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Football Club Finances - on InsideIIM's Knowledge Cafe

Comments
 

Neutral Junta

Kick ass article ! Thanks for publishing this.

19 May 2012, 11.32 PM

Abhinav Agrawal

Awesome article! Loved the insights. Thanks a lot.

20 May 2012, 12.01 AM

EPL Fan

Great article..... Loved the subtle jabs at Arsenal FC.

20 May 2012, 12.04 AM

lurker

@EPL Fan...... Hope you enjoyed the subtler jabs at Manchester United

20 May 2012, 12.30 AM

Cal

heavily "inspired" from swiss ramble huh.. good summary though

20 May 2012, 12.53 AM

+Read Replies (1)

author

i've expressly taken Kieron O'Connor's permission before posting Arsenal's PnL and the last graph (profit comparison) from Swiss Ramble. All other data is from public sources. Hope that assuages your fears, qualms and reservations.

20 May 2012, 08.21 AM |

Jubin

Superb article!!! loved it.....

20 May 2012, 01.21 AM

Ahmed

Amazing article... and thanks for the Swiss Ramble link, its an awesome blog...

20 May 2012, 05.19 AM

Neutral Junta

Hi Shyam, Do you have any idea how brand value is calculated for a club as mentioned in this article link <a href="http://www.goal.com/en/news/9/england/2012/05/21/3115851/no-trophies-in-2011-12-but-manchester-united-remain-worlds" rel="nofollow">http://www.goal.com/en/news/9/england/2012/05/21/...</a>

21 May 2012, 02.21 PM

+Read Replies (3)

Shyam

Hi NJ, We are walking into truly murky waters. Frankly I can&#039;t shed much serious light on this topic. This is because a brand acquires its value through monetary means(revenues, profits margins and general financial performance of the company) and, more importantly through non-monetary means (associations - Apple is associated with &#039;cool&#039;, Barca is associated with &#039;anti-establishment&#039;; positioning of the products in the customer&#039;s minds etc.). There are two simple ways to calculate something, but I&#039;m not sure if it will give you the &#039;brand value&#039; you&#039;re looking for. 1. Look at the price paid by an investor to buy a stake in the company. The excess amount paid over the book value of that stake, will give you the &#039;brand value&#039; or the value of the intangible assets. Works fairly well for FMCGs and brand-companies like HUL, Nestle etc. Will work reasonably well for football clubs, coz. when someone is buying the club, they are buying the brand. This approach will not work for brand value of a Reliance Industries Ltd, because their main assets are the license approvals they&#039;ve obtained from the government - that is not a brand, even though it&#039;s an intangible asset. 2. Another approach is to consider brand value as &#039;untapped pricing power&#039;. This website sheds some light on that <a href="http://www.brandfinance.com/images/upload/top_30_european_football_brands_2011_final_website.pdf" rel="nofollow">http://www.brandfinance.com/images/upload/top_30_...</a>

21 May 2012, 09.59 PM |

Shyam

By license approvals - i mean the fact that the high officials on both sides are hand-in-glove with each other........that&#039;s the intangible part

21 May 2012, 11.14 PM |

Neutral Junta

Thanks for providing the clarification and links !

22 May 2012, 12.29 AM |

AGL

Wow that! Just wow.

21 May 2012, 09.52 PM

varshanagar

Very nicely done. While looking at transfer, you could look at ownership models. ManCity, Chelsea: how is it possible to spend so much and not get commensurate returns. As you mentioned, the revenue generated is quite poor. How can ManCity spend $1.5 billion? Is there more than just footballing ambition? Geopolitics perhaps? Qatar sponsoring Barca and the other spanish team (Getafe? Malaga?) German model of ownership of clubs is quite amazing. which is possibly why their national team is always competitive unlike England. Also, how can Prime Ministers own clubs? As in the case with AC Milan. Madrid and Barca also have a similar history. You could put in the &quot;fowl&quot; play by Venky&#039;s at Blackburn too. Im sure this would be an interesting topic. This link gives a very detailed account on ticket pricing for EPL clubs. <a href="http://tinyurl.com/7u4sutm" rel="nofollow">http://tinyurl.com/7u4sutm</a>

23 May 2012, 11.31 AM

Sreeram

Excellent piece, filled with lots of new info (the 'extraordinary items') and revalidating some old info(Italian football is boring. Good read.

23 May 2012, 03.51 PM

Sreeram

*(Italian football is boring)

23 May 2012, 03.53 PM

Karan

Thank you so much :)

24 May 2012, 02.30 PM

Shishir

Nice article. Adding to it the Barca PBIT is meagre cause Barca had Unicef as sponsors for 5 years! They didnt get any money from unicef. Instead they gave some of the revenue to Unicef after every match. This course along with the reasons u mentioned.

13 Jun 2012, 09.56 PM

SHishir

Also people who believe that Manchetsr City are high spending FYI the Man U squad that faced suderland on the last day cost 8 million $ more than the Manc City squad against QPR on that day. PS : Joe Hart has gotten from shrewsbery town for half million pounds !

