Topping the charts

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Manchester United and Real Madrid sit atop of the global shirt sale charts with 1.4 million shirts sold per season on average over the past five years.

United and Madrid are two of the three teams that have managed to surpass the one million mark between 2007-08 and 2011-12, with Spanish titans Barcelona completing the top three with 1.15m shirts sold per year.

England has four teams in the top 10, with Chelsea, Liverpool and Arsenal accompanying Manchester United, while Juventus, Inter and AC Milan represent Serie A. Bayern Munich completes the top 10 in fifth position.

Although merchandise sales do not constitute a major part of the turnovers of the world’s top clubs, these shirt sale figures (sourced from Goal.com) are still interesting in the context of the total revenues of the respective clubs. The Deloitte UK Football Money League 2012 rankings show that Madrid is well on top in terms of total revenues (as well as commercial sales) with Barcelona on their tails while Man United lags considerably behind. For more financial information regarding the top three shirt sellers, a visit to our favourite site for football financials is strongly recommended.

…Madrid’s commercial philosophy is perhaps most interesting. The club’s stated strategy is to strengthen its brand through investment in top players, which it then monitises via merchandising, licensing and sponsorship. It’s a little bit like a Hollywood movie studio, which means that they need the best “actors” for their “show” that can then be leveraged into higher sales.

There are clearly risks associated with such a strategy, but in fairness it seems to have worked to date, judging by the revenue (and profit) figures. Madrid’s popularity has remained undiminished, which has helped drive the astounding commercial revenue of €151 million (after re-classifying membership fees), second only to Bayern Munich’s almost unbelievable €173 million in the money league. The only other club with commercial income approaching that was Barcelona with €122 million, which will rise to much the same level as Madrid’s once their first shirt sponsorship deal is included.

…United’s largest sponsorship contract is with long-term kit supplier Nike, which runs until 2015 and increased from £23.3 million to £25.4 million in 2011 in line with a contractual step-up. Nike also manage the club’s merchandising, licensing and retail operations, sharing the net profits equally with United. This kit deal remains the highest in England, slightly ahead of Liverpool’s new Warrior deal £25 million and Chelsea’s improved Adidas contract £20 million, though is a little lower than the deals at Real Madrid and Barcelona.

…There’s certainly some room for growth, as United were still a fair way behind the commercial income generated by some leading continental clubs, at least last season, when their £81 million compared to Bayern Munich’s extraordinary £142 million, Real Madrid’s £124 million and Barcelona’s £100 million. Obviously, the 2011 figure of £103 million has overtaken Barcelona, but that is before the new Qatar shirt sponsorship is included. In fairness, United’s merchandising operation is outsourced to Nike, so commercial revenue (and operating expenses) would be higher, if it were brought back in-house.

…(Barcelona’s) commercial revenue increased significantly from €122.2m in 2009/10 to a club record €156.3m (£141.1m) in 2010/11, boosted by a €15m contribution from the new shirt sponsorship deal with the Qatar Foundation. The agreement was announced mid-season and will be worth an average of €30m per season until the end of the 2015/16 season. The club reports that the other key factors in this increase in commercial revenues were contractual bonuses from winning the Champions League, increased stadium tour visitors (1.5m), and the development of their new Seient Lliure ticket exchange service in Barcelona. 

The commercial incomes of these top clubs are clearly increasing, surely fueled by a rise in global popularity. Nevertheless, they will find it tough to escape the economic troubles faced by Europe and beyond, but that is a story for another article.

 

Note: The Madrid & United excerpts above are from The Swiss Ramble while Barcelona’s information comes via Deloitte UK.

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