Daily Bulletin


The Conversation

  • Written by The Conversation
imageWorth its weight in gold.EPA/Jean-Christophe Bott

This year’s UEFA Champions League Final is almost upon us, with Barcelona set to take on Juventus on June 6. It is four years since Barcelona last played for European club football’s highest honour. For Juventus, it is the first time since 2003 that they have reached the final and, should they win, it will be the club’s first Champions League Final victory since 1996.

The commercial returns associated with the Champions League have skyrocketed since then. Such has been the growth of the tournament, that the final is viewed by some as being the world’s biggest annual sporting event and by others as the richest.

Prize money

Barcelona and Juventus though will already be aware of the windfall to be earned. The prize money structure for this year has been:

imageCC BY

This means that, even before this year’s final, Barca have already earned €38m in prize money alone. A win in Berlin will take this figure to €53m. Juve, meanwhile, have already earned €35.5m in prize money, which could rise to €50.5 million should team captain Gianluigi Buffon lift the trophy on Saturday.

Market pool

But for both clubs, the windfall will not end there. At the end of each Champions League campaign, UEFA makes a series of “market pool” payments to clubs, which is based upon the value of the TV market in the country a team is from. For the Champions League finalists during the last three years, this is what it meant for each of them:

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As such, while it is difficult to place an accurate figure on market pool payments (UEFA does not reveal the precise award until August), it is reasonable to assume that Barca and Juve will earn additional prize money of around €20m.

So the two clubs already have around €70m in the bag. On top of this, both will have played six home games and so have drawn additional gate revenues from ticket sales. Consider this: if a club such as Manchester United charged an average ticket price of €70 for a Champions League ticket, of which they sold 75,000 for six games, that’s an additional €31.5m. For Barca and Juve, it is therefore conceivable that one or both will bank €100m or more.

Shirt sales

In addition, there are numerous other revenue-generating opportunities that arise from Champions League success. For example, a club can sell more corporate hospitality packages, turnover more merchandise, charge premium rates for sponsorship and use victory to help build a global fan base.

In terms of say, shirt sales, it is difficult to specifically attribute a sales increase to victory in one game. But the following provides an indication of the possible impact that a Champions League final victory can bring. Among recent winners, it is estimated that clubs sell the following number of shirts worldwide on average per annum:

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If we assume a modest price per shirt of €50, for a club like Real Madrid this brings in additional annual revenues upwards of €70m. Not all of these shirts will have been sold in direct response to these clubs winning the Champions League, but the magnitude of sales demonstrates its high-stakes nature. Nike executives in particular will be anticipating this year’s contest with glee, as both finalists will be sporting their branding and this will be a bumper sales opportunity for them.

Social media

The Champions League final is also a social media sensation. The following heat map of social media activity around the globe during last year’s final shows just how popular it is:

imageThe moment social media went mad after Gareth Bale’s extra time goal.cartodb

The further a club gets in the Champions League (and if they ultimately win it), the more they can build their social media presence. All the clubs have Twitter, Instagram and YouTube followings. The big challenge of course is to monetise this. But social media is a vital tool for any brand when it comes to boosting their visibility, engaging with fans (and, ultimately, customers).

This is hardly surprising though – the Champions League has a seductive social media appeal. Figures from UEFA emphasise the power and the pull of top-level European football. There were 8.4m tweets about the 2014 final during the evening of the game, peaking just under 210,000 when Gareth Bale scored in extra-time; on Facebook there were more than 67m interactions around the final. Altogether, the final was watched by more than 165m people across 200 countries.

Whatever the precise details of a club’s commercial gains, it is indisputable that winning the Champions League brings with it major rewards. Deloitte in its Football Money League explicitly acknowledges: “To gain entry to the top 20 [football club earners], substantial broadcast revenue continues to be critical, especially that generated from participation in the UEFA Champions League.”

Forbes in its 2014 ranking of the world’s most valuable sports teams also acknowledges the “Champions League effect”, with the following winners appearing:

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Wider gains

At last year’s final in Lisbon, the IPAM Marketing School identified the net economic impact for the city as €45m. More specifically, 54% of the impact generated is believed to have come from overnight stays in Lisbon; restaurants generated nearly 22%; with general tourism accounting for 7% of revenues. Meanwhile, Lisbon Airport handled an extra 10,000 passengers over the weekend of the final – a 20% increase on normal passenger levels. An earlier study of the 2011 Champions League final in London estimated that the windfall for the city would be around €52m.

So where does the ripple effect of Champions League revenues actually end? It is difficult to say; let us not forget too that for UEFA itself the tournament is a cash cow, generating somewhere in the region of €1.5 billion a season for European football’s governing body.

For sponsors, the final is always a boost to their business. When Heineken renewed its deal with UEFA, it recognised that awareness of its brand has grown to 60% among UEFA Champions League fans. Even local economic activity in the city from which the winning team originates is likely to increase, with figures suggesting that a “feel-good factor” may boost spending and consumer confidence.

So, no matter who lifts the trophy in Berlin, we can be sure that the Champions League will continue to be a thriving tournament at the heart of a growing micro-economy that looks set to continue prospering for years to come.

Disclosure

Simon Chadwick is affiliated with UEFA; he has helped the organisation develop, and teaches on, their education programmes.

Authors: The Conversation

Read more http://theconversation.com/hard-evidence-how-much-is-the-champions-league-worth-42376

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