Financial Models and Management in Football

Dissertation submitted to
Faculty of Management Studies, University of Delhi
For the partial fulfilment for the award of the degree of
Master’s in Business Administration

By
Sagnik Chattopadhyay
FT-153

Under the supervision of

Dr. Pankaj Sinha

Faculty of Management Studies, University of Delhi

University Enclave, New Delhi, Delhi 110007
 CERTIFICATE

This is to certify that the project titled “Financial Models and Management in Football”, submitted
in partial fulfilment of the requirements for the degree of Master of Business Administration by me, Mr.
Sagnik Chattopadhyay of the Faculty of Management Studies, University of Delhi is a record of original
research work carried out by myself. Any material borrowed or referred to is duly acknowledged.

Sagnik Chattopadhyay
Roll No. - 153, Section – A
MBA - FT (2018-20)

This is to certify that the above-mentioned project titled “Financial Models and Management in
Football” submitted by Mr. Sagnik Chattopadhyay has been carried out under my supervision.

Dr. Pankaj Sinha

Project Guide
Faculty of Management Studies
University of Delhi
 ACKNOWLEDGEMENT

I would hereby like to thank Dr. Pankaj Sinha for his constant help and support in the
accomplishment of this project. Pursuing a project in such a complicated field would not have been
possible without his continuous encouragement and guidance. Apart from the project work, I also owe
him my gratitude for being a faculty member that has always laid strong emphasis on creative thinking
and for always being there for his students whenever they needed his support and valuable guidance.

I have also taken assistance and direction from several articles, research studies and papers from
national and international entities. I acknowledge the value that I have received from these bodies of
knowledge.

Sagnik Chattopadhyay
Roll No. - 153, Section - A
MBA-FT (2018-20)
Faculty of Management Studies
University of Delhi
Delhi - 110007
March 2020
TABLE OF CONTENTS
 LITERATURE REVIEW

OBJECTIVE
Compare the different operating and financial models in football clubs across the world, and the
factors which are integral to the failures and successes (both on-the-field & off-the-field) of clubs,
development of football in the country and sustainability of the model - players and their image rights,
club ownership, sponsorship, investments, etc. and determine their overall impact.

RESEARCH METHODOLOGY
Gather financial data for a variety of clubs and leagues from the respective governing body reports,
focusing primarily on European, North and South American football leagues, looking at revenue streams
as well as major sources of expenses, and the resilience of the individual models to financial exposure
and volatility. This would also explore the disparity between the biggest clubs and the rest in terms of
revenues, player expenditures, sporting successes, as well as the impact of newer models in football, like
the rapid rise of relatively smaller clubs through private investments and setting up of the City Football
Group. From the financial data, as well as data regarding recruitment, player values, expenditure on
youth and training setups, sporting performance, a correlation might be obtained with respect to the
development of the clubs and contribution to the national team. Finally, explore the determinants of
financial and sporting success separately, with case studies on insolvency as well as extranormal
financial returns in spite of extended periods of poor performance on-the-field.

