'The boom years for football are over'

Jim Ratcliffe has shown with his Ineos empire that he is one of Britain’s smartest entrepreneurs. Yet there is not much sign that he has been able to work his magic as the co-owner of Manchester United.

When the football club reported its results last week, revenues were up by less than 1%, at £666.5 million, while it made a loss for the financial year of £33 million. It had been a challenging year for the club, with no Champions League football, and the team finished just 15th in the league, its lowest placing in more than 30 years.

It’s not the only team struggling. Manchester City, their great rivals across the other side of the town, had a far more successful season on the pitch. But revenues last year only rose from £712 million to £715 million, an increase of less than 1%.

MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Over in Paris, PSG ended up winning the Champions League and are widely seen as the best team in the world right now. But revenues only rose by 1% last year to €806 million.

Deloitte, in its annual “Money League” report on the financial performance of the world’s biggest clubs, saw only a 6% rise in overall revenues and much of that was accounted for by a 26% revenue increase for Real Madrid after it completed renovations of its stadium. The days when the world’s major football clubs could count on huge increases in revenues year on year appear to be over.

Football is an ex-growth industry

There are three reasons for that. To start with, sponsorship has been exhausted. There is almost no corner of a pitch, shirt or website that has not been plastered with a series of corporate logos. Manchester United had 41 brand partnerships last season. PSG had 44; Barcelona 34. It might be possible to add one or two more, but there is a finite number of partnerships available, and it is clearly impossible to go up to 60 or 70 sponsors while still offering anything of value to the companies paying the money.

Next, the broadcasters are not bidding crazy amounts of money for TV rights to live games. The UK’s Premier League is the most valuable, with a record £6.7 billion for the 2025-2029 rights, but that was only a modest increase on the last round, and it is hard to see it going up by very much when the rights come up again towards the end of the decade. Indeed, once an adjustment for inflation is made, the Premier League is now earning 31% less for the broadcasting rights than it was during the 2016-2019 package.

With average viewing figures per game falling as the number of matches shown live has increased, and with the subscriptions market fiercely competitive, it is hard to see a return to revenue doubling every few years as was the case a decade ago.

The big hope was that one of the streaming giants would come into the market and pay whatever price was necessary to secure a deal, but although Amazon bought the rights to a few games, overall, the tech companies have kept their chequebooks closed. They know that becoming a major player in this market is not really worth the billions it would cost.

Players and fans have had enough

Finally, the players can’t be expected to play any more games. The Champions League has already been redesigned to stage far more matches between the major clubs. The Europa League and Conference League have been beefed up as well, while the Fifa Club World Cup has been added to the end of the season every four years, and the next one due in 2029 will be expanded to include 32 teams.

More games means more tickets to be sold, more broadcasting rights and more opportunities for sponsorship. Yet, as the half-empty stadiums and poor viewing figures for the Club World Cup made clear, the fans are getting bored too.

In short, football is saturated. The days when clubs could raise revenues effortlessly, extend global reach and charge more and more for broadcasting rights and sponsorship deals are now in the past. After a three-decade boom that has transformed the game, this is now an ex-growth, stagnant industry, with mediocre returns for its investors. The boom years are not going to return any time soon.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.