Soccer is on a great run.
The 20 most valuable soccer teams in the world are worth an average of $1.69 billion, up 14% over the past year and 74% since 2013. The surge in values has been underpinned by revenue growth. The top 20 teams raked in an average of $428 million in revenue during the 2016-2017 season, 40% more than five years ago.
This is our 15th annual list of the World’s Most Valuable Soccer Teams, and for the second consecutive year Manchester United is the world’s most valuable soccer team, worth $4.12 billion, up from $3.69 billion last year. Manchester United generated the most revenue ($737 million) during the 2016-2017 season and nearly 50% more operating income ($254 million) than any other soccer team. Every team team on our list rose in value by at least 9%, with one huge exception. AC Milan plummeted 24% in value over the past year, to $612 million. The Italian team’s debt-laden owner may have to sell the Italian side, which is facing UEFA sanctions.
Nipping at Manchester United’s heels for the top spot are the two Spanish giants—Real Madrid ($4.09 billion) and Barcelona ($4.06 billion). Ether of them may soon surpass the Red Devils in value; the former because of their incredible Champions League play, the latter due to the tremendous revenue their renovated stadium and grounds should generate when completed in four years. Below is an interview I did with Barcelona’s president, Josep Bartomeu.
How about the sport’s profits? Operating income averaged $84 million—an all-time high. UEFA’s Fair Play rules have helped transform European soccer’s finances. During 2016-17 only two teams—As Roma ($64 million) and AC Milan ($10 million)—posted operating losses. During the 2003-2004 season, seven of the 20 most valuable teams had operating losses that totaled $244 million. Upshot: 4 of the 10 most profitable teams in the world are soccer teams.
The increase in revenue and profitability has lifted team values. But only Manchester United, Real Madrid and Barcelona rank among the 10 most valuable sport franchises in the world. That could change if German teams allow foreign investors, which to a certain extent would increase Bundesliga team values like the rush of foreign investors that began over a decade ago boosted Premier league values. A prime example is Bayern Munich. The team took in more commercial (sponsorships, merchandising, advertising) revenue ($374 million) during the 2016-17 season than any other soccer team. Yet Bayern’s total revenue was just $640 million–a distant fourth to Barcelona ($706 million). The German team’s brand needs some marketing love. Foreign capital would mean higher team sale prices and a greater incentive to increase revenue for the Budnesliga.
Soccer is the most popular team sport in the world, and its athletes are two-legged billboards followed incessantly by rabid followers throughout the world. Soccer players are extremely valuable assets, which explains why three of them (Cristiano Ronaldo, Lionel Messi, Neymar) are among the top-five highest earning athletes in the world. These players are worth every penny because the drive the television audiences that command the lucrative broadcasting deals and generate the money from companies that want to splash their names on their uniforms and stadiums. The leagues and teams with the biggest broadcasting and uniform deals are the most valuable, and over time broadcasting and commercial revenue have become a bigger slice of soccer’s revenue pie.
Europe’s top five leagues have deals in place that generate $8.2 billion annually in media rights. English teams dominate our top 20 list with with eight entries because the Premier League has the richest television deals. But rights fees have not peaked, and all domestic leagues are getting richer. Ligue 1, for example, France’s top league, recently sold its television rights for much more than its current deal. And Amazon, throwing cold water on the notion that England’s best division would generate less money in its next round of media deals, just bought the streaming rights for the English Premier League. Don’t kid yourself. The money is going up. It’s just being packaged differently. Italy is also breaking ground with streaming. DAZN has announced that it will launch a streaming service with a three-year deal to broadcast 114 Serie A matches per-season.
The value of uniform and stadium sponsorships are also increasing. Last September, Real Madrid renewed their shirt sponsorship deal with Dubai airline Emirates for a record $82 million per-year (included in the table below) through to the end of the 2020-2021 season. Barcelona has the top kit deal with Nike at $116 million a year. The 10 most valuable shirt, kit and stadium naming rights deals combined command a total $1.35 billion annually. And some teams are now selling a third slice of their uniforms. Sleeve patches, akin to the NBA patch deals, are going to add more uniform dollars. Arsenal and Chelsea have recently inked patch deals that will pay $13 million and $10 annually to each team, respectively.
The gravy comes from Champions League participation—the most lucrative annual sports tournament in the world. The piles of money that teams can earn from advancing deep into the tournament is unrivaled in sports. Consistent participation adds hundreds of millions of dollars to a team’s value and tens of millions of dollars to its bottom line. Liverpool, worth $1.94 billion, increased the most in value (30%) this year in large part because of the money it will take in from the 2017-2018 and 2018-2019 Champions League. Again, just like broadcasting and sponsorship revenue, Champions League payouts are headed up.
Real Madrid has recently dominated the Champions League, winning the past three. This year’s 3-1 win against Liverpool was their third finals triumph in a row in the competition, making them the first team to do so on more than one occasion.
Some bookkeeping. All revenues and operating income figures in our table are for the 2016-2017 season, converted into U.S. dollars based on average exchange rates for the same period. Team values are enterprise values (equity plus net debt) and are based on exchange rates as of May 18, 2018.
Operating income is earnings before interest, taxes, depreciation and amortization, player trading and disposal of player registrations. Debt includes long term borrowings and stadium debt recourse to the team. To compile our figures we primarily used team financial reports, Deloitte’s Money League report and The Swiss Ramble.
For perspective, keep in mind that the U.S. dollar fell in value relative to the euro during the past year. As a result, the measured-in-dollars team values rose 14% but only increased 5% in euro. But over the long haul exchange-rate fluctuations are negated. Over the past five years the average change in value for the world’s 20 most valuable soccer teams was 74% in dollars and 88% in Euro.
More Info: www.forbes.com