EXECUTIVE SUMMARY
 INTRODUCTION
Football has evolved during the last century from a humble sport into an industry that makes
huge amounts of money. Rich clubs with their stupendous revenues are able to attract better players
helping them gain more fans and emerge as global brands through sporting success, which results in
high-paying sponsors and lucrative commercial deals. In recent times, professional football is
becoming more like a branch of the corporate world, thus losing some of its local charm and the inherently
geographical and familial characteristics of their fanbase. Nevertheless, the geographic basis of this sport
is still widely apparent at a variety of scales: global, national and local, as is demonstrated by international
competition among countries, the locational patterns of professional football teams, fans’ attachment to
teams in specific locations, etc. Usually, there is a very strong link between a football team and its host
city, although they are not formal monopolies, with several teams representing a single city, but in many
cases, representative of different sections of the city. For instance, London has more than 10 clubs
competing in the professional football leagues.
Each nation may have one or more professional football leagues of its own following a tiered system,
besides amateur and semi-professional ones. Each club participating in national leagues needs to fulfill
certain criteria set by UEFA’s Club Regulations for licensing and regulation of financial fair play
for receiving the license, in 5 specific categories:
 Sport (player development & re g is t ra t i o n , medical care, racial equality),
 Infrastructural (stadium, and training centers),
 Personal and administrative (human resources),
 Legal (contracts, legal structures and management models),
 Financial (Financial reports, status of payment, future investments).
Good performances in a division are awarded with promotions, while bottom teams are relegated to the
lower tiers, and as such, number of teams playing each year in a particular tier remains the same, as equal
number of teams are promoted/relegated from/to both the immediately higher and lower tiers. Promotions
means more revenue, better players, and boosts the growth of any club significantly. Often top teams from
the top tiers of different countries participate in continental competitions which are considered the highest
award of all for any football club. In some cases, even continental clubs have tiers, involving more clubs
and countries to decide the best teams in each tier.
With the ever increasing global footprint of football and the expansion into high population
geographies of the Asian and other emerging markets, the industry poised to expand
tremendously and clubs are now fighting for bigger incomes, and the competition for big
sponsorships and shares on TV rights is also increasing as clubs target a larger chunk of the pie. Just
like this has increased investment in football manifold, in particular from Russia, Middle East, US, etc.
by business enterprises like the City Football Group, this also leads to financial instability and
insolvency of football clubs in many countries due to mismanagement, spending more than they can
earn due to unrealistic expectations of an overtly optimistic outcome.
The exceptions are the clubs from Germany, Portugal, England and MLS (USA and Canada).
U n l i k e c l u b s i n Italy and France w h i c h are struggling with financial insolvency and outdated
infrastructure, and those in Spain suffering due to overwhelming popularity of the two power centers
of Madrid (Real Madrid and Atletico Madrid) and Barcelona, these countries manage to be
competitive and have the latest infrastructure due to their models of financing. The popular
“50+1” model of ownership structure in clubs have contributed to the development of the
sport, football and stabilization of Bundesliga and better public relations with transparent
activities. The rule states that majority of voting structure in clubs, must be in the hand
of the club and its members, enabling them to have the majority and protect the best
interests of the club. English football is based on the opposite model , with majority of the
clubs under private ownership, who may not have the best interests of the club at heart .
The Portuguese, French leagues (except PSG, Monaco) and many other smaller leagues
base their revenue on making profits from transfers of players owing to their wider
networks and extensive scouting infrastructures . The below figure shows the dominance
of the ‘Big Five’ European leagues in terms of the share they own in the European market.

European Football Market Size

European leagues have seen unprecedented growth over the past decade, driven by the increasing
value of broadcast deals, even though rise in values of domestic broadcast deals are showing signs of
slowing down after several cycles of substantial growth. As such, international markets hold the key to
future growth opportunities. International rights values ensured that the Premier League saw 8% growth
overall for the 2019-20 season, despite an 8% decrease in domestic value. Both La Liga and the Bundesliga
have identified this area as an opportunity to reduce the substantial gap to the Premier League, utilizing
strategies revolving around local engagement to maximize the control, quality, reach and value of
broadcasting their content in developing football markets.

