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How Do Soccer Teams Make Money? 8 Sources of Income

How Do Soccer Teams Make Money? 8 Sources of Income

At the professional level, soccer is seen as a big business. This is why there is a popular phrase that soccer, in general, has a lot of money. Managers, fans, soccer players, and even pundits often say this statement.

The big question then is, how does this money come about? How do soccer teams make money, and how is it shared among others?

The magnitude of numbers that are seen in rights, salaries, and soccer player contracts often baffles the average salary earner. Yet, soccer salaries are usually quoted in tens of millions of dollars and contracts in hundreds of millions in valuation.

For soccer clubs to be able to afford such expenditures, they have to ensure that they earn huge amounts of money so they can keep up. But this amount usually varies based on the team.

Soccer is quite interesting in that some of the biggest teams can sign deals amounting to nearly billion-pound deals like Chelsea dis. This guarantees such teams a steady income for several years, usually a decade.

On the other hand, other lesser successful and smaller clubs are seen to sign deals with paltry amounts like 4 million dollars which most times last for four years.

How Professional Football Clubs Make Money Today: 3 Main Revenue Sources Breakdown

How do soccer teams make money?

Modern soccer is seen by many as a huge business as it contains a lot of money with a large number of transfer fees reported every year.

Some soccer clubs have the financial prowess to offer soccer players that they deem worthy multimillion-dollar contracts. This leads to the question of how soccer teams make money?

Soccer teams make money through various sources. Modern soccer has brought various avenues for money-making. The sources include prize money, match day sales, player transfers, stadium hiring fees, TV broadcasting deals, and merchandise sales.

Every soccer team’s ability to make money is usually based on the soccer team’s success on the pitch. Therefore, performance in games largely influences their commercial appeal.

But it is necessary to note that the avenues are not limited to what is stated above.

Below, you will be shown some of the main sources and avenues that soccer teams employ to make money. Such methods discussed include broadcasting, merchandising rights, player transfers, match day sales, prize money, and others.

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Transfer Market/Sales of Players 

Arguably, the public sees the soccer transfer market as the main method by which soccer teams earn money. This might be due to the astronomical amounts of money that are usually reported to be paid for top players.

Over the years, there have been reports of several players transferring between clubs, and these numbers are increasing each year.

Taking a look at the records, Zinedine Zidane in 2004 had the highest transfer record ever with a £47 million move from Juventus to Real Madrid.

Cristiano Ronaldo doubled this record in 2009, where he made an £80 million move from Manchester United to Real Madrid. Eight years later, Neymar doubled this amount with a £198 million transfer move from Barcelona FC to Paris Saint Germain (PSG).

This trend of movement keeps increasing as time goes on. Elite players are very valuable to soccer teams, just as they are very valuable to their teams as members.

Soccer players sometimes make transfer moves just to leave the club or even in search of new challenges. Unfortunately, when players intend to transfer teams, and there is a willing buyer, the current team cannot do much to prevent this.

This is why every team does as much as possible to ensure that their key players are held in a tight grip. This is to prevent poaching from other teams.

Soccer teams employ the release clause to keep their players, which is usually stated in the player’s contract.

A release clause is a statement in players’ contracts indicating that when a different club offers certain amounts of money, the player can decide solely whether to leave the club.

Clubs usually cannot contest this, but things are not always that simple as it was reported that Lionel Messi had a release clause of about £638 million at Barcelona. But he still made a move to PSG.

Most Expensive Football Transfers Record; 1997~2019 Highest Transfer Fee

Though some people might think that nobody would pay that much, when Neymar’s release clause was set at £198 million, Paris Saint Germain was still willing to pay the same amount as Messi’s move to PSG.

FIFA reported in 2019 that about $7.35 billion (£5.6 billion) was the amount spent on transfers throughout the world of soccer. It is necessary to know that not all this money goes to the coffers of the club. There are legal fees and agents fees that are usually included.

Sometimes, players usually receive a part of the transfer fees. But the bulk of the money usually goes to the club. 

For teams with small stadiums and little global brand and who only get the bottom share of broadcasting deals, how else do they survive other than through the sales of Players?

Most soccer teams now make use of selling their top or elite players for huge amounts to boost their income generation. Clubs like Ajax, Borussia Dortmund, AS Monaco, and Valencia have over the years groomed or bought young players for little fees, then honed their skills for some years.

These players are usually then sold to some of the top teams in the world for large amounts. This financial model has helped sustain some clubs competitively while remaining profitable.

