The Commercial Giant

Everybody knows that Bayern is one of the richest clubs in Europe (and, considering the European financial supremacy in club football, unsurprisingly the world). What many don’t know is that they could be even richer. So why are they not, you might rightfully ask. Continue to read and you’ll find out.

Let’s start with the obvious facts provided by the famous Deloitte Football Money League (CLICK): In the 2009-10 season, Bayern’s revenue was a highly respectable €323m. Only three clubs (Real Madrid, FC Barcelona, Manchester United) exceed that number. Take a look at the top 20:

Nice chart but it doesn’t say that much, does it? You now know that Real makes more money than Barca, that AC makes more money than Inter, that Hamburg makes more money than Schalke. Good to know but not really helpful. What you probably didn’t pay attention to are the different colors and the sizes of those bars. These represent the three main aspects of revenue, to quote Deloitte:

  • Matchday revenue is largely derived from gate receipts
    (including season tickets and memberships)
  • Broadcast revenue includes revenue from both domestic and
    international competitions
  • Commercial revenue includes sponsorships and merchandising revenues

Now take a look at the following chart to understand how important each aspect is for a club:

One thing that strikes the eye immediately is that Schalke and Bayern both heavily rely on commercial revenue. This becomes even more obvious when we look at the represented countries instead of the individual clubs:

Serie A clubs need broadcasting revenue, Bundesliga clubs need commercial revenue to succeed. Doesn’t sound like a great thing either way but there’s a huge difference and advantage for the German clubs for years to come: While the commercial revenue will only increase for all clubs, it’s the broadcasting that makes the difference. In Italy, they now agreed to return to a collective TV deal. That’s good news for small clubs but bad for the big clubs that are relevant here.

Let’s not forget the third factor, matchday revenue. Those numbers aren’t spectacular for clubs of either league but again that is due to different reasons: In Germany, most matches are sellouts (or close to that) while in Italy pretty much no team manages to sell out. Why aren’t Germany’s numbers way better then? The answer: ticket prices. Bundesliga tickets are by far the cheapest of the top 5 leagues. I can’t guarantee that more expensive tickets wouldn’t affect let’s say Stuttgart’s attendance but it wouldn’t be a problem for Bayern where there are so many ticket requests for every match that it’s all but impossible to get one when you’re not a member.

A lot of talking without really explaining why Bayern could be the even closer to the richest club in Europe, I know. After all, I haven’t even talked about Spanish and English clubs yet. I’ll try to keep it simple.

Aside from the monstrous ticket prices in La Liga and Premier League that generate higher matchday revenues, the TV deals are main advantages. In Spain, there are individual deals what leads to huge broadcasting revenues for the global brands Barca and RM (and tiny deals for smaller clubs) while in England, the advantage exists for all 20 clubs: massive domestic and international TV deals.

How is Bayern supposed to have any chance against that? Simply put, it’s half in their own hands and half in the Bundesliga’s hands. As mentioned above, higher ticket prices alone should be enough to surpass Man United. But it’s unlikely that Bayern wants to take the risk to let the Allianz Arena become a place where rich business people instead of true blue-collar fans meet just like it happened in England. Still, it’s an option, even though not a good one.

The other solution: The Bundesliga has to wake up and realize how much money it wastes by not paying attention to TV deals. While the domestic TV situation doesn’t look rosy (pay TV has always struggled in Germany), it’s the international market the league has to pay attention to. Right now that’s a joke compared to what the Premier League is being paid. However, with the Bundesliga becoming more and more attractive for football fans from around the world, that could, should and has to change soon.

What separates Bayern from other Bundesliga clubs financially is the commercial revenue. That can hardly be improved as they’re already close to the top in both manufacturer and shirt sponsor deals:

Top 5 Shirt Sponsors:

Club €m per year Shirt sponsor
FC Barcelona 28,3 Qatar Found.
FC Bayern 26,7 Dt. Telekom
Man United 22,6 AON
Liverpool 22,6 Std. Chartered
Real Madrid 19 bwin

Manufacturer deals of the above mentioned Top 20:

Club €m per year Manufacturer
Real Madrid 30,0 Adidas
FC Barcelona 30,0 Nike
Man United 26,3 Nike
FC Bayern 24,6 Adidas
Chelsea 22,6 Adidas
Arsenal 14,7 Nike
Inter 14,0 Nike
Liverpool 13,6 Adidas
Juventus 12,4 Nike
AC Milan 10,5 Adidas
Man City 5,7 Umbro
Tottenham 5,7 Puma
Lyon 5,0 Adidas
HSV 2,0 Adidas
Schalke 1,3 Adidas
Marseille ? Adidas
Atletico ? Nike
AS Roma ? Kappa
Stuttgart ? Puma
Aston Villa ? Nike

The 50 million dollar shirt

As you can see, Bayern’s adidas deal is worth more than the one of clubs known for a huge international fanbase (Arsenal, Chelsea, Liverpool) and until Barcelona decided to get rid of the ‘no shirt sponsor’ policy for the rich but dubious Qatar Foundation, the deal with Deutsche Telekom was the best of them all.

So in a nutshell:

  • Bayern is the best club when it comes to commercial revenue
  • The broadcasting revenue is comparably low because of the Bundesliga’s poor TV deal (even worse than Ligue 1’s)
  • There’s a lot of room to improve matchday revenue with higher ticket prices. Prices like in England would definitely be enough to surpass Man United and could be enough to surpass Barcelona despite huge TV deal disadvantage
  • With both an improved TV deal and higher ticket prices Bayern most likely would be the club with the highest revenue in Europe

If the financial situation of football clubs is something that interests you, it’s mandatory to visit The Swiss Ramble who describes these things way more accurately and easily understandable than I just did.

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7 Responses to The Commercial Giant

  1. Ashish (car_lover) says:

    I have disagree with the ticket prices bit. Admittedly it will mean increased revenue, ubt ONLY if the stadium manages to fill completely. The Bundesliga should keep the ticket prices low, so as to make it really popular.

    • Red Robbery says:

      As I said, it’s not the best option, a proper TV deal has to have priority. But I’m pretty sure that Bayern could fill the stadium completely even if ticket prices are raised, there are tons of requests for each match. I don’t know if it would work for other BL clubs, though.

  2. Tom says:

    Is there a breakdown on merchandising revenue with regards to domestic versus international? Several of the big clubs (Man U, Arsenal, etc) have storefronts in North America (and the lower shipping costs that go with it). I’d like to see FCB do something similar.

  3. JeanAbboud says:

    I dont remember if it was Uli Hoeness or Rummenigge who said that they want broadcasting revenue to double in the short-medium term because its unacceptable… well I think that Bayern and German clubs will dominate in the years to come especially with the Fifa Financial Fair Play coming into effect

  4. Andreas says:

    Great article!

    Do you know if there is a new tv deal in the pipeline?

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