Spain's big two lead the way once again, and a renegotiation of contracts mean a new influx of cash, but are certain regions over-reliant on this trend continuing?
By Paul Macdonald
There is a familiar pairing heading Deloitte's Money List. Based on figures accrued from the 2011-12 season, Barcelona and Real Madrid dominate the financial landscape, two overbearing giants once again solidifying their authority. Across Spain, Europe, the world, the marker has been laid down. As they streak ahead in the never-ending race to maximise revenue, it may appear that, just like La Liga, the burgeoning gap to the challengers will never be bridged.
Real Madrid lead the way for the eighth season in succession, Barcelona the runner-up for the fourth time in a row. Predictable as ever, particularly when the former obliterated the €500 million barrier. Third-placed Manchester United are €90m short of gatecrashing this duopoly.
But the reason for this seemingly incongruous disparity may well be football's worst-kept secret; broadcasting revenue in Spain is disproportionately weighted in favour of the big two. Indeed, their market share is so large that Barcelona suffered a drop in their TV income from 2010-11 (due to exiting the Champions League at the semi-final stage), but still retained a €40m broadcast earnings advantage over Chelsea - the European champions.
The current deal, brokered, devised and maintained at the behest of the Blancos and Blaugrana, has been at the expense of La Liga's remaining 18 sides. Atletico Madrid and Valencia find themselves outside the top 20, their TV revenue substantially marginalised. The arrangement, much to the consternation of the trailing pack, runs until 2015; until then, this status quo is likely to remain unbroken domestically.
|BROADCASTING REVENUE IN 2011-12
|1||Real Madrid||€199.2m||11||Bayern Munich||€81.4m|
|4||Manchester United||€128.5m||14||Olympique Lyonnais||€71.6m|
|5||AC Milan||€126.3m||15||Olympique Marseille||€70.4m|
This model is inconsistent with the likes of Germany, Italy, and England. To take the Premier League as a particular example, there is a more democratic distribution model in operation. The 'pot', as it were, is deployed based on league position, with narrow increments from 20th through to third, then a more generous total provided to winner and runner-up.
And the pot is ready to run over. A freshly-negotiated, era-defining contract, worth €6.2 billion over the course of the next three years, commences from the beginning of next season. The seismic impact from such an agreement will mean an extra €35-€45m per season from domestic TV rights alone. There are teams such as Aston Villa, Sunderland and Everton lingering just outside the top 20 - an injection of this magnitude will certainly lead to greater competition for positions. This, coupled with a successful run in the Champions League, could mean English football's predominant powers eat into the lead Barcelona and Real Madrid have accumulated.
Chelsea can certainly attest to that. As the above table outlines, the Blues' Champions League victory offset a disappointing sixth-placed finish in the Premier League, and once again showcased the income-generating power of Europe's premier club competition. Getting to the latter stages is the gateway to a palpable spike in revenue.
And yet, Bayern Munich, vanquished by Didier Drogba & Co. in the final, find themselves trailing woefully, usurped by Napoli, who exited at the round of 16 stage, but are third only to Madrid and Barcelona in terms of overall revenue.
With Borussia Dortmund in 18th, and Schalke and Hamburg propping up the top 20 when isolating broadcasting revenue exclusively, it's clear that German sides operate under a structure where this income stream is not a key economic driver. Bayern Munich earn just 22 per cent from this aspect of their revenue; Schalke 18%, Hamburg 21%. Dortmund represent the outlier, with 31% derived from this source.
|BROADCAST REVENUE - % OF TOTAL
|% of total revenue accrued from broadcasting, averaged per country, from teams in top 20 of Money List|
Beyond Germany, is there an over-reliance on the continued gravy train that is televised football? Taking the broadcasting revenue versus total revenue breakdown further: Real Madrid, 39%. Barcelona, 37%. Into the Premier League, the split is generally the same (Manchester United, 33%. Arsenal, 37%. Chelsea, 43%); between 1/3 and 2/5 of all revenue stems from TV deals.
In Italy, with Serie A clubs currently suffering brutal mismanagement and dwindling attendances, the percentages rise to dangerously dependent levels. Just over half (51%) of AC Milan's revenue comes from negotiated TV contracts both domestically and internationally. Juventus, 46%, and, most worryingly of all, Inter; their €185.9m total revenue includes €112.4m from broadcasting - 60% of the total, the highest of any club in the Money List. It is a staggering, and some would argue unsustainable, enslavement to the notion that this revenue stream, one that has admittedly grown exponentially in the past decade, will continue onwards and upwards in all countries.
This alarming predicament is also apparent in France. The emerging behemoth of Paris Saint-Germain will unquestionably cast a substantial shadow over future incarnations of this list, but for now they are absent, leaving Olympique Lyonnais and Olympique Marseille as Ligue 1's representatives. Both competed in the Champions League in 2011-12, but were notably absent this year. Given that Lyon earned €71.4m (54%) from broadcasting revenue, while Marseille collected €70.6m (52%), of which roughly half of which was due solely to the Champions League and its huge draw, these are two sides in danger of dropping out of the top 20 altogether next year.
Which leads us back to Germany. The Bundesliga is often heralded as the optimal business model, but it perhaps lacks the established, instantly recognisable teams that makes the Premier League a veritable cash cow, particularly in Asia. That said, a new TV deal is in the offing in Germany, and while it remains relatively modest in comparison to what English sides will collect (a 50% increase on the current agreement), it remains a significant development. Bundesliga sides have explored other arms of income generation, particularly through commercial means, to establish a firm financial footing to build upon.
All of which makes Spain's two-pronged command of the summit a somewhat short-sighted reveal. Similarly to Barcelona and Real Madrid's dominance of the recent FIFPro XI, where they filled 10 of the 11 available positions, it paints a convenient truth that all things are rosy in the Spanish garden.
But the increasing disparity of wealth will continue to erode the quality of the teams further down, and undermine the product as a whole. Furthermore, when the inevitable TV renegotiation does arrive, will the big two demand a continuation of the current plutocratic regime, or relent and share the wealth? If the latter, then a competitive advantage will be relinquished. This, coupled with the bankability of the EPL and the sound distribution of income in Germany could mean that the overall list may take on a rather different image in the years to come.
What remains unflinching, however, is the current appetite for live football, and the demand of the market is currently a lucrative arrangement. For now, at least.
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