According to financial information collated
by the accountants Deloitte, the combined turnover of the top 20 football clubs
in the world (Europe) is GBP6.97bn or circa HK$73bn. Manchester United was
identified as the top club in terms of revenue with a figure of GBP581m (say
HK$6bn).
On the face of it these look like quite large
numbers but are they really? Personally I think they are surprisingly small.
Arguably Manchester United is one of the world’s best known brands up there in terms of recognition
with the likes of Apple, Amazon, Alibaba, etc and yet its turnover figure is
miniscule in comparison, as illustrated by the wafer thin bar in the chart
below.
Considering the global reach and appeal of
both football and the top brands such as Manchester United not to mention the
ubiquitous TV/media coverage, the amount of money actually being generated by the
clubs is rather pathetic. And of course most of these clubs have huge debts and
make a financial loss every year. Operationally the loss can be (at least in
part) attributed to the fact that an unsustainable amount of revenue is going
on player wages. If the stories about the salary being paid to Sanchez at Man
Utd are true, then he alone is getting over 4% of the club’s entire revenue. It’s
not unusual for the playing staff alone to account for significantly more than
50% of turnover. Some of the recent transfers have also been ridiculous. My own
club Liverpool recently paid GBP75m for a defender (a very good one it has to
be said) which is 20% of the club’s annual turnover.
I’m not blaming the clubs by the way. They
have little choice in paying vast sums of money to players and their agents.
It’s market forces and if they want to stay at the top, they simply have to
fork out ever increasing astronomical amounts. The problem as we know is that
many fans are being priced out of the market altogether.
The main point I am coming round to making however
is that there are even bigger amounts of money being made out of football that
never goes near the clubs.
And I’m not talking about the Leagues or
even the Governing Bodies such as FIFA. The Premier League generates a lot of
money by selling the TV rights (GBP8.4billion between 2016-19) but a large
proportion of that goes back to the clubs and contributes to the turnover
figures above. FIFA generates money from the World Cup but that gets recycled
into football activities and programmes mainly through Member Associations. So in
these cases the football ‘product’ is being used to fund football – I have no
problem with that.
The problem I have is that the
organisations making the most money from football invest nothing in the
‘product’ of football or the infrastructure of football or give much back. They
use the ‘product’ of football as a cuckoo uses another bird’s nest. I’m talking
about betting companies.
The global football sports betting market
is worth HK$7.8trillion (US$1trillion) per annum. That’s US$ 1,000,000,000,000
or not far short of the GDP of Australia. How much of that goes back to the
clubs or football in general?
Just one of the many UK betting companies
Bet365 had a turnover last year of around four times that of Manchester United
and made a healthy profit margin of over 20%. How football clubs would like
margins like that!
The Hong Kong Jockey Club generates
revenues from football betting (not including horse racing) in excess of the
collective turnover of the world’s top 20 football clubs. It’s an astounding
amount of money but at least in this case a large percentage of the profit
generated goes to good causes (and the Government in tax). Similarly, in England
1% of the ‘pools’ (national tote) money has been used to fund the Football
Foundation and this investment has helped to transform grassroots football.
I’m not name dropping but in December I was
having lunch with FIFA President Gianni Infantino and he was rightly bemoaning
the fact that football sees very little of the money generated from commercial football
betting. He mentioned that in France there is legislation to ensure that 1% of
betting turnover goes to the sport that generates it. If this model was
followed internationally and if my maths is correct it would result in an
additional US$10 billion investment back into football. Imagine the power of
this money to change people’s lives through social responsibility programmes,
grass roots football initiatives and even in tackling the problems caused by
football betting such as match-fixing, addiction etc!
Undoubtedly, some of this money should go
back to the owners of the ‘product’ that created the wealth in the first place
i.e. the clubs as long as there were safeguards in place to stop all of the extra
money going to mercenary players and greedy agent! Lower ticket prices maybe? It’s
high time that there was a much closer and global symbiotic relationship
between football and football betting.
Mark Sutcliffe CEO, January 2018