MAJOR FINANCIAL MODELS

Significant Chinese, Middle Eastern, Russian investments in the game, both in domestic and
international markets, have reshaped the football industry in this century. In this context, current club
turnovers are not necessarily the most relevant indicators of financial power. Chelsea’s rise to prominence
through investments in the playing squad, staff and infrastructure, culminating in their Champion’s League
success in 2012, would not have been apparent following Roman Abramovich’s takeover in 2003. This
was followed by Qatari investment in Manchester City and PSG, making them the new ‘big boys’ on the
block. Taking into account assets, net debt and both the realized and potential investment by owners, focus
should also be extended to the management of a club’s assets such as players, stadiums and training
facilities as well as their liquid assets. There are three sources of revenues of the football clubs:
 Matchday (tickets, hospitality and corporate sales);
 TV rights (including distribution rights of local leagues, cups and continental competitions)
 Commercial sources (sponsorships, marketing, sales, and other commercial activities).
 Given that football currently commands the attention of billionaires around the world, many club
shareholders are extremely rich. Between Europe, China, Mexico and the US, club owners have a total
net worth of more than €450 billion. However, there are various club models in Europe, including those
structured around PLCs, limited liability firms and, peculiar to Germany, a model that enables the club to
retain control but also sell shares to minority companies or also be 100% owned by a corporation. There
is also the Spanish model that allows some clubs to avoid becoming a company. The property is
maintained “in house” thanks to club membership schemes. They are an exception in the current
landscape, but this model can also involve the participation of heavily capitalised sports tycoons. In China,
football club owners’ net worth for the largest nine clubs in the country exceeds €75 billion, while in the
US, the richest club owners have a net worth of more than €34 billion.
The economic influence of the club owner and his capitalisation is of course restricted by domestic
regulations that limit the use of resources without control. For example, in the US, wage caps and transfer
regulations prevent MLS club owners - many of whom are wealthy tycoons - from making large
investments that might create an uncompetitive environment. In Europe, UEFA created the Clubs
Licensing System in 2004 and introduced its Financial Fair Play (FFP) regulations in 2011. Today 1,500
European teams fall under this regulation. The European market, following its restructuring and increased
professionalisation in the 1990s, did not have rigid expenditure regulations or control of heavy losses.
This really began with the introduction of FFP. In the UK, with the Premier League’s aggressive expansion
over the past two decades, the presence of wealthy benefactors is an accepted part of the game. Their net
worth in British football now exceeds €88 billion. A portion of the success of English football can be
attributed to the significant investments made by these billionaires. This has elevated a group of clubs into
major footballing economic powers. The UK model has been replicated in other markets as evidenced at
Paris Saint-Germain (PSG) and across Chinese football. European football, at its peak, has experienced
broad expansion, but many of these new giants have accumulated heavy losses in the process, with their
sustainability depending on their owners’ soft loans or large corporate sponsorship funds linked to the
owner’s family or other business interests. With the application of FFP in 2011, the losses were reduced
and more balanced financial structures were developed, but as has been witnessed in the most recent
transfer window, clubs – particularly those with wealthy owners - are still able to make game-changing
investments. The Neymar transfer to PSG, a €222 million transaction, shows how strong and capitalized
the new powers in football really are. Qatar Sports Investment, the group that controls PSG is part of Qatar
Investment Authority which has under is administration €440 billion in assets, enough in terms of capital,
to be considered a country in itself! In comparison, the estimated net worth of Chelsea’s Roman
Abramovich, once considered football’s biggest foreign investor is €9 billion. This study attempts to throw
some light on the current state of play in the football world by looking at the big picture, analysing the
entire business of the clubs, from return on assets to investment strength and levels of indebtedness.
As well as making a select band of clubs extremely wealthy, the overall financial health of football
clubs at the top level of the sport has also improved, creating clubs that have become global brands and
businesses. However, as football has become more popular, transfer fees have spiralled, along with player
salaries. The spending behavior of certain clubs in this new environment has been the catalyst for
regulatory change, notably in the form of UEFA’s Financial Fair Play, which has restricted outlays and,
consequently, club losses. At the same time, traditional football markets in Europe have been impacted by
growing interest in the sport from China, which has been vigorously backed by both the government and
large Chinese corporates. This resulted in increased activity in transfer windows involving clubs from the
Chinese Super League. European clubs no longer get their own way in their own backyard. Among
themselves, the investments made in clubs like Chelsea, Manchester City and Paris Saint-Germain have
created a group of new contenders that have challenged the status quo, not just in their domestic markets,
but also across Europe. Evidence of the shift in football power was seen in the recent transfer of Neymar
from Barcelona to PSG. At present, the trend of football club acquisition shows little sign of easing up.
Indeed, investors from China have started eyeing opportunities among second tier clubs in England, while
bodies such as City Football Group have expanded their franchise by acquiring new clubs in various
locations. Multi-club ownership is a trend that may continue unless regulatory measures make it difficult
to achieve. Meanwhile, the transfer market may now be entering a period of frantic activity and inflated
fees following the Neymar transaction. Football, owing to its mass global appeal and financial potential,
looks set to remain an attractive proposition and major talking point for investors for some time.
Owners of the top 100 ranked clubs across the world have a combined net worth of just over €
475bn. In China, the net worth of the owners of the nine largest clubs amounts to € 60bn, while in the US,
the richest owners’ wealth totals some € 26bn. The owners of the top 30 clubs, as defined by this report,
have a net worth of over € 366bn. Billionaire-owned clubs represent just one type of business model.
Clubs like Real Madrid and Barcelona are member-owned clubs, while in Germany the so-called 50+1
system works for clubs such as Bayern Munich. These clubs sit alongside others, such as VfL Wolfsburg
and Bayer Leverkusen, that are effectively owned by corporates. The English Premier League has been
the most exposed to foreign ownership and only five of the 20 clubs are 100%-owned by English investors.
Given that English clubs have benefitted more than most from the globalization of the game, this is perhaps
no surprise.

