Revenue still rules in football

It’s a been a rather tempestuous week for the sporting empire of Sir Jim Ratcliffe. Following a 3-1 home defeat to Brighton last weekend, Manchester United manager Ruben Amorim labelled his team “the worst” in the club’s history. United now sit 13th in the Premier League, closer to relegation than the Champions League.

Amorim’s appointment was a key moment in Ratcliffe’s stewardship of the club. Since buying a minority stake last year, the UK chemicals billionaire has overseen a mass clearout of senior executives and cut headcount by 250 people. This is now his operation, and things are not going to plan.

His sailing operation has also run into choppy waters. On Thursday, Ineos announced that its America’s Cup team was parting ways with legendary British sailor Sir Ben Ainslie after failing to “find agreement on terms to move forward”. Ainslie responded soon after, saying he was “astounded” and threatened legal action.

Having built a sprawling sports business that also includes interests in Formula One, cycling and rugby, it looks like Ineos and Ratcliffe will be battling on several fronts in the coming weeks and months.

This week we’re having a look at the financial picture among European football’s top clubs, and run through the numbers at DAZN after another year of heavy losses. Do read on — Josh Noble, sports editor

VIPs and sponsors power growth for football elite

It’s that time of the year when Deloitte releases its annual appraisal of the elite football business, and the headline figures look pretty rosy.

The main takeaways from the 2023/24 season are quite straightforward: match day income is where the growth is, while for several top teams commercial revenue has become more important than TV money. Total revenue across the richest 30 clubs in football rose 6 per cent to a new record. So far, so good.

Real Madrid, ranked top in the wealth rich list again, became the first club to breach €1bn in annual revenue. Match day income more than doubled last season to €248mn, thanks in large part to the €1.3bn revamp of the Santiago Bernabéu. Aside from adding seats, the renovation has increased the club’s premium hospitality offering, and opened up a range of non-football events — from NFL games to Taylor Swifts concerts. Many others are trying to follow suit.

Real’s commercial income surged to €482mn, compared to €316mn for broadcast, helping the club achieve topline revenue growth of 26 per cent.

Several other teams booked big jumps in revenue too, with Arsenal, Newcastle and Aston Villa all enjoying steep increases.

But, as always with the Deloitte report, there’s one key metric missing from the data: profits. Even after breaking the €1bn mark, Real managed to eke out a profit of just €15.6mn — and that’s excluding any spending related to the stadium.

City, ranked second in the Money League, also booked profits, but made a loss on an operational basis. United made record losses of £113mn, and a number of others are expected to do the same when they report in the coming weeks. Football is great at earning money, but even better at spending it.

Perhaps none of that matters. Football finance regulation is undergoing a shift — moving from a model that punishes losses to one that, in effect, rewards revenue. So juicing income is, for now, the name of the game. Investors see football as a valuation play, and asking prices are still based on revenue not profit.

But at some point, you have to think, would-be owners will start asking more pointed questions about what a successful business model looks like.

More growth, more losses for DAZN

Speaking of lossmaking enterprises, DAZN is set to post its annual results at Companies House next week, but we’ve been given a sneak peek.

The UK-based sports streamer enjoyed a healthy increase in revenue to $2.9bn in 2023, up from $2.2bn a year earlier. Shay Segev, DAZN chief executive, said most of its top ten markets are now profitable. Its recent deal to acquire Foxtel for $2.1bn resulted in Rupert Murdoch becoming the company’s second-biggest shareholder at a valuation of close to $10bn

But that’s about where the good news ends. Losses at the group widened to $1.4bn from $1.2bn a year earlier. Company insiders say DAZN now has around 300mn monthly customers, but only 20mn are paying subscribers. Sir Leonard Blavatnik, DAZN’s controlling shareholder, pumped another $800mn into the business in 2023, taking his total outlay to $6.7bn.

DAZN has been in aggressive expansion mode for a while now, and shows no sign of slowing down. Aside from the Foxtel acquisition, it has also agreed to pay $1bn for global rights to Fifa’s new Club World Cup. It has future rights commitments of more than $9bn.

Segev expects revenue this year to be around $6bn, more than double that of 2023. The goal remains to become the “Spotify of sport”, and build a $200bn enterprise. He declined to comment on a widely-expected investment in the company by the Saudi state. “We will need to see what happens,” he said.

Many sport executives will be crossing their fingers that his bullish projections come good and that the company stops burning through cash.

Although DAZN’s foothold in the UK and US is largely related to boxing, the streamer’s fortunes increasingly underpin the health of European football. It is now the main broadcaster for the beleaguered French football league, as well as an important player in Spain, Italy and Germany.

Football has a long and frankly miserable track record of aggressive new media players seeking to shake up the status quo, only to run out of money and leave the sport facing a painful financial hangover. Many are now banking on Blavatnik staying the course.

Business of Football Summit: register now

The FT’s Business of Football Summit returns next month for its seventh edition to explore new models for growth with leading executives from Chelsea FC, La Liga, FC Barcelona, Juventus and many more. As a Scoreboard subscriber, register for your complementary digital pass here to watch the event online on 26-27 February, or register here to join us in-person at The Peninsula Hotel in London on 27 February.

Highlights

• The boss of French sportswear brand Lacoste is making an “aggressive” push into the lucrative US market as part of plans to increase total annual sales by a quarter to €4bn. Lacoste counts Novak Djokovic as one of its top brand ambassadors.

• Bill Sweeney, boss of the Rugby Football Union, said he never considered resigning over a bonus row that has rocked the sport in England. Sweeney was paid £1.1mn last year, while overseeing a round of job cuts and record losses.

• Football podcast Men in Blazers, which is aimed at the growing pool of US-based soccer fans, has raised $15mn in series A funding from investors including David Blitzer, Marc Lasry and Ryan Reynolds.