What's new

Financial Fair Play

Status
Not open for further replies.
The latest football rich list shows Barcelona and Real Madrid well on top, largely as a result of the uneven distribution of broadcasting rights from domestic competitions. Liverpool fans will no doubt be in denial over the fact that they again earned less than ourselves.

article-1355310-0D1C43EE000005DC-461_306x498.jpg


LINK

 
I see, so if i got this, a club with a large expenditure would just play accountant tricks to balance the books for the FFP (i heard mention of amortisation, removel of player wages ?), if this was the case then it wouldnt really effect these clubs anyway ?, essentially becoming un-enforcable and would only really show an effect if your income and expenditure cant be fiddled with enough when you make huge signings ?.... it also wouldnt stop a businessmen with dubious background to pile debt onto a club and let it sink, because essenitially its loaded against income and expenditure anwyays ?, with or without FFP.

if this is the case, then whats the point ? :P, it does have a goal, to stop spending, i can see that clearly, with it trying to benefit the larger fanbased clubs.... but could this perhaps offer a layer of protection for a club like chelsea or city ?, having your books balanced should roman or the sheikh do a runner ? (im not saying either will)

 
Backbiter said:
Here's some more detail. The Daily Heil version is a bit simplistic:

http://www.guardian....purs?intcmp=239
Click to expand...
Interesting to note that only Hamburg, Man U and Arsenal receive a higher percentage of their income from matchday revenue than ourselves. The effects of new, improved sponsorship deals, naming rights and so on, should see an improvement in the current figure of 27% earned from commercial sources.

Of course statistics can be deceptive when taken out of context. That Villa receive 58% of their total income from broadcasting rights surely reflects a lower overall income, rather than a massively greater amount of extra income earned in this area.

 
Hutch said:
Interesting to note that only Hamburg, Man U and Arsenal receive a higher percentage of their income from matchday revenue than ourselves. The effects of new, improved sponsorship deals, naming rights and so on, should see an improvement in the current figure of 27% earned from commercial sources.

Of course statistics can be deceptive when taken out of context. That Villa receive 58% of their total income from broadcasting rights surely reflects a lower overall income, rather than a massively greater amount of extra income earned in this area.
Click to expand...
I seem to remember hearing Bruce Buck saying we have a good income already with the stadium we have and they were looking for ways to boost it without moving, maybe this shows it can be done after all.

 
dkw said:
I seem to remember hearing Bruce Buck saying we have a good income already with the stadium we have and they were looking for ways to boost it without moving, maybe this shows it can be done after all.
Click to expand...
I know they've been taking about the naming rights to Stamford bridge, maybe this is one of the avenues theyl go down to improve income. don't think any of us would be happy about it but if it can honestly help us compete at the highest level then maybe itl be possible.

 
Hutch said:
The latest football rich list shows Barcelona and Real Madrid well on top, largely as a result of the uneven distribution of broadcasting rights from domestic competitions.
Click to expand...
Given that Real Madrid and Barcelona have the highest combined matchday and commercial revenues, this is...incomplete at best. If Spain used England's revenue sharing model they would drop, but not nearly as much as people like to think. The aforementioned revenue streams, plus the CL stream, would remain unchanged. They would be in the top 5 even with ZERO domestic broadcasting revenue, for example.

As for Chelsea: Their matchday revenue is high (5th overall) despite the relatively low stadium size. Other than building a new stadium there is little improvement to be had there. Broadcasting revenue will slowly increase as for all English clubs - there is nothing Chelsea can do in this area beyond being successful on the pitch. Commercial revenue is their best hope for improvement - they are around 20m behind Liverpool and United in this. In all, though, beyond new stadia or a broadcasting rights revolution, English clubs don't have a great deal of room for revenue growth.

 
Last edited by a moderator:
Yaotzin said:
Given that Real Madrid and Barcelona have the highest combined matchday and commercial revenues, this is...incomplete at best. If Spain used England's revenue sharing model they would drop, but not nearly as much as people like to think. The aforementioned revenue streams, plus the CL stream, would remain unchanged. They would be in the top 5 even with ZERO domestic broadcasting revenue, for example.

