CAN fc BARCELONA REACH EUR 1 BILLION TURNOVER BY 2021?
The club aspires to be the first one to reach EUR 1 billion turnover by the 2020/21 season. Although this plan might come across as bold, in reality, this target could be reached or even surpassed by keeping up the annual growth rate of 10% that was achieved in the past 10 seasons.
On 6 June 2015, FC Barcelona defeated Juventus FC in the UEFA Champions League final. After a 4-year hiatus, FC Barcelona once again won the most prestigious European football tournament and finished their exceptional season with a treble of trophies. However, the success of FC Barcelona is not limited to the football pitch as the club shows signs of maintaining an upward trajectory in their financial performance.
Recently, the club published their audited financial statements for the 2014/15 season presenting a record turnover of EUR 608 million, the highest result ever achieved by a sporting club. The figure refers to the combined revenue generated by all of FC Barcelona’s sporting divisions, which include, among others, football, basketball, handball, field hockey, and futsal. However, football related activities account for approximately 90% of the overall business.
As the chart below illustrates, over the past ten years, FC Barcelona’s turnover has grown steadily - bar the 2012/13 season - with a compound average growth rate (CAGR) of 10%. The biggest increase in absolute terms was achieved in the past season with a EUR 78 million revenue growth compared to the 2013/14 season, which equates to a 15% increase on a year-on-year basis. This result was mainly driven by the growth of marketing and sponsorship revenue (+33% y-o-y change; from EUR 169 million to EUR 225 million), and matchday revenue (+16% y-o-y change from EUR 128 million to EUR 149 million). Income from media, club members (“socios”), player trading and the sale of broadcasting rights were relatively constant compared to the previous season.
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Relying on this strong performance, the club’s management has set its sight on very ambitious goals. During the recent presidential election campaign a member of the re-elected President, Josep Maria Bartomeu’s team said that the club aspires to be the first one to reach EUR 1 billion turnover by the 2020/21 season. Although this plan might come across as bold, in reality, this target could be reached or even surpassed by keeping up the annual growth rate of 10% that was achieved in the past 10 seasons.
Beyond these initial considerations, the club already has a clear strategic development plan to boost club’s financial performance throughout a range of initiatives with high growth capacity. These were outlined in the election programme of Bartomeu, who was re-elected for a six-year term. Some of the most relevant initiatives that could aid FC Barcelona in ensuring continuous revenue growth in the coming years are presented hereby.
Stadium development
The most important project for the club is undoubtedly the Espai Barca project, which is centered around the expansion and refurbishment of the team’s home ground, the Camp Nou. The development would see the current seating capacity increased to 105,000 with all seats under the cover of a new roof. The number of VIP seats will nearly double to 7,500, whereas the quality of the offered hospitality services will improve. A new ring of boxes and restaurants will be added to the structure of the stadium, reinforcing an important matchday revenue stream of the club.
Camp Nou’s redevelopment is scheduled to start in May 2017 and is foreseen to last until February 2021. Without compromising the football team’s ability to play its home matches on-site, the majority of the construction will take place in the football off-season.
In addition to taking the matchday experience of Camp Nou to a new level, the Espai Barca project includes the construction of the Palau Blaugrana, a 10,000-seat indoor arena. This new multi-purpose venue will be suitable for sporting, music and other professional events. Next to Palau Blaugrana a smaller pavilion will be built with a capacity of 2,000 spectators.
Based on the proposed concept, the entire area around Camp Nou will be extensively renovated, adding food and beverages facilities and other outlets to remain open throughout the year. Furthermore, a state-of-the-art technological solutions and a powerful Wi-Fi network will be implemented in and around the stadium as well.
With the realisation of Espai Barca, the club will own a multi-functional centre capable of providing a wide range of services all year round. Ultimately, this initiative will improve the fan experience and their interaction with the team, thus providing a significant boost to the club’s overall revenue.
Commercial developments, sponsorships and globalisation of the brand
Apart from matchday revenue, additional growth could be generated through the exploitation of new commercial and sponsorship initiatives. A major step towards higher revenues would be to ensure that a portion of player’s marketing rights are retained by FC Barcelona – as it was expressed during the recent presidential election campaign.
However, the success of any commercial deal greatly depends on the popularity of the team and the number of devoted followers that can be reached. According to the 2013/14 financial statement, the club has 41 official accounts on 12 different online social platforms, reaching 180 million global followers and making it one of the most popular teams around the world. On Facebook alone, the football team boasted 84 million followers in June 2015.
Additional objectives are to further increase the club’s audience and maximise related online sale and e-commerce opportunities. Effectively, the aim is to translate this sizeable follower base into a real revenue channel.
Based on the success of their fan shop at Camp Nou, which generates nearly EUR 35 million annually, the club is also considering to open a chain of new stores in key territories around the world.
Moreover, it also appears that the club is in the process to renegotiate the agreements with their shirt and technical sponsors, Qatar Airways and Nike respectively. Doing so, and taking into consideration potential gains connected to sport performance, it is expected that the club might receive a sizeable premium on its current deals. Added considerations are also ongoing regarding the possibility to sign a new shirt sponsorship for the club’s training kits, which could generate additional revenue.
What is certain is that the ever-increasing global visibility and the regular on-pitch success of the club certainly reinforces its position during the negotiations of these commercial deals.
Conclusion
The financial statements of FC Barcelona demonstrate that the club was able to profit from the on-pitch success achieved by the team. However, there is still potential for further growth. Among others, the long-awaited redevelopment of Camp Nou and the new sponsorship contracts could strengthen the club’s matchday and commercial revenue channels.
A notable threat to FC Barcelona’s EUR 1 billion turnover target could be the recent restructuring of La Liga’s revenue distribution system. The Spanish league is in the process of implementing a collective negotiating approach, which aims to significantly reduce the sizeable difference between the duopoly of FC Barcelona and Real Madrid CF and the rest of the teams in terms of broadcasting revenues received. Eventually, the league will distribute its income from domestic and international television deals more evenly, but in the near future both FC Barcelona and Real Madrid CF are guaranteed to receive as much as they did in the 2014/15 season (nearly EUR 140 million each). By the time this protective measure expires, the overall increase in the value of La Liga’s broadcasting rights might offset the reduction these two big clubs might experience due to this redistribution scheme.
