Amidst the uncertain global economic scenario, one sector seems to be in a state of perpetual boom — European football. Brazilian star Neymar’s jaw dropping transfer from FC Barcelona to Paris Saint Germain (PSG) for a record-breaking fee of €222 million seemed to completely defy any financial logic. It seems no price was high enough for PSG’s Qatari owners who came swooping down on Neymar.
The €222 million is more than double the sum that Manchester United paid Italian club Juventus last year to acquire French player Paul Pogba. Neymar will reportedly be earning €550,000 a week! As Ed Malyon wrote in The Independent , “We are already well along the path to financial absurdity”. Football clubs make their money through TV broadcast deals, gate tickets sold at stadiums and sponsorship deals. Of late merchandising — sales of official football jerseys, scarves and other goods — has also become an important source of revenue.
Global consultancy firms such as KPMG and Deloitte run dedicated football desks analysing financial aspects of the game. According to a KPMG report – ‘Football Clubs’ Valuation: The European Elite 2017’ — the combined valuation of 32 elite European clubs’ was €29.9 billion last season, up 14 per cent over the previous season.
Manchester United topped the list with a valuation of over €3 billion followed by Real Madrid and Barcelona. There are six English clubs in the top 10 of the valuation list as they enjoy higher broadcast revenues — proving that the English Premier League (EPL) remains the most popular football league the world over.
According to Deloitte’s ‘Annual Review of Football Finance-2017’, EPL revenues the rose to a record £3.6 billion in 2015-16. The big five European leagues’ (England, Spain, Italy, Germany and France) collective revenues rose 12 per cent in 2015-16 to €1.4 billion. Of this 59 per cent was due to increased broadcast revenues and 31 per cent increased sponsorship. This clearly shows that the appetite for football viewership seems insatiable.
Also, over a three-year broadcast period of 2013-14 to 2015-16, the EPL clubs earned operating profits of over £1.6 billion, higher than the combined sum earned in the previous 16 seasons, says the Deloitte report.
Football clubs, long seen as billionaires’ play things with high cash burn, have now turned profitable with 17 out of the 20 EPL clubs reporting operating profits in 2015-16 and net debt falling for the third consecutive season. Spanish clubs saw their operating profits rise 53 per cent, notes Deloitte.
Of course, it’s not all hunky dory for all the leagues. The Italian league — Serie A — which was the top league in Europe in the past has fallen on bad times. Top Serie A clubs have changed ownership with the latest being AC Milan. Long owned by the controversial and flamboyant former Italy President Silvio Berlusconi, AC Milan is now in Chinese hands and so is their cross town rivals Internazionale.
It is sometimes confounding to see the amount of money football is raking in, in a continent where countries have endured serious debt crises (Greece) and high youth unemployment (Spain).
So whether the sum PSG paid for Neymar was worth it will be known by May 2018, as anything less than the UEFA Champion’s League Trophy will be seen as a failure.