Ticket sales and matchday revenue
How it works.
Football teams depend on ticket sales and money made from matchday revenue to generate funds. This includes home game ticket sales, season tickets, and services on game days like selling food and drinks, merchandise, and parking.
The Pros
- Immediate Cash Flow: Brings in money right away. Big clubs can really benefit, for example, Barcelona made a total of £162.47M from match days in 2023, with an average of £6.5M from each home game.
- Fan Engagement: Makes game days better and creates a loyal fan group.
- Selling merchandise: A chance to sell club products and souvenirs.
The Cons
- Limitations on Capacity: The number of people who can fit in a stadium limits how much money a club can make.
- Event Dependency: The team's income depends on how many home games they play and how many people show up.
- Economy: In times of economic downturn, fans may spend less, which has an effect on the clubs matchday income.
Broadcasting Rights.
How it works.
Clubs and broadcasters agree on broadcasting rights so that games can be shown on TV. This can be broken down into rights to broadcast for international and domestic audiences.
The pros
- Huge Profits: This is one of the most important ways for top teams to make money. The Premier League made more than £3.2B from TV rights in 2022–23.
- Global Reach: Brings more fans around the world to the game.
- Long-Term Contracts: Long-term television deals give them financial security.
The Cons
Shared Revenue: A lot of the time, league teams share their revenue with each other.
- Market Dependency: Depends a lot on how popular the league and teams are.
- Scheduling Problems: There may be times when local fans can't watch matches that are being televised.
Sponsorship and advertising
How it works.
Through sponsorship deals with clubs, businesses can get their logos shown on kits, stadiums and digital platforms.
The Pros
- Significant Income: Advertising can bring in a lot of money, especially for larger clubs. Manchester United recently signed a new advertising deal with Adidas worth an estimated £900M.
- Brand Partnerships: Working with global brand names can improve the club's image.
- Flexible Agreements: Clubs can arrange more than one deal with a sponsor. Since 2017, sleeve sponsorships have brought in almost £10 million for Premier League teams.
The Cons
- Dependence on a Strong Brand: Clubs needs a strong marketable brand to get top sponsorship deals.
- Market Volatility: The state of the economic market can affect sponsorship deals.
- Ethical Considerations: Possible fan backlash regarding problematic sponsors. This caused the Premier League to withdraw gambling sponsors from the front of matchday shirts, which will start in the 2026/27 season.
Player Sales and Transfer Market
How it works.
Clubs buy and sell players in the transfer market, making money through transfer fees.
The Pros
- High Potential Earnings: Selling valuable players can bring in a lot of money. For example Liverpool, who bought Phillip Coutinho for £8.5M and then sold him for £148M in 2018.
- Squad Improvement: There is a chance to make the squad stronger in a strategic manner.
- Youth Development: Profit from academy players with Chelsea banking over £300M in academy player sales over the last 10 years.
The Cons
- Uncertain Market: The value of a player can drastically change in a short space of time.
- Player replacement costs: These are the high costs that come with getting new players.
- Market Inflation: If transfer fees go up, it might cost more to buy star players.
Commercial and Marketing
How it works.
Sales of merchandise, club memberships, online content, and brand licensing are all examples of commercial and marketing activities.
The Pros
- Diverse Income: Getting income from different parts of the club.
- Global Reach: The power to grow into new areas abroad. For instance, in 2022–23, Barcelona had over £86M in retail sales.
- Brand Loyalty: Goods and memberships can make fans more loyal to the club.
The Cons
- Brand Dependence: The club's marketing success depends on how strong its brand is.
- Market Competition: Going up against other brands and clubs can restrict marketing opportunities.
- Economic Sensitivity: When the economy is bad, it may impact sales.
Memberships for fans and subscriptions
How it works.
Clubs offer both paid subscriptions with access to exclusive content and paid fan memberships with special access and perks.
The Pros
- Recurring Revenue: This type of income is steady.
- Better engagement with fans: Subscriptions make the connection with fans stronger.
- Collecting Data: Clubs get important information about fans for marketing reasons.
The Cons
- Demand for Content: People are always looking for exclusive, high-quality content. Some clubs don't have the resources to keep up with demand.
- Market Saturation: Competition from other entertainment subscriptions like Netflix.
- Fan pockets: It's important to keep in mind that fans may cancel their subscriptions when money is tight.
Academies and Youth Development
How It Works
Investing into youth academies helps local players develop for the first team opportunities or potential transfers to other clubs.
The Pros
- Cost-effective: It may be cheaper to develop talent in-house than to buy experienced players.
- Generating Revenue: Selling academy grads could bring in a lot of money. As previously mentioned, Chelsea made more than £300 million by selling academy players over the last ten years.
- Club Identity: Academy players help improve a clubs identity and get fans more involved. Fans like seeing young players come from the academy to the first team.
The Cons
- High Investment: Running an academy or training centre costs a lot of money.
- Risky Returns: Not all young players make it to the top level.
- Time-consuming: A long-term investment that doesn't pay off right away.
Corporate Hospitality
How it works.
Premium matchday experiences are available through executive boxes, lounges, and hospitality packages.
The Pros
- High Revenue Per Customer: Offering high-end services brings in a lot of income.
- Business Engagement: Brings in corporate clients and provides networking opportunities.
- Matchday Experience: Makes the whole matchday experience better.
The Cons
- Economic Dependency: spending on luxury items tends to go down when the economy does.
- Limited Space: Sales can be limited due to how many hospitality suites are available.
- High Expectations: Customers expect excellent service and amenities. This can go badly, like when Manchester United had a PR nightmare because they served uncooked meat to guests at a corporate event, which led to a 1 star review for food safety and bad publicity of their corporate services.
Prize Money
How it works.
Clubs can win huge amounts in prize money by competing in leagues, cups, and foreign events like the UEFA Champions League.
The Pros
- Based on performance: Clubs get rewarded for how well they do on the pitch.
- High Earnings: Winning major competitions brings in a lot of money. As the winners of the Champions League last year, Real Madrid made more than £70M from the tournament.
- Motivating: With contract clauses, prize money can make players perform better. They get huge bonuses for winning or competing further down the competition.
The Cons
- Unpredictable: You can make money, but it depends on how well you do in the competitions.
- Pressure: Both the players and the managers are under a lot of pressure to do well.
- Revenue Sharing: Prize money is often split between players and staff. With some players taking a larger split due to their contracts.
Budgeting Due to Regulation.
To make sure they can afford to spend money in the long run, football teams must follow rules like UEFA's Financial Fair Play (FFP). This includes making a budget to avoid overspending and being fined.
Impact
- Financial Discipline: Encourages careful handling of money.
- Sustainability: It helps keep the club stable over the long run.
- Compliance costs are the expenses that come with following the rules and carrying out audit checks.
How clubs will spend and budget in the future
As football changes, teams will focus more on long-term financial practices. They will use technology to improve their financial management and look for new ways to make money, like digital platforms and international markets.
What to Expect
- The digital transformation means using digital channels to make more money.
- Global Expansion: expanding into fresh markets abroad to make more money.
- Embracing new innovations and strategies like the use of NFT tokens and clubs now signing e-sports players.
For anyone interested in football, it's important to know how the club makes money and how its finances work. As football spreads around the world, teams must deal with these issues in order to stay financially stable and be successful.