ANALYSIS OF RICHEST CLUBS IN WORLD FOOTBALL

The report evaluates and ranks the financial potential of each club that looks at the performance of
clubs in each of the five key variables identified, weighted against that variable’s percentage of the
accumulative total.
Net debt has been calculated as short term liabilities plus long term liabilities minus current assets.
In some cases, this produces a negative net debt which is indicative that the club possesses enough cash
and cash equivalents to pay off its short and long-term debt and still have excess cash remaining.
Many clubs featuring at high positions in the list, in addition to a capitalized ownership, have
excellent asset management, for example, clubs that have extremely valuable players in their squad have
a greater capacity to generate revenue from intangible assets. The ability to make a return on their
investment in players is a key business tool for many clubs.
The management of tangible assets and cash in bank are fundamental for the most efficient and
productive management of the entire business. The actual transformation of assets into revenue depends
on many factors. Many clubs have turned into economic powerhouses precisely because they have been
able to increase the return of investment to their shareholders, thanks to asset growth.
In line with the modern reality of football, the owner’s net worth is considered as an important factor
for the evaluation of the teams’ financial strength, according to the degree of effective investment. In
situations where a club does not have one owner or ownership group – e.g. members’ clubs such as Real
Madrid and Barcelona - they are attributed a value of “zero” for that variable. Also, some tycoons have
multiple clubs, in different countries. In these instances, in our methodology the potential investment
amount was divided between the different clubs owned by the investor. A starting percentage is used based
on research and evaluation of the owner investment to date, with further weighting applied based on
analysis of macro & microeconomic factors such as ownership structure, national league restrictions and
other regulations such as financial fair play.
In cases where no reliable information could be found to provide a figure for a club’s net debt or
owner’s net worth, we have listed them as NA and for the purposes of the calculation zeroed the value.
Clubs that do not have moguls as owners have had their calculations restricted to valuing their assets and
deducting debts. Some of them showed strength in their asset management and they are featured in the
survey. In the cases of Cash in Bank and Owner Potential Investment, greater weighting was applied due
their greater liquidity and therefore greater impact on a club’s immediate financial strength.

UK clubs dominate the upper part of the rankings, providing four of the top 10 and eight of the top
30, more than any other nation.
The remaining 22 comprises clubs from eight other countries; the US have the next biggest
contingent with five, Germany and Spain provide four clubs each, France and Italy three and China, Russia
and the Ukraine one each.
Manchester City, one of the most famous cases of significant foreign investment changing a club’s
status and potential, top the rankings. Their owner’s high potential investment value is complimented by
a strong performance by the club across each of the other verticals, showing how the owner’s investment
has improved the club’s overall business.
Arsenal’s 2nd place in the rankings, ahead of PSG, will surprise many and is certainly a talking
point in light of the criticism the club receives from some quarters for its perceived lack of spending in
the transfer market. Their ranking is a reflection of the club’s professionalism and a sound business model,
which sees them around the top in four of the five key variables, while also having a relatively low level
of net debt. This position of financial strength means Arsenal could invest significantly should the
hierarchy at the club choose to change their business strategy.
Leading Chinese club Guangzhou Evergrande features in the top 10 largely due to the immense
wealth of its owners, Evergrande and Alibaba. In total, there are nine Chinese clubs in the top 100, more
than France, Germany and Italy and the same number as Spain, showing the significant financial potential
of the Chinese Super League.
Chelsea, the other big European club often associated with heavy owner investment, are 9th,
however it should be noted that their ranking is affected by the listing of the owner’s investment as a loan,
albeit one without interest or timescale, which gives them the largest net debt of all clubs in the top 100.
We have made a weighted adjustment for this in the ranking but if the bulk of their “debt” to Abramovich
was recorded as sponsorship or something similar, as it is with other clubs, then Chelsea would move up
to 5th in the rankings.
Spanish powerhouses Real Madrid and Barcelona, who invariably feature at the head of most
reports on football finance, “languish” in 6th and 13th respectively, with their rankings impacted by their
member ownership structures and the lack of potential owner investment. Although, as we point out,
should Real Madrid be capitalized via the stock markets, their overall financial power, would make them
worth more than any tycoon’s club.
Unsurprisingly, the European clubs in the top 20 are the clubs that have dominated the top leagues
in Europe – PSG (France), Bayern Munich (Germany), Real Madrid and Barcelona (Spain) and Juventus
(Italy). In most cases, their wealth exceeds their main domestic competitors by some distance, suggesting
their reign at the top should be sustained.
The United States is the joint second most represented country in the top 30, ahead of the likes of
Germany and Spain, largely due to solid business models, high value of assets (e.g. stadiums) and strong
investors.
Despite the rich football heritage of the region, notable absentees from the top 30 are South
American clubs, where national economic inistability is reflected in their financial position. However
Brazil is strongly represented in the lower half of the rankings with 12 clubs featuring between 50 and
100. Our report demonstrates that heritage counts for little in the new corporatisation of global football.
Hence, football institutions with rich tradition such as AC Milan, Benfica and Ajax, all of whom have
won countless trophies on both the domestic and international stages, can now considered to have less
financial strength than clubs like Leicester City, Zenit St Petersburg and RB Leipzig, as well as a number
of US and Chinese clubs. Football, as ever, remains a curious game for many people.

