximise revenue, it may appear that, just like La Liga, the burgeoning gap to the challengers will never be bridged.

Real Madrid lead the way for the eighth season in succession, Barcelona the runner-up for the fourth time in a row. Predictable as ever, particularly when the former obliterated the €500 million barrier. Third-placed Manchester United are €90m short of gatecrashing this duopoly.

But the reason for this seemingly incongruous disparity may well be football’s worst-kept secret; broadcasting revenue in Spain is disproportionately weighted in favour of the big two. Indeed, their market share is so large that Barcelona suffered a drop in their TV income from 2010-11 (due to exiting the Champions League at the semi-final stage), but still retained a €40m broadcast earnings advantage over Chelsea – the European champions.

The current deal, brokered, devised and maintained at the behest of the Blancos and Blaugrana, has been at the expense of La Liga’s remaining 18 sides. Atletico Madrid and Valencia find themselves outside the top 20, their TV revenue substantially marginalised. The arrangement, much to the consternation of the trailing pack, runs until 2015; until then, this status quo is likely to remain unbroken domestically.

This model is inconsistent with the likes of Germany, Italy, and England. To take the Premier League as a particular example, there is a more democratic distribution model in operation. The ‘pot’, as it were, is deployed based on league position, with narrow increments from 20th through to third, then a more generous total provided to winner and runner-up.

And the pot is ready to run over. A freshly-negotiated, era-defining contract, worth €6.2 billion over the course of the next three years, commences from the beginning of next season. The seismic impact from such an agreement will mean an extra €35-€45m per season from domestic TV rights alone. There are teams such as Aston Villa, Sunderland and Everton lingering just outside the top 20 – an injection of this magnitude will certainly lead to greater competition for positions. This, coupled with a successful run in the Champions League, could mean English football’s predominant powers eat into the lead Barcelona and Real Madrid have accumulated.

Chelsea can certainly attest to that. As the above table outlines, the Blues’ Champions League victory offset a disappointing sixth-placed finish in the Premier League, and once again showcased the income-generating power of Europe’s premier club competition. Getting to the latter stages is the gateway to a palpable spike in revenue.

And yet, Bayern Munich, vanquished by Didier Drogba & Co. in the final, find themselves trailing woefully, usurped by Napoli, who exited at the round of 16 stage, but are third only to Madrid and Barcelona in terms of overall revenue.

With Borussia Dortmund in 17th, and Schalke and Hamburg propping up the top 20 when isolating broadcasting revenue exclusively, it’s clear that German sides operate under a structure where this income stream is not a key economic driver. Bayern Munich earn just 22 per cent from this aspect of their revenue; Schalke 18%, Hamburg 21%. Dortmund represent the outlier, with 31% derived from this source.

Beyond Germany, is there an over-reliance on the continued gravy train that is televised football? Taking the broadcasting revenue versus total revenue breakdown further: Real Madrid, 39%. Barcelona, 37%. Into the Premier League, the split is generally the same (Manchester United, 33%. Arsenal, 37%. Chelsea, 43%); between 1/3 and 2/5 of all revenue stems from TV deals.

In Italy, with Serie A clubs currently suffering brutal mismanagement and dwindling attendances, the percentages rise to dangerously dependent levels. Just over half (51%) of AC Milan’s revenue comes from negotiated TV contracts both domestically and internationally. Juventus, 46%, and, most worryingly of all, Inter; their €185.9m total revenue includes €112.4m from broadcasting – 60% of the total, the highest of any club in the Money List. It is a staggering, and some would argue unsustainable, enslavement to the notion that this revenue stream, one that has admittedly grown exponentially in the past decade, will continue onwards and upwards in all countries.

This alarming predicament is also apparent in France. The emerging behemoth of Paris Saint-Germain will unquestionably cast a substantial shadow over future incarnations of this list, but for now they are absent, leaving Olympique Lyonnais and Olympique Marseille as Ligue 1’s representatives. Both competed in the Champions League in 2011-12, but were notably absent this year. Given that Lyon earned €71.4m (54%) from broadcasting revenue, while Marseille collected €70.6m (52%), of which roughly half of which was due solely to the Champions League and its huge draw, these are two sides in danger of dropping out of the top 20 altogether next year.

Which leads us back to Germany. The Bundesliga is often heralded as the optimal business model, but it perhaps lacks the established, instantly recognisable teams that makes the Premier League a veritable cash cow, particularly in Asia. That said, a new TV deal is in the offing in Germany, and while it remains relatively modest in comparison to what English sides will collect (a 50% increase on the current agreement), it remains a significant development. Bundesliga sides have explored other arms of income generation, particularly through commercial means, to establish a firm financial footing to build upon.

All of which makes Spain’s two-pronged command of the summit a somewhat short-sighted reveal. Similarly to Barcelona and Real Madrid’s dominance of the recent FIFPro XI, where they filled 10 of the 11 available positions, it paints a convenient truth that all things are rosy in the Spanish garden.

But the increasing disparity of wealth will continue to erode the quality of the teams further down, and undermine the product as a whole. Furthermore, when the inevitable TV renegotiation does arrive, will the big two demand a continuation of the current plutocratic regime, or relent and share the wealth? If the latter, then a competitive advantage will be relinquished. This, coupled with the bankability of the EPL and the sound distribution of income in Germany could mean that the overall list may take on a rather different image in the years to come.

What remains unflinching, however, is the current appetite for live football, and the demand of the market is currently a lucrative arrangement. For now, at least.

