Written by Umberto Pelà (27.01.2023)
As part of their now-annual publication, Deloitte has released the latest version of the ‘Deloitte Football Money League’ (DFML), a reliable ‘annual profile of the highest revenue generating clubs in world football.’ The document is packed to the brim with the latest financial measurements for the clubs with the highest revenues, and is considered by many as the ‘industry’s most reliable independent analysis’. In this year’s release, the DFML announced a variety of records being broken. For the first time ever, revenues from the 20 highest-earning clubs in the world surpassed €10.5bn — a testimony to the growth and expansion of the industry.
Before exploring the intricacies with regards to clubs in the Serie A, it is important to understand where the bar is set, and perhaps, who are the clubs that are setting the bar today. In recent times, the top 2 has only left space for two clubs: Real Madrid and Manchester City. Respectively led by Florentino Perez and Ferran Soriano, the clubs have learnt to become true money machines. The streams of revenue that a football club considers – Commercial, Broadcast/Media, and Matchday – have been nurtured and developed in ways that can compare with few clubs around the world.
Yet something tells me that these streams haven’t yet been maximized and that growth is on the horizon.
Both Real Madrid and Manchester City have moved ahead of the masses, increasing the value of their clubs through acquisition of new assets and specific player trading strategies. On top of that, of course, is domestic and international success — which is paradoxically undermined when considering how successful a club will be. As silly as it may sound, if a club doesn’t win or at least gets close to doing so, it is unlikely to be financially successful. Both Real Madird and Manchester City know something about that, as in the last 10 editions of the UEFA Champions League Final, these clubs have appeared 6 times.
On a higher level, however, what emerges is the sensation that these two clubs are playing a different game. The feeling is that everyone else is playing a game that is finite. Set rules, set players, set times. They all strive to win, and they strive to win now.
Real Madrid and Manchester City, on the other hand, have been playing an infinite game. A game of patience, where the metrics that define success – both financially and athletically – haven’t been defined with metrics.
Picture this: when Manchester City spent hundreds of millions of pounds to improve their infrastructure and develop their roster, just to fall short of the UCL Final numerous times, they kept their trust high. The club’s faith in manager Pep Guardiola, eventually paid off as they beat Inter Milan last year to win their first ever Champions League.
Similarly, Real Madrid and Florentino Perez never lost sight of the grand scheme of things. While unquestionable that the pressure to win is always on at Real Madrid, the club never made their wins and losses black or white situations. “Don’t pass the ball to him, brother, he’s playing against us, I swear”, went Karim Benzema at half-time to teammate Ferland Mendy as he referred to Vinicius JR. The media was quick to paint the picture of Real Madrid’s catastrophic downfall. It was only going to be down from here. One year later, that same star duo carried Real Madrid to the UCL Final, taking down Liverpool 1-0 and earning the club their 14th UCL. Yes, you read that right, 14 UCL titles.
Now, am I saying that these formats of management are adequate or even possible for all clubs around the world? Absolutely not. Disregarding the financial troubles that Manchester City is allegedly facing, not every club has owners willing – or able – to invest as much money as the owners of these clubs have in recent times. Yet if you focus on that long-term vision, playing an infinite game against clubs who look at the same context with a finite mindset, we can start to see why they have been so successful in recent times.
Serie A clubs can learn from these systems — yet the gap isn’t as drastic as some paint it to be.
For the first time since the 2015/2016 season, when Juventus, AS Roma, AC Milan and Inter Milan appeared in the DFML’s top 20, four Italian clubs have made that same list. This time round it is Juventus, AC Milan, Inter Milan, and SSC Napoli. Even though none of these cracked the top 10 for revenue – with Juventus being the closest in position #11 – this is a testimony to the league’s growth and international success. In fact, Serie A, in terms of revenue, is the league with the second-most clubs in the DFML top 20 behind the English Premier League.
To better understand the club’s individual scenarios, however, it is smarter to break this down.
