It was in London, financial and football European capital, on October 10th 2013. The crème de la crème of football business was gathering around Leaders conference in Stamford Bridge. Executives from all over the world were moving around to meet-up with best contacts, in search for business for their respective entities. And in there I had the opportunity to chat with Real Madrid and FC Barcelona international executives. For all of them a very straight forward objective: “To catch business”. And such objective is very often pursued in fight with eternal rivals. Indeed, more and more friendly games promoters and potential sponsors from remote geographies have to pick one of the 2 Spanish giants to do business. For that, executives from the “merengues” and the “culés” use their skills and state-of-art presentations to bring the client home.
The off-pitch rivalry among clásico protagonists is not anything of recent times. In fact, and for 4 consecutive seasons, Real Madrid and FC Barcelona have remained at the top of European revenue ranking, ahead of Manchester United cash generation machine. Furthermore, Real Madrid has been the undisputed revenues leader for 8 consecutive years since season 2004/05, while the industry leaders are still astonished with the merengues capacity to grow revenues year after year, without even being the most successful side on the pitch. In this sense, if we would rank European teams according to their revenues per trophy lifted during the last 5 years, Real Madrid would be cashing-in as much as 733mio€ in average for the 2 Spanish leagues and 1 Copa del Rey achieved during that period, just behind Arsenal.
Excluding income from player sales, Real Madrid recently announced revenues of 521mio€ for the season 2012/13, compared to 480 presented by FC Barcelona. That makes a difference of 8.5%, which over time the catalans have managed to reduce (it was 56.1% at season 2002/03). Let´s have a look at performance of both teams on different revenue streams using data from season 2012/13.
Barça takes the lead on marketing revenues
FC Barcelona reached 172mio€ on marketing revenues last season, ahead of Real Madrid for the first time ever (163mio€). Since the culés decided to sell the advertising in the front of the shirt thru the Qatar deal, the gap got reduced dramatically. This major sponsorship deal –which amount grows progressively year on year- translated into 29.5mio€ in Barça’s 2012/13 accounts (it will be 32.5 at season 2013/14). In this sense, Real Madrid signed recently its most lucrative shirt sponsorship ever, since Emirates Airlines will pay 25mio€ per season until 2018.
The new battle field is now the world, and in particular the so called “regional sponsorships”. In this type of deals, clubs release their rights for selected territories only. For example, Nokia has FC Barcelona’s sponsorship rights in India and Yamaha has those of Real Madrid in Thailand (where curiously both teams share Chang Beer as regional sponsor). FC Barcelona has managed to take advantage of great sporting success of recent times –with subsequent increase in fan base- to take the lead on regional sponsors recruiting, of which it has already 10 (vs Real Madrid 5). Globalization and ease of access to content from all over the world will help to make this type of sponsorships one of the most prominent revenue growth opportunities for the 2 La Liga giants.
Stadia and membership. It’s a draw
Although thru different commercial patterns, Real Madrid and FC Barcelona coincidentally experimented a draw on income from the stadium and membership, with both reaching 146mio€ in revenues last season. On one side, Real Madrid sets higher prices for season tickets and has more than 500,000 “Carnet Madridista” fan cardholders spread globally. On the other side, FC Barcelona has more members (161,197 at 2012/13 season closing) and higher stadium capacity, which translates into more season ticket holders (around 90,000 vs Real Madrid 59,000). Regarding ticket sales, FC Barcelona reached 49,2mio€, its higher ever, with significant contribution from tickets released by season ticket holders thru “Seient Lliure” program, with which an average of 21,391 season ticket holders made their seat available at every match. Real’s program “Cesión de Abono” is much more recent and less widespread among season ticket holders, as only 5,000 tickets per match were released in average during season 2012/13.
In media and television, the merengues run the show
Real Madrid cashed in 202mio€ in media and broadcasting revenues (including income from Champions League participation), well above 162mio€ of FC Barcelona. Despite none of the teams discloses the split in their annual report, we can conclude that the difference for the merengues is coming from their more aggressive commercial activity and monetization of the content. For example, Real Madrid TV broadcasts 24x7 365 days a year in 90 countries, reaching 30 million households globally. muy por encima por los 162 millones de los culés. A pesar de que ninguno de los dos equipos desglosa en su memoria anual las diferentes partidas incluidas en este concepto, llegamos a la conclusión de que la diferencia a favor del Real Madrid se basa en la mayor agresividad comercial y monetización de sus contenidos. Así por ejemplo, Real Madrid Televisión emite 24 horas al día y 7 días a la semana en 90 países, llegando a 30 millones de hogares en todo el mundo. Alternatively, FC Barcelona decided to outsource management of its television channel to Mediapro.
Broadcasting rights are the main component of media revenues. Both Real Madrid and FC Barcelona make around 140mio€ per season from Mediapro, the highest amount in Europe as sales format is still individual (vs centralized in the league in most European countries). In terms of income from UEFA Champions League, Real Madrid made 48mio€ last season, compared to 46 collected by Barça, thanks to a higher participation from the so called “market pool” as a result of being La Liga previous winners.
Income from player transfers: Real Madrid has more determination to sell
At European summer transfers window of season 2013/14, Real Madrid cashed-in 104mio€ from player sales, while FC Barcelona collected 28mio€. Although signing of Gareth Bale helped Real to be more aggressive at selling this summer, we can still conclude that the merengues are generally more determined to release their best players for a good price. As a result, Real Madrid collected 260mio€ in player sales over the last 5 years, 76% more tan FC Barcelona. However, the Catalans have gradually changed their strategy and are less and less reluctant to release key players when there is a good offer in place.
Finally, we have to keep in mind the fact that Real Madrid and Barça have in their squad the most iconic players in the planet –Cristiano Ronaldo and Messi-, whose agents also work hard in fight to recruit sponsors for their clients. In this sense, it is interesting to realize that the Portuguese star has “inherited” several sponsorship contracts that use to be part of Messi’s line-up, such as Bimbo, Herbalife and KFC. This battle field will however experiment a major change in the month to come with the arrival of “intruders” Neymar and Bale, whose executives (in the case of Bale also Real Madrid) will also compete to recruit the best advertising brands.
Real Madrid is still with no discussion the absolute powerhouse of European football revenues, but FC Barcelona has dramatically closed the gap. The pitch results of upcoming seasons will for sure dictate the financial potential, and Real will have to be back on track in regular trophies lifting to continue at the top.