13 Jun 2012, 10.06 PM

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Comments
 

Neutral Junta

Kick ass article ! Thanks for publishing this.

19 May 2012, 11.32 PM

Abhinav Agrawal

Awesome article! Loved the insights. Thanks a lot.

20 May 2012, 12.01 AM

EPL Fan

Great article..... Loved the subtle jabs at Arsenal FC.

20 May 2012, 12.04 AM

lurker

@EPL Fan...... Hope you enjoyed the subtler jabs at Manchester United

20 May 2012, 12.30 AM

Cal

heavily &quot;inspired&quot; from swiss ramble huh.. good summary though

20 May 2012, 12.53 AM

+Read Replies (1)

author

i&#039;ve expressly taken Kieron O&#039;Connor&#039;s permission before posting Arsenal&#039;s PnL and the last graph (profit comparison) from Swiss Ramble. All other data is from public sources. Hope that assuages your fears, qualms and reservations.

20 May 2012, 08.21 AM |

Jubin

Superb article!!! loved it.....

20 May 2012, 01.21 AM

Ahmed

Amazing article... and thanks for the Swiss Ramble link, its an awesome blog...

20 May 2012, 05.19 AM

Neutral Junta

Hi Shyam, Do you have any idea how brand value is calculated for a club as mentioned in this article link <a href="http://www.goal.com/en/news/9/england/2012/05/21/3115851/no-trophies-in-2011-12-but-manchester-united-remain-worlds" rel="nofollow">http://www.goal.com/en/news/9/england/2012/05/21/...</a>

21 May 2012, 02.21 PM

+Read Replies (3)

Shyam

Hi NJ, We are walking into truly murky waters. Frankly I can&#039;t shed much serious light on this topic. This is because a brand acquires its value through monetary means(revenues, profits margins and general financial performance of the company) and, more importantly through non-monetary means (associations - Apple is associated with &#039;cool&#039;, Barca is associated with &#039;anti-establishment&#039;; positioning of the products in the customer&#039;s minds etc.). There are two simple ways to calculate something, but I&#039;m not sure if it will give you the &#039;brand value&#039; you&#039;re looking for. 1. Look at the price paid by an investor to buy a stake in the company. The excess amount paid over the book value of that stake, will give you the &#039;brand value&#039; or the value of the intangible assets. Works fairly well for FMCGs and brand-companies like HUL, Nestle etc. Will work reasonably well for football clubs, coz. when someone is buying the club, they are buying the brand. This approach will not work for brand value of a Reliance Industries Ltd, because their main assets are the license approvals they&#039;ve obtained from the government - that is not a brand, even though it&#039;s an intangible asset. 2. Another approach is to consider brand value as &#039;untapped pricing power&#039;. This website sheds some light on that <a href="http://www.brandfinance.com/images/upload/top_30_european_football_brands_2011_final_website.pdf" rel="nofollow">http://www.brandfinance.com/images/upload/top_30_...</a>

21 May 2012, 09.59 PM |

Shyam

By license approvals - i mean the fact that the high officials on both sides are hand-in-glove with each other........that&#039;s the intangible part

21 May 2012, 11.14 PM |

Neutral Junta

Thanks for providing the clarification and links !

22 May 2012, 12.29 AM |

AGL

Wow that! Just wow.

21 May 2012, 09.52 PM

varshanagar

Very nicely done. While looking at transfer, you could look at ownership models. ManCity, Chelsea: how is it possible to spend so much and not get commensurate returns. As you mentioned, the revenue generated is quite poor. How can ManCity spend $1.5 billion? Is there more than just footballing ambition? Geopolitics perhaps? Qatar sponsoring Barca and the other spanish team (Getafe? Malaga?) German model of ownership of clubs is quite amazing. which is possibly why their national team is always competitive unlike England. Also, how can Prime Ministers own clubs? As in the case with AC Milan. Madrid and Barca also have a similar history. You could put in the &quot;fowl&quot; play by Venky&#039;s at Blackburn too. Im sure this would be an interesting topic. This link gives a very detailed account on ticket pricing for EPL clubs. <a href="http://tinyurl.com/7u4sutm" rel="nofollow">http://tinyurl.com/7u4sutm</a>

23 May 2012, 11.31 AM

Sreeram

Excellent piece, filled with lots of new info (the 'extraordinary items') and revalidating some old info(Italian football is boring. Good read.

23 May 2012, 03.51 PM

Sreeram

*(Italian football is boring)

23 May 2012, 03.53 PM

Karan

Thank you so much :)

24 May 2012, 02.30 PM

Shishir

Nice article. Adding to it the Barca PBIT is meagre cause Barca had Unicef as sponsors for 5 years! They didnt get any money from unicef. Instead they gave some of the revenue to Unicef after every match. This course along with the reasons u mentioned.

13 Jun 2012, 09.56 PM

SHishir

Also people who believe that Manchetsr City are high spending FYI the Man U squad that faced suderland on the last day cost 8 million $ more than the Manc City squad against QPR on that day. PS : Joe Hart has gotten from shrewsbery town for half million pounds !

13 Jun 2012, 10.06 PM