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The business of football and why it is the most lucrative sport

The business of football and why it is the most lucrative sport.

Major league sports are a massive business. Through many avenues, billions upon billions of dollars are generated every year from what is simply a game. From the players to the leagues to the fans, everyone has their part in this massive money-making industry. Football in particular is a game that has been around for generations and is cherished in many countries worldwide. Let's take a look into what are the driving factors behind football's success and how major league football organisations make money for this gigantic industry.

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Football is the Most Popular Sport in the World

To no-one's surprise, football is the biggest major league sport in history. Almost every country in the world competes in football on some level, and there are over four billion people that say they follow football to some degree. Without debate, football eclipses all other sports in the world. In Europe especially, football is just a way of life and embedded deep within the culture.

Football is far-reaching because in its most basic form, it is a very cheap game to play. Needing really only a ball to play and compete is a major factor in the global appeal. Women are just as competitive in football as well, making it a sport that is equally as cherished by women as men, effectively doubling the fan base.

When you compare football to the next biggest sports, like basketball for instance, the number of viewers and annual revenue is worlds apart. With so many participants in the international economy of football, billions of dollars are generated every year.

How Does Football Make Money?

From the ground up, literally from the pitch and stadium it's played in, everything in football is monetised in some way to generate revenue. When players like Ronaldo are making tens of millions of euros every year, you know there is a serious incentive to keep these players on the field and performing highly-entertaining sports. At the end of the day, this is precisely what sports are, entertainment. Let's look at some of the biggest factors to the economy of football.

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Stadium Naming Rights

Traditionally, stadiums in countries like England were named after the cities the stadiums were founded in. After generations of football's viewer base increasing dramatically, big companies have found that it is great exposure to gain naming rights to these iconic stadiums. In 2004, the team Arsenal signed an exclusive deal with the airline Emirates for naming rights on their stadium, paying £100 million for 15 years. This is certainly a lucrative proposition for any club and indeed, all major sports teams follow this trend and as a result, the company's name is mentioned every game and is in front of millions of viewers.

TV Deals

By far the biggest money maker for teams around the world is the television distribution deals which are essentially the most important revenue source for every league. In 2016 the Premier League signed its record-breaking deal for £10.4 billion distributed amongst the league's clubs. Out of that sum, £5.3 billion was for the broadcast of live matches and another £5.1 billion was for sale of overseas rights. An impressive deal to say the least and there are sure to be bigger deals in the future.

Sponsorships

Every football player is essentially a walking advertisement for the numerous businesses that sign deals with the clubs. Naturally businesses can see the value in these sponsorships and invest huge sums into winning teams. Every club have their own sponsorships and make large contributions the clubs can use to get better players. All football jerseys are printed with several sponsors much in the way a sport like NASCAR racing has several sponsorships on their race cars.

Attendance and Events

Like television deals, crowd attendance is one of the fundamental and most important aspects of football's annual revenue. A club like Real Madrid is estimated to make over €4.9 million per match, accounting for up to 23% of their total annual revenue. This adds up to an immense €131 million per year, a staggering amount for any major league sports team.

Games and Memorabilia

By extension, there are numerous other revenue sources that the sport of football encompasses. When we consider the world of video games, football games have been a top grossing subsection for decades and series like FIFA are considered some of the best videogames of all time. Every year there is a new addition in the FIFA series that fans will run out and purchase. This makes up a huge market that adds to football's financial success.

In addition to games, there are numerous other pieces of merchandise and memorabilia like the ever popular jerseys, with a team like Manchester United selling over three million every year. The revenue amassed from jerseys alone is immense, with major sports apparel manufacturers like Adidas cashing in alongside the assorted clubs and leagues. There are also specific club soccer balls and other merchandise to commemorate specific seasons of the club's history. To even begin unravelling the massive industry of merchandise is a challenge in itself, but you can easily see that football is a massive industry in every respect and is growing every year. ID:394366:cQx
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