AS Monaco, for example, sold Mendy, Thomas Lemar, Mbappe, Fabinho, and Bernardo Silva, while making a large profit of about €319 million. This price was greater than the amount that was used to purchase these players.

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A major con of this method is that teams that follow this model need the inflated values of their players. Teams that hold out to sell their players at the best possible price usually have contracts that will soon expire.

Arsenal, for example, fits this profile, as most of their valuable players were sold as a result of expiring contracts. As a result, their players were sold cheaply. Lewandowski’s situation was no different as he had to run down his contract at Borussia Dortmund so he could move to Bayern.

This ensured that Borussia Dortmund did not receive any fee for Lewandowski, who is a world-class player. This is what every soccer team should avoid by raising money through sales of Players.

Robert Lewandowski's First Day at Bayern Munich

Broadcasting Stations Deals 

Broadcasting deals from TV stations is one of the most important sources of revenue for most soccer teams. Domestic and Foreign Broadcasting stations usually bid for the right to broadcast live matches on their channels to every soccer fan that usually watches soccer.

For example, in the EPL, the English Premier League are the owners of the broadcasting distribution rights of every soccer game that is played in the EPL league.

What they do is then sell this right to the highest bidder. So, for example, in the EPL in the United Kingdom, the highest bidders are BT Sports, Sky Sports, and DAZN, a streaming site.

In the EPL, this works because the EPL owns the television distribution rights of all soccer being played in their league.

The broadcasting rights are usually sold to the highest bidders, with DAZN, BT Sports, and Sky Sports as the highest bidders.

In 2015–2019, Sky Sports and BT sports acquired the right to broadcast English Premier League matches for a 5 Billion Pounds deal.

The payment from these deals is shared among the teams based on the clubs that attracted the largest view number. Therefore, the team with the highest number of views usually earns the largest amount.

This is usually based on either the performance of the team on the pitch or the popularity of the team or club. Now, this is only from the United Kingdom alone; there are other broadcasting deals from other countries.

The English Premier League in 2018 sold the broadcasting rights for EPL for about £1.66 billion per season for four years of 2019-2022.

How Much Do Clubs Make in Broadcasting Income?

Swiss Ramble analyzed and found that in the 2019/20 season, Liverpool, who was the league winner, earned about £139.1 million from broadcasting money, with Norwich the last-placed team earning roughly £92.7 million.

Spain, for instance, has a different way of giving out broadcasting revenue. In the Spanish La Liga season of 2018/19, the total broadcast revenue amounted to €1.4 Billion.

Barcelona got €166 million, Real Madrid got €153 million, while the bottom team Real Valladolid received about €47.6 million.

This situation is similar in the German Bundesliga as Bayern Munich was given about €65 million from the broadcasting deal while Fortuna Dusseldorf received €25 million.

In Europe, teams get more money as they advance in the competition. For example, when a team gets to the knockout stage, they are given more money than teams that stopped at the group stage.

This unequal distribution of broadcast revenue is usually a result of the performance and contributions of the team’s game to the broadcast revenue.

Looking at other leagues apart from England, twenty broadcasters in China hold the premier league’s right to broadcast. Worldwide, over a hundred broadcasters hold the right to broadcast the Premier League.

For the covering of these matches, the amount paid by these companies is astronomical.

How the English Premier League makes money

Commercial and Sponsorship Deals 

Commercial deals are a major source of income for every top soccer team in the world. Though authorities usually regulate broadcast revenue, commercial deals are the major source of income with the biggest potential for top teams.

Commercial deals include deals like foreign tours during off-seasons, sponsorship deals, merchandise sales, and other profitable operations.

Commercial and broadcast revenue are related. While matches are broadcast to the whole world, top teams make new fans. The loyal fans of these teams, in turn, watch their favorite teams play regularly.

This then presents opportunities that are attractive to prospective collaborators and brands to collaborate with such clubs in order to advertise their products to the fans of the teams.

Like Adidas of Real Madrid, they have an existing deal of about €1.1 billion when their partnership with real Madrid was extended till 2028.

Soccer has many attractions, which has, in turn, made a shift in the marketing strategies of top corporations. Over the years, these top corporations have made deals with some of the top teams for collaborations.

TOP 10 teams with the best sponsorship deals in football.

Every soccer team wears jerseys when they play on the pitch, and these jerseys are sponsored by their respective corporations. These moves by top corporations have strategic and financial reasons behind them.

Manchester United, for example, in the 2019/20 season, had three corporations sponsoring their home kit jerseys: Kohler, Chevrolet, and Adidas.