As for Chelsea: Their matchday revenue is high (5th overall) despite the relatively low stadium size. Other than building a new stadium there is little improvement to be had there. Broadcasting revenue will slowly increase as for all English clubs - there is nothing Chelsea can do in this area beyond being successful on the pitch. Commercial revenue is their best hope for improvement - they are around 20m behind Liverpool and United in this. In all, though, beyond new stadia or a broadcasting rights revolution, English clubs don't have a great deal of room for revenue growth.
Click to expand...
Look at the thread title. The reference to "uneven distribution of broadcasting rights from domestic competitions" is in regard to the disproportionate amount of TV money and so on (broadcasting rights) awarded to these two clubs compared with the rest of La Liga, rather than a comparison with Chelsea or any of the other English clubs, indeed the actual Football Rich List.

I agree entirely about your second point, as I stated in a later post in this same thread "The effects of new, improved sponsorship deals, naming rights and so on, should see an improvement in the current figure of 27% earned from commercial sources." This relates to documented forthcoming improvements in sponsorship deals, the specifics of which escape me at the moment, but which are expected to lead to substantial increases in commercial revenue.

 
Hutch said:
Look at the thread title. The reference to "uneven distribution of broadcasting rights from domestic competitions" is in regard to the disproportionate amount of TV money and so on (broadcasting rights) awarded to these two clubs compared with the rest of La Liga, rather than a comparison with Chelsea or any of the other English clubs, indeed the actual Football Rich List.
Click to expand...
Well, you said they remained top of the rich list because of that uneven distribution. One could also say they remain top because they continue to earn the most from matchday and commercial revenue streams. No matter, a small quibble. Just wanted to make clear that they are seriously rich regardless of the TV issue, which is rather overblown. Seen people claim they wouldn't even compete in Europe without it...

I agree entirely about your second point, as I stated in a later post in this same thread "The effects of new, improved sponsorship deals, naming rights and so on, should see an improvement in the current figure of 27% earned from commercial sources." This relates to documented forthcoming improvements in sponsorship deals, the specifics of which escape me at the moment, but which are expected to lead to substantial increases in commercial revenue.
Click to expand...
Yeah, not enough though. Wage pressures on all clubs can't be relieved enough with just modest increases to commercial revenue. Hence English football - by far the richest around - still bleeding money at an incredible rate. Wish I was an agent ;)

 
Yaotzin said:
Well, you said they remained top of the rich list because of that uneven distribution. One could also say they remain top because they continue to earn the most from matchday and commercial revenue streams. No matter, a small quibble. Just wanted to make clear that they are seriously rich regardless of the TV issue, which is rather overblown. Seen people claim they wouldn't even compete in Europe without it...

Yeah, not enough though. Wage pressures on all clubs can't be relieved enough with just modest increases to commercial revenue. Hence English football - by far the richest around - still bleeding money at an incredible rate. Wish I was an agent ;)
Click to expand...
To be honest, the quote was nicked from an article on Sky's site, and added to the image from the Mail. I don't claim an in depth knowledge of the financial aspects of Spanish football, but I am aware that Real in particular have enormous financial resources that they can call upon without taking into account broadcasting revenue.

Wage pressure: the most surprising aspect of the purchase of Torres and Luiz was that for some time now, Chelsea have looked to be cutting back on wages and general expenditure. And suddenly, pretty much out of the blue, somewhere around £70 million goes on two players, both on high wages, particularly Torres. Is he now the highest earner at the club? Some of the older higher earners will naturally be phased out over the next couple of seasons, but if any of the current crop of rumours turns out to have a basis in reality, it's difficult to see how the club can continue to reduce its overall wage bill.

I'm glad it's not my problem.

 
Yaotzin said:
Well, you said they remained top of the rich list because of that uneven distribution. One could also say they remain top because they continue to earn the most from matchday and commercial revenue streams. No matter, a small quibble. Just wanted to make clear that they are seriously rich regardless of the TV issue, which is rather overblown. Seen people claim they wouldn't even compete in Europe without it...
Click to expand...
Are you sure about that with regards to Barcelona? Didnt they have to take out a loan to pay the payers wages last season some time, and also had to sell a couple of players to relieve the pressure financially.

