The Premier League clubs need to speculate to accumalate

Commercial revenue is made up from sponsorship links with companies, deals with shirt makers (Liverpool with Adidas) and shirt sponsors (Manchester United with AON). This is a very good representation of a club’s ‘size’ as a commercial deal is reflective of a club’s historical achievements and present day success.

For example, Liverpool who may have not achieved great domestic success in the last ten years, received more money in commercial deals in 2010 than Chelsea. This is because Liverpool has a history of such greatness attached to it, that a company would rather be associated with Liverpool than Chelsea, who have won 3 Premier League titles in the last ten years.

Of the 20 richest clubs in Europe in 2005, their revenue through commercial deals was as follows. In 2005, Manchester United were ahead of Barcelona. However, looking at the same side’s commercial revenue from 2010, you see that is no longer the case.

In 2005, Barcelona earned less than Manchester United (England’s richest club). By 2010 they earn £20m more. However, unlike with broadcasting deals (where Spanish clubs organise private TV deals), and match-day revenue (where some clubs have old stadiums), the reason for the gap between the best English clubs and their Spanish counter parts is not obvious.

One answer may be the following. Looking at Barcelona as a brand, they are very individual and marketable. The style of football they play is synonymous with the football club. And it is attractive football. They have also seen more on-field success than Manchester United in the last 5 years.

Furthermore, Barcelona’s side is made up of almost the entire World Cup and European Championship winning Spanish team. For these reasons, the club draws in supporters from all over the world. The amount of support of Barcelona is reflected in their commercial deals.

Real Madrid, the other Spanish giant, have secured lucrative sponsorship deals as well as extremely high shirt sales. The earned £60m more than Manchester United through commercial deals in 2010. One contributing reason for this is because of their signing the best players in the world, or ‘galacticos’. In the last two seasons Real Madrid have spent more than €300m on players. Firstly, they bought Cristiano Ronaldo, Kaka, Xabi Alonso and Benzema at the start of the 2009/10 season, and then Khedira, Ozil and Di Maria, who had all starred in the World Cup, in 2010.

To some extent, the margin between Manchester United and the Spanish giants could be down to the weakness of the pound compared to the Euro. If the pound was still as strong, the gap would not be as severe. But you could also argue that it is down to the extra TV money they receive.

The increased revenue from television allows Spanish clubs to spend more money on their players and therefore they become more marketable, thus they generate more money through commercial deals. The more the Spanish clubs spend, the more marketable they become.

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