Taking a closer look at this deal with Manchester United, the team received about £10 million from Kohler, £64 million from Chevrolet, and £75 million from Adidas. Of course, the figures above are huge to the average salary earner, but this is extremely normal in soccer.

Manchester United also has several deals involving their shirt sponsors. In 2019, Manchester United performed a survey, and they estimated that the club had about 1.1 billion global fan followers.

This figure represents a huge audience base that large corporations can show their brand or logo every time Manchester United plays soccer.

Prank Wars | Manchester United | Chevrolet FC | Everything But Football Season 1

Prize Money 

At the basic level, soccer is a competition. Therefore every soccer team aims to win competitions. 

Clubs that finish just above the regulation zone usually make less amount of money from broadcast rights and coverage, and they will also earn a lesser amount compared to teams that are above them.

This is because the higher a team is on the league table, the more money they earn. For example, in the Premier League, each position is usually about £1.9 million higher than the next team.

Towards the end of the Premier League 2016-2017 season, Watford might have finished in any position between the 8th and 17th based on the results around them and their result. This would have made a difference of £17.1 million from the top option to the bottom position.

After beating Crystal Palace in the 2016 FA Cup, Manchester United won the prize money of £1.8 million prize money leaving the Eagles with half of this amount as the runner-up. This is why people often say that cups are more lucrative for smaller teams.

FA Cup final prize money How much can Arsenal or Chelsea win

One example is in the 2016-2017 campaign where Lincoln, as a non-league side, got as far as the quarter-finals and earned about half a million pounds with other amounts that they made from TV coverage and gate receipts.

For this reason, smaller teams usually like to play against any of the bigger teams. If a non-league team can play Chelsea, say twice, for example, you can imagine the number of gate receipts and TV coverage that would be gotten.

Such amounts of money can keep the expenditure of smaller teams for years.

Like broadcaster right money, the prize money for teams further down the league is smaller than those at the top. 

This is true for every soccer sport in the world, not just limited to England. Take Bundesliga 2, for example; teams that finish at the 10th position would not make as much as the team that finished 10th at the German Bundesliga.

Also, in the United Kingdom, teams in League Two do not earn as much money as a Championship team. This is the competitive nature of soccer sports.

It should also be noted that the League Cup is not as lucrative as the FA equivalent since winners of the trophy earn only one-tenth of the amount of FA Cup winners.

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Match Day Tickets Sales 

Another way soccer teams make money is through sales on match day. For example, in the English Premier League, teams play 38 matches in a single season.

Half of these games are played out in their home stadium. The biggest advantage of the home ground is that the clubs have their fans cheering while they play.

However, this support from fans comes at the expense of the fans.

Sales of Tickets is one of the obvious methods of making money by soccer teams since it has been a very dependable source of income for decades.

Selling match day tickets is a good source for soccer teams to make money, especially when the club is in demand and has a large number of fans.

Not every professional soccer team can set high prices for their tickets knowing that they are expecting fans.

In most international top leagues, there are about 20 games per year, which gives the team several opportunities to make more money through ticket sales.

This process usually varies depending on the team played against. However, part of the money made from ticket sales usually goes into the operation of the game day.

Some soccer tickets are on the field

Some teams usually charge premium prices for suites, luxury seating, and others.

From the Premier League official website, across all 20 teams in the 2019/20 season, the average matchday price of tickets was £32.

This amount took into consideration entry-level ticket price, which usually does not have the best view of the game. Premium tickets are usually sold, ranging from Hull City’s £36 to Arsenal FC’s £97.

Arsenal’s Emirate stadium is a large source of income for the club and one of the most expensive stadiums globally.

With a capacity of 60,704 people, Arsenal’s Emirate stadium and soccer clubs, in general, can be said to make huge amounts from the sale of matchday tickets.

In the 2018/19 season, Arsenal reported that the overall matchday revenue was a staggering £100 million. Though small considering the huge amount that the club makes, it is worth noting that this amount included sales of drinks and goods within the stadium.

Most expensive tickets | Manchester city vs Liverpool EPL

Tours and Stadium Rentals

Apart from using the stadium to get income during match days, some clubs usually make use of their facilities on the other days of the week.

Most of the top and successful soccer clubs usually rent out their facilities with different packages.

Such packages can include weddings, stadium tours, museum tours, and even private social events.

Soccer teams that do this include Barcelona’s Camp Nou, Manchester City’s Etihad, and AC Milan, and Inter Milan’s San Siro.