Juventus
La Vecchia Signora, as reviewed in last week’s financial analysis, brings in revenues of €432.4M, €100M off of #10 Arsenal. The club has a wage-revenue ratio of 65%, down 19% from last year’s 85%. This is an important metric because it helps us determine how much of the club’s revenue is allocated to wages. A higher ratio means that a larger portion of the club’s income is dedicated to wages. As a result, a fair assumption to make is that with higher ratios, higher levels of success should come. In other words, if you’re reinvesting a lot of what you earn into operating costs you should be winning (or getting close to doing so) in the present. A wage-revenue ratio of 65% is notable if we compare it with Manchester City’s 59%. Plus, it becomes a considerable issue if the club in question, Juventus, hasn’t reached anywhere near the levels of success that the English treble-winners have. Last season, the Bianconeri ended their domestic season in 7th position (also due to a 10-point deduction as a result of a capital gains/tax evasion case) and were eliminated in the UCL’s group stages, only to exit the UEL in the semi-finals.
AC Milan
The first Milanese club on this list edged their cousins, Inter Milan by just over €6M in revenue with a total of €385.3M. This is particularly impressive if we consider that the Rossoneri had their UCL season cut short by Inter themselves in the semi-finals and ended their season in 4th position, trophyless. In other words, recognition must be given to the levels of management behind the club that boosted non-pitch revenues impressively. AC Milan’s wage-revenue ratio sits at 45%, down from last year’s 66% — an impressive number. The Rossoneri’s case, to me, is particularly interesting because they represent the first of what will be many management transitions in the world of football in the next couple of years. The club was acquired by Investment Management firm Elliott Management, and a shift in culture has been swiftly undertaken. Greater attention to major expenditures (e.g. amortization values and wages), investments on player scouting, and an eye for the future have set up the club with strong foundations for the years to come.
Inter Milan
AC Milan’s cousins, Inter Milan, trail in position #14 with revenues of €378.9M. Is something not adding up? The Beneamata won the Coppa Italia, was runner-up in the UCL, and finished in 3rd position in the Serie A. Well, this is arguably the beauty of effective management. You can gain the edge on competitors through smarter choices, and AC Milan literally did that this past season. Nevertheless, the Nerazzurri must hold their heads high: this was a pivotal season in their financial climb out of the mud that Antonio Conte’s era left the club in. Wage-revenue ratio has steeply declined from 82% to 61%, and the club has managed to maintain and improve on their impressive domestic and international success on the field — something which isn’t exactly foregone. Imagine if your club – or firm – had to decrease its company-wide wages by 21%. How much talent would you lose? How would you mitigate that loss? Thankfully, Giuseppe Marotta is at the club, and as long as that will be the case, Inter Milan’s tifosi can feel relatively safe.
SSC Napoli
The final club in this list are the Italian champions. The Partenopei sneaked into the DFML in position #19 with revenues of €267.7M after an unprecedented season. Luciano Spalletti’s side brought the scudetto back to Napoli after a 33-year drought and carried the side to a rare UCL Quarter Final. Fluke or not fluke, this has been the ultimate reward club owner Aurelio De Laurentiis has expected for the past decade. With his set-in-stone, rigid management style, De Laurentiis has surprised everyone this season as he lowered his wage-revenue ratio from 85% to 42% — and managed to win as much as SSC Napoli did last year. This massive, 43% decrease is a result of two things. Firstly, and most logically, successes on the field leading to greater commercial, matchday, and broadcast/media revenue. Secondly, the club’s strict wage strategy which encompassed letting go of club captains Lorenzo Insigne and Kalidou Koulibaly to sign Kvicha Kvaratskelia and Amir Rahmani. Whilst controversial, this move proved to be genius.
Seeing 4 Italian clubs in the DFML top 20 is a great, promising sign. Seasons like last year’s, while particularly impressive, are the exact steps the league needs to take in order to cement itself once again as the most dominant league on the planet. While the gap between positions 1-10 and 11-20 is notable, I’m very confident that the league can increase its value as one entity by dominating the latter side of the leaderboard.
If an increasing number of Italian clubs follow the model that has been set by clubs like Manchester City and Real Madrid, I can’t see how the positive externalities of such moves won’t accumulate, allowing further clubs to enter those 10-20 positions. In turn, this would reinforce a positive loop, where the league increases in competitiveness and attracts greater investments, star players, and the eyes of the world — translated, money.