After Manchester United suffered a 3-1 defeat against Brighton last weekend, manager Ruben Amorim described the team as “the worst” in its history.
Currently, United is positioned 13th in the Premier League, closer to relegation than qualifying for the Champions League.
A good moment in Ratcliffe’s tenure occurred with Amorim’s hiring. Since acquiring a minority stake last year, the UK chemicals magnate has orchestrated an overhaul of the club’s upper management, resulting in a reduction of 250 positions.
This is now fully Ratcliffe’s operation, but it is clear that things are not revealing as intended. Ratcliffe’s sailing venture is also facing challenges.
Recently, Ineos announced its America’s Cup team would part ways with renowned British sailor Sir Ben Ainslie due to a lack of agreement on future terms. Ainslie expressed his shock, even hinting at potential legal action.
With a diverse sports portfolio that includes Formula One, cycling, and rugby, it seems that Ineos and Ratcliffe will encounter multiple challenges in the upcoming weeks and months.
This week, a financial analysis of European football’s elite clubs will be conducted, including a look at DAZN’s numbers after another year of substantial losses. Continue reading for insights — Josh Noble, sports editor.
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VIPs and Sponsors Power Growth for Football Elite
Deloitte’s annual report on the elite football sector has just been released, revealing some encouraging figures.
The primary highlights from the 2023/24 season are clear: matchday revenue is where the growth is happening, while commercial income has become more crucial for several leading teams than broadcasting revenue.
Total income for the top 30 clubs in football increased by 6 percent, reaching a new high. So far, the outlook appears positive.
Once again leading the wealth rankings, Real Madrid became the first club to exceed €1 billion in annual revenue.
Their matchday income soared to €248 million last season, thanks largely to the €1.3 billion renovation of the Santiago Bernabéu.
This upgrade not only expanded seating capacity but also enhanced premium hospitality services and opened opportunities for hosting various non-football events, including NFL games and concerts by artists like Taylor Swift. Many clubs are now attempting to replicate this success.
Real Madrid’s commercial revenue jumped to €482 million, compared to €316 million from broadcasting, contributing to a 26 percent increase in the club’s entire income.
Other clubs also reported revenue increases, with Arsenal, Newcastle, and Aston Villa enjoying obvious gains. However, as with previous Deloitte reports, there is a key piece of information missing from this data: profits.
Despite surpassing the €1 billion threshold, Real Madrid managed to achieve a mere €15.6 million profit, excluding any stadium-related expenses. Manchester City, ranked second in the Money League, also reported operational losses.
Manchester United recorded unprecedented losses of £113 million, with several other clubs expected to report similarly poor financial results in the coming weeks. Football excels at generating income, but it is even more proficient at spending it.
The financial dynamics of football could be shifting. Regulations are moving away from punishing losses and instead emphasizing revenue growth.
As a result, generating income has taken precedence. Investors see football as a chance to capitalize on valuations, with asking prices still driven by revenue rather than profitability.
Nonetheless, it raises the question of when prospective owners will begin to demand more detailed insights into what constitutes a successful business model.
More Growth, More Losses for DAZN
DAZN, a streaming service known for its sports coverage, is expected to release its annual results at Companies House next week, but a preview has been provided.
The UK-based streamer reported a strong revenue increase, reaching $2.9 billion in 2023, compared to $2.2 billion the previous year.
CEO Shay Segev indicated that most of its top ten markets are now profitable. Following a deal to acquire Foxtel for $2.1 billion, Rupert Murdoch has become the company’s second-largest shareholder, with a valuation nearing $10 billion.
However, the positive news is limited. The company’s losses widened to $1.4 billion, up from $1.2 billion in the previous year.
Insiders report that DAZN currently has approximately 300 million monthly users, but only 20 million are paying subscribers.
Sir Leonard Blavatnik, the controlling shareholder, invested an additional $800 million into the business in 2023, bringing his total investment to $6.7 billion.
DAZN has been on an aggressive expansion path for some time, with no signs of slowing down. In addition to the Foxtel acquisition, it has agreed to pay $1 billion for global rights to FIFA’s new Club World Cup, with future rights commitments exceeding $9 billion.
Segev anticipates revenue will reach around $6 billion this year, more than doubling 2023’s figure. The ambition is to transform DAZN into the “Spotify of sport” and build a $200 billion enterprise.
He refrained from commenting on a widely expected investment in the company by the Saudi state, stating, “We will need to see what happens.”
Many sports executives are hopeful that his optimistic projections will materialize and that the company will stop its cash burn.
While DAZN’s presence in the UK and US is primarily tied to boxing, its fortunes are increasingly pivotal to the health of European football.
The streamer has become the main broadcaster for the struggling French football league and plays a nice role in Spain, Italy, and Germany.
Football has a long and rather disappointing history of aggressive new media companies attempting to disrupt the status quo, only to exhaust their finances and leave the sport grappling with the consequences. There is a prevailing hope that Blavatnik will remain committed.
Next month, the FT’s Business of Football Summit will return for its seventh edition, aiming to explore innovative growth models with top executives from Chelsea FC, La Liga, FC Barcelona, Juventus, and many others.
As a Scoreboard subscriber, you can register for your complimentary digital pass to watch the event online on February 26-27, or join us in person at The Peninsula Hotel in London on February 27.
