It’s no doubt to say football business is the most lucrative and money spinning sports franchise on earth.
This is evident as Spanish football giant, FC Barcelona, have reported a $1.05 billion in revenues for the 2017-2018 fiscal year and posted operating income (earnings before interest, taxes, depreciation and amortization) off of $204 million. The team had a net profit of $15 million.
For the 2018-19 season, Barcelona has budgeted revenue of $1.105 billion and operating income of $220 million.
Barcelona now top Manchester United, the world’s most valuable soccer team in June, recently recorded record revenue of $794 million and operating income of $238 million in the fiscal year ending June, 2018. But the Red Devils had a net loss of $50 million.
Barcelona also boost of bigger and more profitable results than archrival Real Madrid, which had revenue of $892 million and operating income of $175 million in 2017-18.
“The Vice President and Treasurer of the Board of Directors, Enric Tombas, detailed the economic report on the fiscal year 2017-18 season, which ended on June 30 with revenue of $1.05bn , and makes FC Barcelona the first sports club in the world to surpass the 1-billion dollar mark in revenues,” according to a statement from FC Barcelona.
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The operating profit for 2017-18 was $37m. The 2017-18 accounts, together with a proposed budget of $1.1b for this season, will be submitted to a meeting of the membership on October 20.
The spending plan for 2018-19 also earmarks funding of $83m for Espai Barça, an ambitious retrofit program for the Camp Nou that will expand stadium capacity and upgrade facilities. The project is scheduled for completion in 2022 at a cost of $417m.
Since the 2011-12 season, Barcelona’s revenues as published by the club have almost doubled, from $574m to $1.05b. Expenses have also doubled from $512m in the same period, but an operating profit has been achieved each season. This is the eighth straight season that the club has turned a profit.
The biggest increase from 2011-2012 to 2017-2018 was the profit on the sale of players from $22m to $264m. The increase came from the buyout of Neymar’s contract by French Ligue 1 side, Paris Saint-Germain, in the summer of 2017.
The $264m constitutes 45% of the total profit generated by Barcelona from the sale of players over the last seven seasons. From 2014-2015, Barcelona would not have made an operating profit if it did not sell players at a substantial gain. Of course, Barcelona is not alone and many of Europe’s big clubs depend on a healthy transfer market to keep finances in the black.
Deloitte when compiling its annual Finance Football League does not regard profit from player sales in its revenue calculations and neither does Forbes when generating its annual most valuable soccer team rankings.
What this means is that Barcelona’s revenue number of $1.06 for 2017-18 will be closer to $812m when being compared with revenue numbers for other teams.
Barcelona’s commercial revenues have grown nearly 80% since 2011-12 which is a healthy increase.
Sporting salaries for 2017-18 accounted for $600m in 2017-2018, a 119% increase since 2011-2012, and an increase of $180m in one year from 2016-2017 to 2017-2018.
After deduction of profit from player’s sales, the percentage of sporting salaries to operating revenue was 75%, a dangerously high number. Of course, another way to look at it is that a number of Barcelona players received big salary increases courtesy of Paris Saint-Germain and Neymar.
The high cost of purchase of new players has pushed annual amortization costs to $137m in 2017-2018, doubles the number in 2011-2012.
Other costs have also increased, but the cost of acquiring and paying players has been the primary driver in doubling Barcelona’s costs since 2011-2012.
Barcelona is projecting an increase of 5% for 2018-2019 fiscal year. However, the problem is that Barcelona cannot sell Neymar every year. Although the anticipated profit on player sales of $151m should be achievable given moves in the summer transfer window, it still leaves close to a $115m gap year to year.
Barcelona’s management team expects to plug the hole and more through generating more through sponsorship ($65m) and Media/Broadcast $92m, the latter mainly through a new and more lucrative UEFA Champions League payout.
On the spending side, sporting salaries are down (although a relatively small reduction given the massive increase from 2016-2017 to 2017-2018, but amortization costs relating to signing new players and writing the deals down over the length of the contracts are up $25m, or 18%.
Other costs are also up but Sporting Salaries and Amortization constitute over 68% of Barcelona’s expenses.
Here Are Five Biggest Sports Teams in the World:
Barcelona: $1.05 billion
Real Madrid: $892 million
Dallas Cowboys: $864 million
Manchester United: $794 million
Manchester City: $674 million
Anthony Nlebem