 
A good read here and certainly well worth spending 5 mins on with your morning coffee. To summarise, its as we all most thought - for Chelsea to remain in this top 10 decisions are going to be needed to be made about Stamford Bridge.

What the Deloitte report says about Chelsea

Every year around this time, Deloitte publishes its Football Money League, the best report on football finances. The 2011 vintage contains the usual plethora of figures and makes for fascinating reading. Yesterday we looked at the general findings, today we look at what the report says on Chelsea in particular.

Second week of February: it`s Deloitte time. The 2011 Football Money League has just hit the press. Deloitte has published its league table of the 20 richest clubs in the world. Deloitte examine the numbers for the 2009-2010 season, and focus on clubs revenues only, to establish the hierarchy of clubs. Because each League (let alone each club) has differing ways of presenting their figures, Deloitte has standardised the numbers, and divided revenue into 3 parts: matchday (gate receipts), broadcasting (both domestic and international, particularly from European competitions) and commercial (sponsorship and merchandising). Excluded from the figures are transfer fees.

Chelsea come in 6th place. Ahead of us: Madrid, Barça, ManYoo, Bayern and Arsenal. We are one of 7 English clubs making the top 20. Total earnings are €255,9 million, up €13,6 million. However, much of this increase has been statistical rather than reflecting an influx of cash: all the figures in the report are converted into Euros. When you look at the earnings in sterling, Chelsea pockets £209,5 million, up only £3,1. Compared to the other clubs on the list, particularly the ones above Chelsea, our growth has been sluggish. That said, we have managed to make up some ground on the club just above us, Arsenal. Not by much, mind (some €2 million).

There is no other way of putting it, Chelsea`s financial performance in 2009-2010 was mediocre compared to that of our rivals. Chelsea had an excellent season on the pitch, but we nevertheless suffered a significant drop in matchday revenue (from €87,4 million to €82,1). The 10% drop is easy to explain: whereas, in 2009 we went to the semi-finals of the Champions League, in 2010 we exited at the first knockout stage. Chelsea therefore played 2 highly lucrative European home fixtures less at the business end of the competition. This was only partially offset by having an FA Cup run with a disproportionate number of home fixtures; it is cruel to say, but the FA Cup generates little money.

Chelsea have done a good job filling Stamford Bridge: average attendances are 99% of the 41,422 capacity of the club`s spiritual home. In fact, Chelsea have the 5th best matchday revenue of all the clubs, generating an average of £2,4 million per game. But the club has to be aware that this is one area of revenue where the club is hamstrung by the Bridge`s limited capacity and the fact that increasing that capacity is, as we know, extremely difficult. From a purely financial point of view, we should be aware that our rivals are playing in larger stadia or charging higher ticket prices (or, in the case of Arsenal, both). This may be a hard fact to present, but the club has the ability to increase ticket prices. Tickets to Chelsea games are no longer the most expensive in England: it costs more to see both Arsenal and Spurs, both of whom manage (also) to sell out every game. Chelsea took the decision to freeze ticket prices for a number of years, a decision that was largely applauded. The increase this year has been nominal. We might have to accept that this decision has come at a cost to the club, and in its search for growth, will be forced to increase prices in the seasons to come; if only because, if Chelsea were to increase prices, they would continue to fill the stadium.

Decreases in matchday revenue contrasted with an increase in broadcasting moneys: from €92,9 million to 105 million, a very healthy 9% growth. That is, however, healthy only in theory: the motor for that growth was, in fact, automatic: the new contract to distribute Premier League broadcasting rights kicked in last season, which guaranteed all English clubs more broadcasting money (some £5,1 million more for Chelsea). By chance, there was also a new regime to distribute Champions League money, so despite playing 2 less games, Chelsea nevertheless earned €1,3 million more. In this area of revenue, there is no secret: the better a club does, the more money it will earn, with the big broadcasting cash coming when you get to the latter stages of the Champions League: the €32,2 million we earned from UEFA contrasts with the €48,8 that Inter trousered.

