In Soccer, Big Money Buys Marketing Muscle

August 30, 2013

Transfer MoneyIt’s no secret around the office that I’m a big soccer fan. I’ve been following the game for years — and I’m still fascinated by how much money teams throw around to buy players.

Every year sees at least a few huge player signings, costing several million each.

This summer, teams already have spent big money to acquire individual players, outlays that don’t even include the players’ wages. A few great examples are: Barcelona FC reportedly bought Neymar de Silva (Brazilian) for $74 million and Paris Saint-Germain bought Edinson Cavani (Uruguayan) for $84 million.

None of these will compare to the possible transfer of Gareth Bale (Welsh) from Tottenham Hotspur to Real Madrid. Although it’s not final, it is reported to be between $124 and $133 million.

What are these teams actually buying? Is it worth it?

The most obvious answer is they are buying a world-class player. The players listed above are considered some of the best in the world at the moment and they are expected to instantly make their respective teams better. The ultimate goal (pun intended) is to help their team win their league and tournaments. Winning these trophies can bring in huge paychecks for teams. Last year’s winner of the Barclays Premier League made over $95 million*.

Another part of the answer, which actually may be more important on the business side of soccer, is the marketability of the player and its impact on the team. There are several different parts to this, so I’ll break down a few of the big ones.

Team Sponsors

Bringing in big name signings during the year makes a team more attractive to primary sponsors. Arguably the most important sponsor to a soccer team is the one featured on players’ jerseys. There were four teams last year in the Barclay’s Premier League (BPL) that made $30+ million solely off jersey sponsorships. So, as teams add these big players, getting better and more popular, the price to sponsor its jerseys increases and they make more money.

Television

Barclays Premier LeagueThese huge signings make certain leagues more appealing to TV audiences as well. With growing popularity a league can charge more for networks to carry the games. Since a large portion of this contract money is paid out to each team in the league, with first place getting the most and last place getting the least, team make more money when their league is more attractive to TV audiences.  A perfect example is the BPL sealing a few deals for the current 2013-2014 season. It’s estimated that the league will make more than $8.5 billion from global TV deals*, with the winning team taking in $150 million.

Fans

Having a huge transfer signing gets teams’ fans excited about the upcoming season or second half of the season, depending on when the player is purchased. This will inevitably cause more people to buy tickets and the average price per ticket to go up, which in turn makes the team more money.

More importantly, new signings mean new jersey purchases, which can create huge revenues teams. The best example is Cristiano Ronaldo, one of the two best and most popular players in the world. In summer summer of 2009 his transfer to Real Madrid, for $124 million, made him the most expensive player in soccer history. However, due to his popularity, Real Madrid basically made all the transfer money back within a year of his purchase, just on jersey sales.

When you put all of these aspects of buying a player together — the impact it has on the team, the league and the fans — it puts things into perspective. Sure teams may throw around millions of dollars like it’s nothing, taking a hit on the front end, but over the long haul a better team, filled with the best players can be a cash cow.

*Note: The values were calculated from British pounds to USD with Google’s currency converter.