2.1.Differences between models of financing

Liam Smith, a respective sport reporter and author of several papers, in his papers explains
management structure in German football. German football and management structure of the clubs,
respectively, is bases on the “50+1” model, and considered to be the most successful one. 50+1 is
a term used for regulation in German football league. Clause, the rule, which states that majority
of voting structure in clubs, must keep the club, and members of the club, respectively. This ensures
members of the club to have the majority in voting structures and to protect the club from the outside
investors. The rule, devised in 1998, states that “the main club must own at least 50% plus one share
(1% of the votes) ensuring the majority in the voting structure”. This model is correlated to the
stabile business enterprises and safe solvency of the clubs.
By 1998. clubs were ownerships of football fans, without possibility of investments and they were
considered to be non-profitable. Since the model is applied, there is a growth and development
in German football [5]. English football is based on the opposite model. English model of
management structures is that majority of the clubs is in the private ownership, and, therefore
dependable on money of an individual, TV rights, and great loans with favourable interest rates.
Still, there are clubs that are based on German model where the owners of the clubs are the fans
with smaller participation of private money (AFC Wimbldon, Portsmouth, Exeter, Wrexham).
Soccereconomics announced the revenues of top five European football leagues (Bundesliga,
Primera, French First league, Premier league and Italian Series A) in season 2012/2013.have
increased for 5% and reached to 9.8 billion euro which enabled the growth of total i ncome of
European football

revenues and enabled quadruple growth of the total revenues since the season 1996/1997. New
contracts of the rights of the broadcasting in two biggest leagues will contribute that the revenues
of

business operations in Deloitte [8]. When it comes to revenues, Premier league is the world leader
in relation to others; in season 2012/2013 revenues were increased for 165 million pounds (7%)
and reached over 2, 5 billion pounds (2,5 billion euro). More than 60% of that increase came from
two Manchester clubs and Liverpool. During devaluation of British pound, the difference between
Premier league and Bundesliga was reduced in 928 million euro.

2012/2013. comes from commercial sources. According to total incomes, Premier league is behind
Bundesliga for 55million euros, which a quarter of difference since three years ago. For the first
time, we expect, in the following edition, that the top league of England becomes the first in Europe
in all three categories of revenues. According to projections, the revenues in Premier league in
season 21032014. will reach 4 billion euros, which is more than projected revenues i n Primera and
Series A .

2.2. Bundesliga against other models

Bundesliga had another year of impressive growth, and it positioned itself on the second place of
the list of European leagues with the highest revenues, and for the first time crossed the limit of
2 billion euro. Total incomes, in season 2012/2013., were increased for 146 million euro (8%)
and reached 2.018 billion. 80% of that increase came from the success of Bayern from Munich
and Borussia from Dortmund.