In fact, Chelsea`s €105 million in broadcast revenue places us in 8th position in terms of this revenue stream. To be fair, we have to compare with what other English clubs earned: Arsenal earned only €700,000 more than us (and their Champions League experience was better than ours), whereas ManYoo earned some €23 million more. Above us, however, are the two Spanish giants (Barça on €178,1 million and Madrid on €158,7 million): neither Chelsea nor any English club can compete with their numbers since Spanish clubs negotiate their television deals individually, a system that ends up hoovering up most of the cash for Barça and Madrid. More surprising is that three Italian clubs are above the English clubs: Milan, Inter and Juventus. The reason for this: Italy had similar individual rights deals for their broadcasting. That has ended; next year there will be a collective deal and therefore a more equal distribution of TV cash in Italy. For this revenue stream, there is no secret: the further you go in the competitions, particularly in Europe, the more money you can expect to earn.

Where Chelsea did quite well on its own merits was in commercial revenues. Our €68,8 million represents a €6,6 million increase, 7% in real terms, on 2008. Not only did Chelsea sell a load of shirts, and benefited from long-term deals with both Samsung and Adidas, but also developed a number of secondary partners (Singha beer, Lucozade, 188Bet), on top of those we already have with Etihad and Thomas Cook. The good news on this front is that the two big deals were renegotiated (Samsung and Adidas): not only prolonged, but also increased. We will earn some €20 million per year from Samsung, which is a very handsome sum bettered by only 5 other shirt deals.

Compared to our competitors, Chelsea are 7th on the commercial front. We are, however, a long way behind the ones above us: our €68,8 million have to compare with the extraordinary €172,9 million that Bayern earn (some 53% of their revenue, and more from this than the total revenue of all but the first 10 clubs).

All in all, Chelsea`s year has been slightly disappointing. We might have done well on the pitch, but the revenues have not really benefitted. The 2% growth in revenues was considerably less than that of most of our competitors. In addition, that growth can be mainly attributed to automatic increases in broadcasting revenues from the new UEFA and Premier League. We did well in improving commercial revenue, but otherwise there is a simple rule: the real money is to be made in a healthy Champions League campaign.

This allows us to formulate some predictions for next year: we will improve the commercial revenue courtesy of the new contracts with Adidas and Samsung (and hopefully flogging a lot of shirts). But how Chelsea does will depend mostly on how we perform in Europe. Even one extra round in the Champions League will bring an extra €7-€8 million or so in combined matchday and broadcasting money.

In the longer term, however, Chelsea continue to be constrained by the size of Stamford Bridge, certainly compared to our rivals. Two sources of revenue are therefore going to have to be considered: increasing ticket prices, and naming rights for the stadium. We should be warned and maybe consider the economic rationale for both.
Click to expand...
 
big blue said:
thirded? (if that's the correct term)

great read, should forward it to wenger, it might stop him moaning, probably not though.
Click to expand...
Fourthedediddly.

 
Quality journalism. Well researched and well written. Very interesting stuff.

 
Very good article, and you can tell he knows his stuff by his answers to some of the comments.

He makes several assumptions in his calculations, first of all it sounds like selling the name of The Bridge is part of breaking even, as is a rise in ticket prices. But most importantly without qualifying for CL football this season it makes it very difficult to qualify under the FFP, due to the loss in revenue. It's a catch 22 situation. Something RA can do little about, he can't just inject cash to make us break even!

Puts even more importance on making that 4th spot!

 
Blue Tony said:
Very good article, and you can tell he knows his stuff by his answers to some of the comments.

He makes several assumptions in his calculations, first of all it sounds like selling the name of The Bridge is part of breaking even, as is a rise in ticket prices. But most importantly without qualifying for CL football this season it makes it very difficult to qualify under the FFP, due to the loss in revenue. It's a catch 22 situation. Something RA can do little about, he can't just inject cash to make us break even!

Puts even more importance on making that 4th spot!
Click to expand...
It's important to finish fourth, but it wouldnt kill us if we didnt, or citeh, Blatter has already said that liitle can be done to stop rich owners (like Roman) investing money in players. Roman and Sheik Mansour (the sugar daddy owners) are not into football for the money, they desire glory, not profits. Uefa and Fifa will leave doors open for these sugar daddy type owners, but the same doors will be shut to stop other clubs accumlating debt due to greedy (mainly American) owners who use their club as a cash cow.

 
Last edited by a moderator:
Status
Not open for further replies.
Back
Top