Teams like Norwich City usually offer their home ground, The Carrow Road, for private matches, though it costs about £1,500. This is quite cheap compared to the Emirate Stadium, which is let out at £30,000.

In recent years, Wales National Stadium, The Millennium Stadium, and Sunderland FC Stadium of Light have been used to hold concerts.

The stand of a stadium is filled

Kit Deals 

Another way for soccer teams to make money is through kit deals. Brands make use of the kits of clubs as a platform for advertisement.

Soccer teams have a lot of media exposure and are regularly broadcast to a large number of audiences.

This means that the jerseys and apparels are capable of attracting a tremendous amount of attention.

Soccer clubs now make use of this to their advantage by signing contracts with top apparel and clothing manufacturers such as Adidas or Nike. These companies would pay to use the team’s jerseys.

Just like nothing on earth is created equal, so are the contracts for kits.

Small clubs such as Burnley in the English Premier League, who do not have the same level of success as Manchester United and also have a smaller fan base with fewer broadcast games, would not have their jerseys sold well.

Football Kits Sponsors 2018 - 2019 ⚽ Football Sponsors List ⚽ Footchampion

Since the manufacturing of soccer kits is very expensive, the manufacturer would have to expect great advertising value in return, and most small teams are unable to provide this level of attraction value.

This results in small teams negotiating with smaller deals from kit manufacturers. This, in turn, creates a huge disparity in the wealth that top teams receive which usually amounts to hundreds of millions of pounds more than what the smaller teams receive.

Also, you would notice that small teams not only sign smaller kit contracts, but the duration of the contracts is also smaller compared to deals with top teams.

These companies aim to make money, so they do not want to stick with teams that they think can’t guarantee them good value for their investment.

Clubs like Liverpool, Manchester United, Manchester City, and Arsenal would have a lot of their games being broadcasted consistently. This is because these teams boast of a large fan base both in the United Kingdom and outside the UK.

Top 10 football clubs who sold the most jerseys in the 2018-19 season | Oh My Goal

This tells manufacturers of kits that such teams have value and a large audience that would expose their brands to the world. The disparity between kits deals cannot be resolved because of the economics of kits deals.

Kits manufacturers cannot be forced to sign deals against their will as this would infringe on their business sovereignties. So a major solution to this is to maybe remove kit negotiations from individual clubs and give them to EPL to handle.

This might need a huge adjustment on the parts of the English Premier League and the clubs since the clubs have to adjust their business model while EPL would then handle the negotiations with the manufacturers of kits for the whole English league.

This would allow the English Premier League to distribute the profits properly. Nevertheless, this also has its issues, such as potentially bringing corruption to an English Premier League that becomes too empowered.

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Sales of Merchandise 

Sales of Merchandise is another way that soccer teams make money. When on stadium and museum tours, most soccer teams usually put on sale their merchandise in their stadium’s gift shops.

The items sold usually range from stationaries, scarves, snow-themed globes, etc. Sales of Merchandise are usually not as profitable as other sources of income, but it is a method of getting extra income for clubs.

Are soccer teams profitable?

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Soccer teams are profitable since they have multiple income sources, ranging from sponsorship deals, broadcasting rights, and others.

According to Dan Jones, a U.K.-based partner of Sports Business Group, “owners of soccer clubs are said to be at a certain level of businessmen.” This statement attests to the fact that most soccer teams are extremely profitable though some are not.

Forbes in April 2021 stated that the value of soccer teams went up by 30% percent on average in the last two years. This was reported to be a result of investors eying the untapped potential that Sports has globally.

Various rankings show that soccer teams are profitable, with a major one being The Deloitte ranking. Deloitte’s 2021 Football Money League numbers rank up the most lucrative soccer teams.

These findings revealed that the top 20 clubs, which are all based in Europe, accrued an estimated value of €8.2 billion in the 2019/20 season.

Though there was a 12% decrease from €9.3 billion in the previous season as a result of the Covid-19 pandemic that impacted the soccer community, there was an increase in the commercial venue.

These statistics show that soccer teams are quite profitable.

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There are a lot of ways that most soccer teams have to generate revenue. Soccer teams have different methods of getting money ranging from renting out stadiums to broadcast rights and others.

Top soccer clubs are usually well diversified in making money through various means. Modern soccer is commercial with a lot of emphasis on teams getting payments that are larger than before.

However, a club would not be able to achieve this if they do not perform well when on the pitch. This is quite good for fans as it keeps the players and teams motivated to bring out their best performances, therefore increasing the overall watching experiences.