The difference between Bundesliga and Spanish Premier League grew on 159 million euros
although total revenues of Primeri in season 2012/2013. reached 1.859 bi llion euros. Despite the
trend of the previous years, growth of 77 million euros didn't come from Real Madrid or Barselona,
which contributed to the growth of incomes of 6 million euros which is considered modest. More
clubs with new and improved contracts of right of broadcasting and better results of Spanish
clubs in Championship league [8].

Due to its comeback to the Championship league, Juventus is responsible for more than three
quarters of the revenues in Series A in season 2012/2013.which was 97 million euros (6%) while
the total
income was 1.682 billion euros. Italian clubs still rely on the revenues from broadcasting rights,
which present 59% of the total incomes of the league, which is the highest percentage of all big
leagues. French First league had the fastest growth of the incomes. 14% (161 million euros) and
the total incomes reached 1,297 billion euros for which Pari Sen Zermen is responsible. While
its incomes grew for 178 million euros other 19 clubs of the First league suffered from reduction of
incomes for 17 million euros in total [8].

Clubs of top five leagues, in season 2012/2013., showed perseverance on the revenues so the growth
of the revenues absorbed only 25% of the growth of the incomes. In four of five leagues, in season
2012/2013. ( in relation to season 2011/2012) the revenue/cost ratio was unchanged or better (Series
A 71% (74%); Primera 56% (59%); Bundesliga 51% (51%); French First league 66% (74%). The
exception is Premier league in which costs and the revenues grew in 8 % and reached 1.783 billion
pounds (2.1 billion euros). As a result the revenue/cost ratio reached to incredible 71% [8].

In season 2012/2013.only Bundesliga and Premier league gained, a profit. Bundesliga set a new
record for all football leagues- business revenue was increased for 74 million euros (39%) in
addition to 264 million euros in total . Business revenue of clubs of Premier league decreased, in
local currency for 2 million pounds in addition to 82 million pounds (96 million euros). French and
Italian league had significant business losses: in the First league, business losses are reduced for 64
million euros (on 3 million eurois) so it almost reached the state of rent, while in Series A, after
seven seasons of bad results, had reduction of losses for 107 million euros (n 53 million euros).

Respected magazine Economist researched two opposite models ( Germany and England) which
are often confronted at the matches of European Championship league and European league [9].
The example of this is the finale Bayern- Chelsea. Chelsea is one of the luxuriant consumers
in the English Premier league. Since Abu Dhabi United Group took over Manchester City in
2008. fiscal power of the club enabled winning the home title. However, wastefulness has
affected others. Portsmouth fell out from the league after bankruptcy in 2010. It's difficult for
this to happen in German football league, Bundesliga, where strict controls of expenses prevent
clubs to spend excessively [9].

Why Bundesliga progresses in relation to other European leagues? Emmanuel Hembert AT

Kearney, coauthor of paper from 2010. examined the power of Bundesliga. New contracts with
broadcasters encouraged the clubs to invest more. Revenues from commercial sponsorships have
healthy grounds. German clubs develop academies for young players, and they are mandatory to
have at least 5 young players at the age of 23 in their roster. While Sky broadcaster (in England) has
almost all rights for broadcasting league, there is great competition in Ger many among ZDF;
Eurosport and BN sports. The exclusive right on the first broadcast of each round currently has
Eurosport. German authorities have invested 1.4. billion euros for expansion of stadium for the
World Championship in 2006. Bundesliga clubs were able to increase their revenues. In England,
big clubs don't have help in public sector. Decentralization of German economy also helped the
clubs around the country to form commercial partnerships. With the lack of strong business
actions outside Paris , Madrid and Barcelona, most clubs in France and Spain have limited local
sponsorships.

Leagues in Germany and France demand the monitoring of the financial accounts in order to prevent
unnecessary expenses. The authorities can ban transfer activities or remove the teams from the
league as punishment for breaking the rules. Mr. Hembert states that system in both leagues is
stricter than financial fair-play rules of the game and suggests that FIFA restrains the expenses of
the clubs that compete in European competitions. Instead of spending money on the market of
transfers, German

team). Opposite of that; Spanish clubs that are not under financial control keep borrowing money,
in spite of successful youth programs from their own system.

