Football (soccer) is the most popular sport in the world and its reach continues to grow steadily. Its popularity makes it an attractive business for many brands as their association with a football property (club, player or event) can expand their reach to more potential customers than ever. Especially during the last years, the rapid evolution of technology, the massive use of social media and the live-streaming mobile applications have turned football into a global phenomenon which can be followed and watched, technically, in countless ways from almost everywhere. For brands, this situation means a massive potential return on their investment.

Nowadays, brands’ main challenge is to create an emotional connection between the consumer and the product, surpassing the classic price-quality ratio. In other words, they try to create fans for their brands and football helps them to build a relationship of emotions and loyalty with their customers. Customers who will not only buy their product but they will also talk about, support and promote it. We all know how important the word of mouth is for brands. That is advertising and marketing science at its purest version.

In order a brand to create an association with a football property, it buys sponsorship rights (or endorsements for players). A sponsorship can include rights such as:

• Logo on jersey
• Name on stadium
• Campaigns with players, property’s logos and trademarks
• Tickets and hospitality packages
• Accessories’ provision (sports’ equipment, time counters, etc.)
• Official transportation partner (cars, airlines, etc.)
• Advertising via LEDs

Furthermore, broadcasters buy the rights to broadcast the fixtures of football properties’ events.

Most of the times, all the above actions and deals include exclusivity rights for brands and broadcasters (geographic or by sector of business). Nowadays, clubs’ popularity is an important indicator of their value. Naturally, the more popular a football player, a club or an event, the more valuable and expensive the sponsorship and broadcasting rights will be.

By investing in football, a brand expects several outcomes. The most usual are:

• Increase sales and market share
• Maximize customers’ engagement and loyalty
• Improve brand awareness, reach and exposure
• Rebranding
• Survive competition (competitive advantage)

Obviously, in order to achieve the above outcomes, a brand must be associated with a football property successfully. A successful association between a brand and a football property depends on various factors such as:

• Appropriate activation (clear objectives, exploitation of all channels, effective “call to action”, etc.)
• Harmonization / alignment of brand’s and football property’s vision, mission and strategy (what the brand and the football property stand for)
• Efficient segmentation and ideal target audience
• Holistic approach in measurement and evaluation with ability for relevant flexibility and adjustment
• Other factors like momentum, luck, etc.

On the other hand, a football property expects one main outcome from a sponsorship: Money.

This money will help the football property to improve its financial status. Especially for clubs and events, part of this money will be invested in order to improve the football property’s quality (prestigious players, top training facilities, outstanding academies, modern stadiums, spectacular events, etc.). In this way, they will increase their value and they will become even more popular, so potential sponsors and broadcasters will have to pay more for establishing an association with them.

Undoubtedly, it is essential for clubs to invest this money in a way that their performance on the field will improve. As Sam Allardyce said during the season 2013 – 2014, “Where you actually finish in the league depends on the money you’ve spent. It’s a statistical fact, that.” By adapting this philosophy, they will be able to increase their popularity and their value’s monetization even more.

Furthermore, the above is not the only way that money flows into football. Individual investors are also taking ownership of many clubs (Manchester City, Chelsea, Paris St. Germain, etc.) without following the above “natural” process of raising their quality and value and monetizing it. This can become risky for clubs as they tend to lose their ability to be self-sufficient and they depend on one person’s money. FIFA and UEFA are trying to discourage this kind of investments by establishing initiatives, regulations and rules like the UEFA Financial Fair Play. An extremely indicative example that shows how money can affect an entire country’s perspective and progress in football is China’s attempt to become a superpower in football.

One way or another, since brands and individuals have decided to include it in their investments’ portfolio, football has changed. Nowadays, football properties –especially clubs– receive great revenue from several streams.

Matchday Revenue

It is the most traditional revenue stream for football properties and it includes income from services and experiences of the matchday such as ticketing, membership, hospitality packages, food and souvenirs from the stadium’s shops. The higher the attendance and the more the home games of a club, the higher the revenue will be in combination with the right pricing policy.

Broadcasting Revenue

This revenue is the income from the rights that broadcasters buy from a football property in order to grant permission to show their matches, highlights, pregame shows and more. The more prestigious the football property (club, league or tournament), the higher the revenue will be for it.

Commercial Revenue

The most recent and promising revenue stream for a football property is the commercial. It occurs from commercial activities like sponsorships, merchandising, licensing and more. The more the benefits of a sponsor (prestige, access, use of trademarks, etc.), the higher the revenue will be for the football property.

Below, you can check a 90-seconds video about how football clubs make their money made by The Telegraph. It refers to the English Premier League, the league with the highest total and combined revenues for its clubs worldwide.

