Soccer Dollars Make No Sense
Deloitte, the accounting firm, just released a survey of the world’s richest soccer clubs.
Like a bikini what the report shows is interesting but it hides the essentials.
Revealed is that Man United, with annual reveues of some $300 million (170 pounds), is the world’s richest club. But to paraphrase Bush the Elder, this is voodoo accounting because the club’s profit and loss is not revealed.
Here, fourth ranked Chelsea can be instructive. They lost $160 million on annual revenues of $250 million. But hang on, that loss does not include player salaries. That’s like Mobile reporting profits sans the cost of crude. Let’s be conservative and say Chelsea’s payroll is just 50% of it’s revenues (it’s probably more like 70%), which means the club lost a whopping $285 million. Now that’s not chump change even for a Russian oligarch billionaire like owner Abromovich. But that’s what it takes to run a world class soccer team.
As a business these clubs, some of whom like Man U are publicly listed, make no sense. They may be global mega brands yet they are small businesses. The top 20 clubs with combined revenues of $3.8 billion would rank only as the 441th largest company, next to Lyondell Chemical, whoever they are.
Yet these clubs are worth a fortune. Malcolm Glaser, the owner of Tampa Bay Buccaneers, has bid $1.5 billion for Man U. . The pundits say there’s money to be made, on these deals.
Perhaps, but I don’t get it.