#7. How do Football Clubs Make Money?

In the world of sports, football clubs have the most fan following compared to any other sport in the world, & that reflects in their earnings.

In 2021, FC Barcelona⚽ reported earnings of a staggering $792 million.

To put that into perspective, the LA Lakers🏀 earned $316 million in the same year, and a cricket franchise like the Mumbai Indians🏏 trailed far behind with just $116 million in earnings for the year.

What's even more remarkable is that only three football clubs make it to Forbes' list of the top 20 most valuable sports teams worldwide, but football clubs continue to dominate the sports sector in terms of annual revenue. In fact, out of the top 20 sports teams with the highest annual revenue, a whopping 15 of them are European top football clubs.

Anyhoo, here are a few categories that contribute to the revenue that the teams earn each year.

1. Broadcasting Revenue: The Crown Jewel 👑

Broadcasting Revenue for any sport is driven by the number of viewers it gets. And football is undoubtedly the world's most popular sport. In 2014, when the US faced Portugal in the World Cup, over 24 million viewers tuned in. Compare that to the 15 million who watched the Baseball World Series finale the year before, and you'll understand the global appeal of football.

Even the ICC Men's Cricket World Cup's most-watched match in 2019, India versus Pakistan, garnered 273 million viewers. The Super Bowl, a cornerstone of American sports, attracts nearly 100 million viewers annually. However, these numbers pale in comparison to the nearly 700 million people worldwide who watch a regular Premier League clash between Liverpool and Manchester United.

The reason behind this colossal viewership is the fierce competition among broadcasting companies for television rights. Among all the leagues in the world, the English Premier League reigns supreme. In 2015, it raked in over $6.5 billion in broadcasting rights, dwarfing the roughly $1.3 billion paid to La Liga.

What's unique about the Premier League is that TV money is shared equally among clubs, which meant each club earned over $100 million per season from 2015 to 2019 thanks to the deal with BT Sport and Sky Sports.

2. Prize Money: Climbing the Ladder 🪜

Football is a fiercely competitive industry, and clubs are rewarded based on their performance, as they should. In the Premier League, each rank higher in the standings is worth $2.5 million more. For instance, finishing 7th versus 18th can make a $22 million difference in earnings.

Prize money isn't limited to league positions; it extends to cup competitions. Smaller clubs often find a financial lifeline in a successful cup run. Take Lincoln City, a non-league team in the 2016-17 season, for example. Their quarterfinal run earned them roughly half a million dollars, plus gate receipts and television coverage, which helped them stay in the league.

So the higher the team finishes in the league, the more money they make.

3. Player Transfers: Big Bucks on the Move 🤑

Player transfers, although not always considered part of a club's income, can bring in substantial sums. Barcelona, for instance, saw their finances significantly boosted in 2017 when Neymar moved to PSG for a whopping $240 million. Smaller clubs can secure a decent return on their investments by including a sell-on clause in player contracts.

4. Matchday Revenue: Filling the Stadiums 🏟️

Matchday revenue is a visible income source for football clubs. This includes ticket sales and revenue from food, drink, and merchandise sales at the stadium. Larger stadiums, like Arsenal's Emirates Stadium with its 60,000 seats, generate substantial income through ticket sales. Clubs that perform well in various tournaments also experience increased ticket sales.

5. Merchandise: The Power of Jerseys 👕

Football clubs partner with sportswear giants like Nike, Adidas, or Puma, striking lucrative deals. The signing of high-profile players is often linked to increased jersey sales. Cristiano Ronaldo's move to Juventus in 2018 resulted in half a million Ronaldo jerseys sold in just a week, generating nearly $68 million in revenue for Juventus.

6. Football Kit Sponsors: Everywhere You Look 👜 Sponsorship deals are everywhere in football, from jersey branding to advertising boards. Top clubs, like Manchester United, sign multi-million-dollar sponsorship contracts. For instance, Manchester United's partnership with TeamViewer is valued at over $300 million.

In conclusion, football clubs have mastered the art of generating revenue from multiple streams. Whether it's broadcasting deals, prize money, player transfers, match-day income, merchandise, or kit sponsors, these financial powerhouses have a diverse playbook for success. Their global appeal, competitive spirit, and savvy business tactics continue to make football the reigning champion of sports revenue.

Also, as you might have guessed, there is a significant gap between the clubs in the Premier League and the divisions below it in the football leagues. The lower the team in the pyramid, the less money the team makes, & hence relegation can be a harrowing experience for lower-ranked Premier League teams.