Bundesliga, as an organization promised their fans that they will keep the business model for many
is to ensure the fans affordable tickets, satisfactory experience at the game and high standards
of

Bundesliga. The First German league is European football league with the biggest rating in
broadcasting. The average of 42.6000 visitors per game and the total number of incredible 13
million people in total on Bundeleague stadiums which sets the bar high. An impressive data is
that the matches of the second league (Bundesliga 2) were visited by 5.5 million people and
17.850 spectators per game, respectively [7]. In the last 7 years the revenue has increased for over
a billion euros.
It is interesting to look at the analysis of the revenues through the types of revenues. It is visible
that there is a balance between basic revenues of football clubs (matches, sponsors, TV rights)
and that there is no dependence ( risk) on one type of the profit. It is noted that revenues of the
transfers are only 7% of total incomes.

Table 2. source of income Bundesliga

 Source of income Amount (billion euro) % total income

Tv rights 716,8 29,30

Marketing 640,4 26,18
Matches 482,5 19,72
Souvenirs sales 186,9 7,64
Transfers 171 7
Other 248,6 10,16
Total 2 446,2 100

This policy lead to the situation that Bundesliga, from year to year, is the most visited. In seas on
2013/2014. when 42 125 viewers watched the games which was significantly more than it is the
case in Premier league (England) (36 657) and La League (Spain) (27 053), and the number
is still growing. And this is only one match of the local championship that is broadcasted at certain
time ontelevision in Germany (not counting pay per view- option) [5]. The price of the ticket of
Bundesliga at the main tribune is 23 Euro and Bayern Munich season tickets cost 135 Euros. Seifert
explains that the clubs are willing to sacrifice their revenue from tickets in order to combine
finances, the game, and society.
Model of a small country (in a financial sense) , Portugal, is worth mentioning. Portugal has three
big clubs: Benfica, Porto and Sporting Lisbon. President of Portuguese professional football
league Manuel Figueiredo said that Portugal was the only state of European Union that had
positive netto balance by selling players in period of 2001-2005 [11].

Costs

alone earned over 400 million euros. [11].

2.3. Profit through European league

The last report of the most respectable house of football finances in the world Deloitte, in 2016
urope , were 54% (12 billion) of
total European football market, which mostly came from new sponsorship contracts in Spain.
The only league which doesn't do business well is the French league 1. UEFA, alone had the
increase of the incomes by 21% due to TV rights for European qualifications.
In England clubs had revenue of 1.925 billion due to sposorship contracts, 2.34 billion euros on
TV rights and 768 million on ticket sales and other contents during the game. They are unbeatable
in that way. But unlike England, where there are big numbers involved, Germany manages to get
467 million euros every year from their membership cards. 731 million euros comes from TV rights,
significantly less than in England, and 521 million comes from the tickets and sales at stadiums.
In Spain, where total revenue is 2.053 billion euros, 975 million comes from TV rights, 435 millions
from tickets and other conents sold at stadiums, and 643 million comes from sponsors. Italy,
which has great wage costs, had the revenue in Seria A of 1.792 billion , of which 1.1. billion was
from TV rights, and only 210 millions from ticket sales and 438 from sponsorship contracts. The
lowest revenue had France with 1.148 billions ,628 millions came from TV rights and 318 from fan
memebreship cards.
 Graph 2. Wage/revenue ratio
(source : Deloitte UK annual review of football finance 2016)

Wage/revenue ratio shows that the biggest revenue is present in England, where incomes in season
2014/2015. were 4.4 billion pounds of which 2.67 billion pounds was spent on wages of the players.
The lowest cost was in France, but so are the revenues of 1.418 billion euros, of which 953 million
are spent on wages. Italy spends over 65% of their revenue to cover wages.
Table 4. Descriptive financial analysis of top 50 European clubs

(Rules of the Game: Strategy in Football Industry.2015)

CONCLUSION

From everything mentioned above, we can conclude that German football grows every year
and it is based on healthy grounds. Results of quality work and business enterprise are the
stabile clubs, great number of viewers and healthy competition. Representation became the
world champion, clubs are successful in Europe, the number of young players is rising, the
ratings (live and TV broadcasting) u grow, and sponsors are generous. Synergy of local
community, fans and great companies creates money. Each system has its shortcomings and
its qualities but the system implemented in Germany has the best effects so far.
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