In the past, most of a football property’s revenue was generated from gate receipts and fans eating and drinking inside the stadium (matchday revenue), but nowadays, it is generated from the other two streams: broadcasting and commercial. According to Deloitte’s annual review of football finance 2016 and concerning the Big Five European leagues (English Premier League, Spanish La Liga, German Bundelsiga, Italian Serie A and French Ligue 1), the average percentage of each revenue stream for all the participated clubs for season 2014 – 2015 was:

• 28% – Matchday Revenue
• 48% – Broadcasting Revenue
• 24% – Commercial Revenue

Additionally:

• Combined revenues of the Big Five European leagues were 12 billion of euro in season 2014 – 2015 as four of the ‘Big Five’ leagues recorded revenue growth.
• It is expected that these revenues will exceed 15 billion of euro in season 2016 – 2017.
• The English Premier League leads the football world in all three key revenue streams.

It is worth to mention that the more popular and successful a football property, the higher the commercial revenue’s percentage will be because these properties are in position to negotiate more and better deals with their commercial partners. This fact can be shown in another very interesting report from Deloitte about football money league 2016 and in the related infographic below.

A huge part of football’s current structure is based on money. Obviously, football is not going to be the same in case that all this money stays outside of the game. At moment, most of the predictions show that football is growing season by season and football properties are becoming more and more profitable while their investors are getting multiple benefits.

Nevertheless, every investment and economic activity is followed by certain and unpredictable risks and threats. Football could not be an exception. There are many potential threats (direct or indirect) which could affect football’s main revenue streams. Some of them are already happening while other will possibly never occur. Below, you can find an indicative qualitative risk analysis (possibility and severity) of potential threats that could affect football properties’ main revenue streams.

Fans’ change of preferences
In case that many fans change their preferences, this automatically means that football will not be so attractive for investors and broadcasters as it currently is. In other words, football properties will lose some of their negotiating power and will be forced to establish deals with lower revenue. However, all the reports show that football is the most popular sport and this is unlikely to change during the next years.

TV option for football matches in combination with bad weather conditions, poor stadiums’ facilities and expensive tickets
Many fans prefer to watch a match from their home than from stadium. Most of the football properties (mainly clubs) are trying to provide to their fans the best possible experience inside the stadium but in most of the leagues the attendances’ trend is negative. This phenomenon could slightly affect the football properties’ commercial deals as the investors are not going to be willing to invest in the stadium’s activities.

Live-streaming applications and social media
Technology’s rapid evolution and internet’s huge reach have led mobile live-streaming applications and social media to evolve as well. This situation threats broadcasters’ exclusivity rights and gives the opportunity to the fan to watch the game in different and new ways. At moment, the first option for the average fan is to watch a football match on TV. Reports have shown that this is not going to change in the near future. What broadcasters have to do is to adapt to technology’s rapid evolution and keep providing unique and original experiences to their audience.

Ambush marketing
In simple terms, ambushers are not paying any sponsorship fees to the football properties and at the same time official sponsors are losing their exclusivity rights. Consequently, it is very possible that official sponsors will try to negotiate better deals or to become ambushers. Ambush marketing is here to stay as we witnessed during the 2016 UEFA European Championship in France. In this occasion, the most important action that official sponsors need to take is to keep providing unique experiences to the fans and be one step ahead of ambushers.

FIFA and UEFA corruption accusations
One very important term and condition for any investor (sponsor or broadcaster) is their mission and vision to be aligned with the football property’s respective characteristics. Most of the brands want to have partners with excellent reputation and public image. FIFA’s and UEFA’s latest corruption accusations could force some sponsors to withdraw their money from football. As humans, we tend to forget scandals easily, so FIFA and UEFA with few smart moves will be able to win the public opinion again or at least to keep it neutral.

General economic situation
Economic crisis is a reality for many countries around the world. Consequently, some brands may reduce or withdraw their money from some investments including football and follow a more conservative strategy in order to protect their viability. In this case, many football properties will be forced to reduce their budget and the consequences in football can be serious.

Political Changes
In some cases, political changes could affect a country’s football conditions and cause unexpected situations like difficult move outside of the domestic area for football players and managers and many more. This situation could affect the country’s quality of football and the consumers’ preferences. A great example is Brexit and how football business could be affected by it.

All the above situations can lead to money’s flow reduction and engender several consequences concerning football properties’ main revenue streams such as:

• More native players in national leagues (this is not necessarily bad)
• Less spectacular events
• Poor matchday experience
• “Empty” stadiums
• Lower quality of training facilities
• General “depreciation” of football as sport and more

Football is the most popular sport and the most important unimportant thing in the world. It is an indispensable part of many people’s life. Sponsors, investors and broadcasters have turned it to a show which must go on for everyone and basically for fans, their main source of money, but the beauty of the game itself and the way it captivates an audience is what makes it so special. At the end of the day, without the game there would be no money to be made.

In an extreme scenario where football could not have managed to gather all this money and prestige as it has, there is a possibility that it would not be as an attractive career path as it is for football players. Certainly, it will always be amazing to get paid for playing football but there is a possibility that many football players would have chosen an alternative job to do for living. So, which jobs could be ideal alternatives for some of the top and most marketable football players?