Transfer fee versus financial opportunities
It is that time again in European football – the time of million-Euro transfers. With the transfer of Neymar to Barcelona, Alcantara to Bayern and Real Madrid stocking up on some promising young players, there is a lot of movement in the market. In 2009 Cristiano Ronaldo moved from Manchester United to Real Madrid for a record 94 million Euros. Barcelona recently paid 57 million Euros for Neymar.
Yet clubs spend such (excessive) amounts on new players at a time that they are under scrutiny for making severe financial losses. This raises the question: is there more in it for clubs than just football success?
“Neymar is seen as a star of the future and will surely benefit the club.”
From competitive to financial success
Of course is the answer to that question. The main reason FC Barcelona bought Neymar is for an increased probability of competitive success. Neymar is seen as a star of the future and will surely benefit the club in coming seasons. In addition to competitive success, there are financial opportunities.
Competitive success positively affects a club’s income. More success is after all accompanied by higher prize money. However, this might not be the best source of financial gain for a club like Barcelona. Such clubs are systematically competing in the final and decisive stages of big competitions. So competitively, and in turn financially, they cannot improve much.
A source of income that might be more affected by the arrival of new stars is ticket sales. People, especially fans, want to see these players play. Stadiums will be fuller and the atmosphere will generally be better. Ticket sales will rise, generating more income.
So yes, a lot of money is invested, but a lot is generated. Besides competitive success and ticket sales, merchandise income will also rise. Some time after Real Madrid bought Ronaldo, the club made a statement about the transfer’s financial return. The sales of jerseys alone surpassed the transfer sum. Obviously the club’s real income from Ronaldo-related merchandise was far less due to other parties’ shares. Even so, in one year the club generated quite an amount. Imagine what it is by now. Similar rumors are now circulating about the recent transfer of Neymar.
“European football goes beyond European borders.”
Contracting star players gives more financial opportunities, for example pre-season trips. Do not forget European football goes beyond European borders. In Africa and Asia fans are sometimes bigger fanatics than the ‘home’ crowd. Fans swamped Robin van Persie in Asia this summer. Although it was a trip with the national team, it shows how much clubs can benefit from these markets. And they do. Manchester United has made several Asia Tours in recent years.
These are just a few of the financial opportunities that arise by the signing of a star player. Obviously it is difficult to forecast the income a player can generate for a club. Transfer sums might seem excessive. But the real stars bring financial opportunities in addition to competitive success, making those excessive amounts possibly worthwhile.