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How Football Clubs Got So Rich?

| 02.08.2020
How Football Clubs Got So Rich?

Many fans of the beautiful round leather game of football still can’t fathom how football clubs get the huge amounts they pay to their staff and players. Different TV stations and news outlets display these outrageous amounts for all to see. This incredible amount of money is even paid to the players, managers, and club workers per week. Where do the clubs get the money from? Is it from the millions of pounds invested in the sports by investors? Is it from adverts? Continue reading to get answers to your questions.

TV/Broadcasting Rights

Manchester United Goalkeeper

Football is unarguably the most popular sport in the world. Football is played in every continent and in all countries. Several countries have their own domestic leagues for the training of homegrown players. Every football competition, irrespective of its size, from the bigger ones like the FIFA World Cup, the English Premier League, the Champions League, La Liga to the smaller competitions like national or regional tournaments, attract billions of fans all over the world. Whenever a competition is to be played, TV right becomes the trending issue between the organizers of the tournament and the TV stations. The organizers usually want more money from the TV stations, but the TV stations want to save as much money as possible from the negotiation. Some of the TV stations that determine the TV rights amount to be paid for EPL fixtures are Sky Sports, Skysports.com, and many other stations.

According to reports, The English Premier League got over £5 billion from TV rights in 2015. La Liga Santander got over £1 billion from TV rights in the same year. The revenue generated from TV rights is distributed equally to all the clubs participating in the competition.
Speaking of profits made from TV rights, Manchester City earned a profit of over £76 million for participating in the Champions League between 2015 and 2016. Out of the club's money during that season, £42 million was gotten from TV rights.

There is no doubt that TV right is one of the primary sources from which football clubs get their money.

Prize Money

This is another major part of a football club’s financial strength. This is very different from the money gotten from TV rights. This money is calculated based on how far the club goes in that particular competition (performance-based money). For example, if the competition is a league, the prize money is calculated based on the team's position on the log table. The prize money difference between the team in the first position and the team at the bottom of the table could be close to £15 million. For instance, in 2016, Manchester United won Crystal Palace in the finals of the English FA Cup to earn the sum of £1.8 million.

Player Transfers

Player transfer runs into millions of pounds. The more skilled and professional a player is, the higher his transfer fees. People usually ignore players’ transfer money, but it usually rakes huge sums of money for the football club. Such money is usually reinvested into the entire development of the club selling the player. A player’s transfer money is not usually viewed as part of the club's income. However, it contributes immensely to the financial strength of the club. The coffers of Liverpool FC were filled to the brim when the football club sold Forward, Luis Suarez, to FC Barcelona in 2014.

To make more money from the sale of a player, smaller clubs usually attach a sell-on fee to new contracts signed by players, especially when the players are generating interest from other clubs. The transfer of Raheem Sterling from Liverpool to Manchester City was worth £49 million, even though he wasn’t in Liverpool for some time.

For a young player that is inconsistent, this deal is a good one. But do you know who also benefited from the deal? QPR did. QPR had agreed to a 20 percent sell-on fee with Liverpool FC when Liverpool purchased him from the London club earlier. It means that, although the total transfer fee was £49 million, Liverpool got £39 million while Queens Park Rangers got £10 million. You can check Skysports.com for more news on player transfer and transfer fees.

Liverpool goal

Match Day Revenue and Gate Receipts

Another good source of a club’s revenue is the money gotten from gate receipts and match day. EPL fixtures and La Liga fixtures usually witness large turnouts. In fact, this was the major way clubs made their money before the English Premier

League transformed the league into a money-making beast. The success and popularity of the competing clubs determine the number of fans that will be willing to pay huge sums of money for the ticket. The teams and clubs participating in competitions like the Champions League, FIFA World Cup, and so on usually earn a larger sum of money from sold tickets.

Advertising

Advertisement also adds significantly to the financial strength of a club. Football gives many companies the platform to advertise their products and services to a larger audience all-round the world. So instead of using their money on adverts with unsure outcomes, many companies prefer to market their products with celebrities. Football, as the most popular of all sports, is the platform all companies are targeting. Liverpool is sponsored by Carlsberg, Arsenal by Emirates, Chelsea by Yokohama Tires, and Manchester United by AIG.

The popularity and fame of these clubs is enough for businesses to invest millions of pounds on them. You will usually see brand names or logos on the shirts of some clubs. This means that the brand sponsors the team. AIG’s chief executive announced in 2006 that the company will henceforth sponsor Manchester United. This sponsorship deal was up for debate as the amount was expected to reach £56.5 million in 4 years. In other words, the club will receive an annual sum of £14.1 million.

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