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• Real Madrid crowned as world’s richest club for eighth year in a row
• Top-six placings remain unchanged
• Clubs from five different countries in top 20
• Manchester City, Borussia Dortmund & Napoli climb most places – five
• EPL has most representatives
• Italy continue to struggle
• Combined revenues grow 10 per cent

Real Madrid and Barcelona once more dominate football’s rich list as the Spanish duo are still miles ahead of their rivals from England, Germany, Italy and France. According to the 2012 Deloitte Football Money League, published on Thursday, the Liga giants remain the only clubs with annual revenue over €450 million.

Real Madrid top the Football Money League for the eighth year in succession, thus equalling Manchester United’s dominance in the top position during the first eight years of the Money League, and became the first club in any sport to surpass the €500m revenue threshold in a single year. 

“It is an impressive achievement for Real Madrid to have surpassed €500m in revenue in a single year. Real have led the way in the phenomenal rate of revenue growth achieved by the game’s top clubs,” Dan Jones, Partner in the Sports Business Group at Deloitte said.

However, the reigning Spanish champions are being chased hard by arch-rivals Barcelona, whose growth in 2011-12 leaves them only €17m short of the €500m mark. Even though the Catalans couldn’t quite match their on-pitch success from 2010-11, the club enjoyed €32.3m (seven per cent) revenue growth. 

United’s failure to qualify for the knockout stages of the Champions League in 2011-12 meant they were unable to prevent a Spanish one-two for the fourth successive year, but Sir Alex Ferguson’s side remain the proud number three in the rankings.

For the fifth successive year, the clubs comprising the top six places in the Money League remain the same. 

“An unchanged top six emphasises the fact that these clubs have some of the largest fanbases and hence strongest revenues, in both domestic and international markets,” Jones commented.

The Money League top 20 again comprises clubs from the ‘big five’ European leagues, seven of which come from the English Premier League, while Italy have five teams in the top 20, and Germany four. Spain and France, meanwhile, have to settle for two representatives each.

“It’s always interesting to see the disparity between the top two in Spain and the rest of the league. There are no other Spanish clubs in the top 20. A key change that would improve the overall state of finances in Spanish football would be a collective broadcast deal. It sounds like the Spanish government have put collective payments on the agenda on that level which, if it happens, can only help with the competitiveness of the division,” Mark Roberts, Senior Consultant within the Sports Business Group at Deloitte, stated.

The top 10 consists of teams from only four leagues, as Ligue 1 sides Olympique de Marseille and Olympique Lyonnais sit only 16th and 17th respectively.

Manchester City (seventh) are this year’s joint highest climbers, along with Borussia Dortmund (11th) and Napoli (15th), moving up five places and claiming a top 10 position for the first time.

“City’s Premier League title winning season combined with participation in the Champions League, helped drive 51% revenue growth to €285.6m, the largest absolute and relative growth of any Money League club,” Austin Houlihan, Senior Manager in the Sports Business Group at Deloitte, said.

As pointed out before, the English Premier League has the most representatives, and this situation seems unlikely to change any time soon.

“The Premier League still has the most representatives in the top 20 of the list. Clubs will get another €20-30m from the new broadcasting deal so in the future there will be more English clubs challenging for those positions. The most there has been in the list is eight but I think we could be seeing as much of half of the list represented by the Premier League,” Roberts pointed out.

Italy’s future on the other hand seems far less rosy as their facilities generally don’t match their reputation.

“The poor financial performance of Italian clubs goes back to their matchday revenues. Juventus have benefitted from their new stadium, which increased their matchday income by about €20m. For the Milan clubs and the Rome clubs, the stadia is a limiting factor on their revenue generation. They simply don’t have the facilities and don’t get the gates to compete with matchday incomes in other countries. Italy has gone to collective selling of broadcasting and that is a positive start in improving that,” said Roberts.

The combined revenues of the world’s 20 highest earning football clubs have grown 10% on the previous year to reach €4.8bn in 2011-12.

“The combined revenues of the top 20 clubs have quadrupled since we began our analysis in 1996-97,” Jones explained.    

“Whilst eight of the top 20 clubs experienced a drop in revenue in 2011-12, in most cases this was due to less successful on-pitch performances in European club competitions, rather than wider recessionary impacts. 

“Combined, the 20 Money League clubs contribute over one-quarter of the total revenues of the European football market.  The top 20 can be expected to generate over €5bn between them in 2012-13.”

Jordan Henderson insists the selection headache Brendan Rodgers has every week can only be a good thing for Liverpool’s prospects this season.

The midfielder has made 26 appearances in all competitions for the Reds, despite battling for a spot with club captain Steven Gerrard, Joe Allen, Jonjo Shelvey, Lucas Leiva and Nuri Sahin, who departed for Borussia Dortmund earlier this month.

And the 22-year-old, who arrived from Sunderland for £16 million in the summer of 2011, believes the stiff competition for places at Anfield has driven him on to improve as a player.

“I think we’ve got a lot of good players in the team so it’s a headache every week for him – and that’s a good thing!” he told the club’s official website.

“It makes everyone push on in training and try to improve, so if we keep playing like that we’ll be alright.”

Henderson has been in good form recently, and admits that having attackers of the calibre of Luis Suarez, Raheem Sterling and new signing Daniel Sturridge makes life as a midfielder a lot easier.

“They’re world-class players and there’s a lot of movement in front of me,” he added. “They’re always available to give the ball to so it makes it easier for the midfielders.

“Daniel is a really talented player. He’s scored a few goals and played well too. He’s a big plus for us and he just needs to keep working hard and keep going forward.”

Liverpool now find themselves level on points with Arsenal having played a game more, and Henderson is convinced they can still mount a late charge for the Champions League places.

“The top four is a realistic aim, but we just have to take each game as it comes, keep chipping away as we have been and hopefully get a good finish to the season,” he concluded.