Friday, February 17, 2006

Real Madrid overtakes ManU as world richest club

Real Madrid has supplanted Manchester United as the world's richest football club. Madrid overtook the Red Devils for the first time at the top of the "Football Money League," an independent report released by accountancy firm Deloitte. United had been ranked the world's richest club since the report began nine seasons ago. Deloitte says it only uses revenue as its ranking and not the wealth of individual club owners.

Real Madrid increased its revenue by 17 percent for the 2004-05 season despite going a second straight year without a major trophy. AC Milan was third followed by Italian champion Juventus and English champion Chelsea .

"The mainstay of Real's revenue growth is not match-day revenues, as we have seen in many of the UK clubs, or broadcasting revenue, as we have seen -- and continue to see -- in Italy, but strong progress in realizing their commercial potential," the report said.

Madrid's revenue doubled in four years despite increasingly poor performances. It was second in last year's Spanish league and was eliminated from the Champions League at the first knockout stage. Commercial revenue including sponsorship, merchandising and licensing contributed 45 percent of Madrid's total income. Madrid made $62 million more in commercial revenue than Manchester United and $74 million more than FC Barcelona.

"Recruiting world class 'galactico' players has not necessarily delivered the anticipated on-pitch results, but their presence has facilitated a transformation in the club's financial performance," the report said.

Manchester United's revenue fell because of a reduction in broadcast income, partly because of its exit from the Champions League at the first knockout round. However, Deloitte said United was one of "the foremost brands in the industry and are still clearly the most profitable club in terms of day to day operations."

However, a spokesman for the Glazer family told PA Sport: "Good luck to Real Madrid. Let them enjoy the limelight we have enjoyed for the previous eight years. We are optimistic about our future revenue generating expectations with the stadium expansion and the prospect of more lucrative sponsorship deals." The capacity at Old Trafford will rise to 76,000 next season, with an extra 7,500 seats coming from the new quadrants in the stadium. Together with this season's 10 percent rise in ticket prices, United should earn an extra £16 million in matchday income next year.

Real Madrid have achieved their success by concentrating on their commercial income, from areas such as merchandising, shirt sales and sponsorship.Whereas United earn 42 percent from matchday income, 29 percent from broadcasting and 29 percent from commercial, the split for Real is 23/32/45.

"The report shows that Real Madrid have overtaken Manchester United as the world's biggest earning football club - that is not necessarily to say that they are more profitable, however, since the report makes no allowances for costs or expenditure," Richard Hunter of Hargreaves Lansdown Stockbrokers said. For example, United have sold their replica shirt rights to Nike, and earn around £20 million annually from the deal without any manufacturing or distribution costs. Real's income from replica shirts is around twice as much but they have to cover the costs as well.

Real have also taken a leaf out of United's book in terms of international marketing. Five years ago, 80-90 percent of their merchandising income came from Spain, and that figure is now 40 percent with the rest coming from international sales.

The annual pre-season tour to the Far East has become hugely important to Real, especially since David Beckham joined, but the club are now getting concerned that the Asian market is becoming saturated. United, one of the first clubs to recognise the potential of Asia, have also been trying to crack the north American market and Real may now try to muscle in there as well.

Three clubs dropped out of last year's top 20 -- Marseille, Aston Villa and Rangers -- and were replaced by Everton, Lyon and Valencia.

Deloitte doesn't consider a club's expenditure or what someone might pay to buy or invest in a club, an example being Chelsea under billionaire owner Roman Abramovich. The revenue is divided into match-day, broadcast and commercial sources.

The combined income of the top twenty clubs surpassed £2 billion for the first time in 2004-5.

ANNUAL INCOME FOR 2004-05

1(2) Real Madrid £186.2m
2(1) Man Utd £166.4m
3(3) AC Milan £158m
4(5) Juventus £154.9m
5(4) Chelsea £149.1m
6(7) Barcelona £140.4m
7(9) Bayern Munich £128m
8(10) Liverpool £122.4m
9(8) Inter Milan £119.7m
10(6) Arsenal £115.7m
11(12) Roma £89m
12(11) Newcastle £87.1m
13(14) Spurs £70.6m
14(17) Schalke £65.8m
15(-) Lyon £62.7m
16(13) Celtic £62.6m
17(16) Man City £60.9m
18(-) Everton £60m
19(-) Valencia £57.2m
20(15) Lazio £56.1m
Source: Deloitte via BBC News (Previous season's positions in brackets)

Deloitte said it expected more French and German clubs to feature in the list in future seasons because television revenues in the two countries had increased substantially.

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