When you have a look at the evolution of the Top 5 clubs you realise that they have mostly been growing like crazy for the last decade. It is only Arsenal the one that has stagnated in recent years, possibly because of their lack of chances to negotiate broadcasting rights independently (it is the Premier League who does in England, and UEFA for the Champions League) and also because their marketing efforts appear not to be flying. The results being achieved this season will not help them either, and Arsenal may fall out of this elite Top 5 Club next season.
Since 2003 FC Barcelona has grown an year-by-yeart average of 26% beating all their competitors and jumping from the fifth to the second position. In the meantime global companies have not -in most cases- been able to reproduce this growth rate (i.e. IBM 2%; Microsoft: 5%... while almighty Mr. Jobs managed to get a 40% growth for Apple at the other side of the equation).
The chart above shows the income of those Top 5 Clubs in € Million. It is not much when you compare them with other companies whose brands have a similar global impact. Actually, with an average of 500-1000 employees they may be considered Medium-sized Enterprises. So the question is: do they make much, or do they make little? Could the Real Madrid Brand be exploited at a higher level? How come the income is so little for such well known firms?
I'm taking Wolford as an example of a listed company, producing and marketing prime quality lingerie in the high end segment (€100 for a pair of stockings is not what you'd consider a commodity, would you). They made slightly over 150 Million Euro last year in sales around the world, a similar amount to what FC Barcelona or Real Madrid managed to cash in through their commercial, marketing & marchandise business units. My point is: is the Wolford brand so valuable as the FC Barcelona brand? If football clubs are wider known as Wolford, why is it that they cannot make more sales? Do they actually a the proper marketing strategy? I believe there's plenty of room for football clubs to develop their business in this sense.
A second source of income is broadcasting rights. There will be quite a lot of movement in this chapter in this paneuropean space we know in the seasons to come, particularly now that consumers are free to choose their providers across the EU and therefore pick the best satelite-TV package at the lowest possible price, beyond the borders of their own country. Streaming is becoming more and more a viable option, the further the IT develop and there where clubs could only offer their show to their local fans some few decades ago, today the whole world is at reach of a button click.
You finally have stadia and match day revenues, which in a visionary perspective may not be so important in the future as they still are today. While crowds only fill about 75% of the stadia, it makes you wonder whether smaller investments and thus ammortisation costs would make sense in exchange of higher ticket prices. If football has been democratised by media, then watching a game live may well be considered a luxury targetted to a premium segment of the public. But we all like to see stadia at full capacity, and TV has not yet been able to reproduce the feeling of singing together with 100.000 other fans. Let's see what the future brings.
So what's the strategy? Clubs tend nowadays to equate all three sources of revenue at a 1/3 ratio each. Matchday revenues do actually have a physical cap in which stadia can hardly be expanded once they are built, and prices may not succeed in growing if they are hardly ever loaded at full capacity. Trend will be that income from broadcasting will grow if well managed. They may stop to be the cashcow they are today in keeping the liquidity afloat, but may well become a growing source of value for clubs if handled properly. The winner team will be the one developing their branding value in the commercial aspect of the business. I personally believe in a 10% - 25% - 65% ratio in ten years from now, time will say.
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