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KPMG recently released a football club rich list in their study of Football clubs' valuation: the European Elite 2018. One of the Big Four auditors, the company has taken the Enterprise Value(EV) into account while compiling this list, based on the financial numbers accumulated by the Top 32 European clubs in seasons 2015/16 and 2016/17.
As stated in the report, the company defines the Enterprise Value(EV) as the sum of the market value of the owners’ equity, plus total debt, less cash and cash equivalents. The Enterprise Value is taken into account because it allows the auditors to compare football clubs with different debt and equity structures.
For calculating the EV, KPMG has considered five key metrics. The algorithm of the company for calculating the EV is as follows:
- Profitability - This factor takes into account the staff costs-to-revenue ratio of the previous two financial years alongside wages of players and the remaining staff of the club.
- Popularity - Popularity deals with the fan-following of the clubs on Twitter, Facebook, Instagram and YouTube, highlighting the importance of social media in a club's financial value.
- Sporting potential - Sporting potential defines the probability of on-pitch success of a club. A club with higher squad value has better chances of winning accolades. Hence, KPMG has considered the market values of the squads published by Transfermarkt.
- Broadcasting rights - This factor plays an important part in defining the revenue generation potential of the football clubs.
- Stadium ownership - The stadiums of the clubs are one of the most valuable assets of a football clubs. A club-owned stadium has better chances of generating revenues, which is why the ownership of a stadium is a crucial factor in KPMG's algorithm.
Out of the 32 clubs considered, let's have a look at the ten most valuable football clubs according to the report.
Tottenham Hotspurs (€1.286b)
Tottenham might not be winning trophies, but that hasn't affected them from being amongst the top 10 financially powerful football clubs in the world. The London-based club has outclassed a seemingly mighty Paris Saint Germain to book a place on this list.
Considering all their financial assets, Tottenham have been valued at €1.286 billion. They have shown an increase of 27% in their EV, which is the best amongst the top ten clubs in Europe. Constantly increasing operating revenues, improved profitability and a huge boost in the squad's market value (€706m) can be cited as the reason for the Lillywhites' financial growth as a footballing institution.
Tottenham has also amassed the highest EV growth in the past two years, which accounts for 61%.
Furthermore, the club's plan to move to a new White Hart Lane stadium in season 2018/19 will be beneficial for their financial health. The 62000 all-seater stadium is bound to increase their match-day revenues in the years to come.
With social media being a crucial aspect of KPMG's report, here's a look at the club's followers on social media, which definitely has a room for improvement in the future.
Facebook - 10.1 million
Twitter - 3 million
Instagram - 2 million
With a total social media fan following of 15.1 million, Tottenham has accumulated 3.2 million new followers this year. Also, the English club stands third in terms of relative growth on social media (26%), behind Inter Milan and Manchester City.
Juventus (€1.302b)
Italian champions Juventus edged past Tottenham by a margin of €16 million, after being valued at €1.302 billion by KPMG. The Bianconeri owe a big chunk of their financial growth to the on-pitch success, clinching five titles and finishing as Champions League runners-up in the last two years.
In season 2017/18, the Old Lady won their seventh consecutive league title and the Coppa Italia. Considering their ageing squad, manager Massimiliano Allegri deserves an ovation for guiding the club to success and continuing their domination in Italy.
In comparison to the previous year, Juventus have increased their EV by 7%. KPMG has listed the club's Champions League journey to the final in 2017 and the record sale of Paul Pogba to Manchester United as the two key factors behind their improvement in the EV. Also, they have shown the third-highest EV growth in the past two years (32%).
The social media numbers of Juventus are as follows:
Facebook - 32 million
Twitter - 7.5 million
Instagram - 9.5 million
Juve's total social media fan-following adds up to 48.9 million, making them the most followed Italian club in the world. With a 12% increase in their fan-following on the internet, the Italian champions have amassed 5.4 million new followers in contrast to the previous year.
Liverpool (€1.580b)
Liverpool recently finished runners-up in the UEFA Champions League 2017/18. However, the Merseysiders have fared pretty well in the financial department, overtaking the mighty Juventus in spite of a poor record on the pitch. A major part of their place on this list is down to the improved broadcasting rights in the Premier League.
With a value of €1.580 billion, the Reds are the eighth most valuable club in world football. They have shown an impressive increase of 19% in their Enterprise Value(EV). We will definitely witness an increase in the club's financial power when KPMG releases a new report next year, thanks to their exhilarating Champions League journey this season.
It is quite clearly visible that the club's failure in winning trophies has barred them from attaining a higher place on this list.
Liverpool's social media figures are as follows:
Facebook - 31 million
Twitter - 11.8 million
Instagram - 6.3 million
The total social media fan-following of Liverpool is 49.1 million. Like Juventus, they too have shown a 12% increase in the numbers of followers on the Internet, amassing 5,3 million unique followers this year.
Chelsea FC (€1.765b)
As mentioned before, KPMG has compiled this list on the basis of financial numbers notched in seasons 2015-16 and 2016-17. In spite of their absence in the Champions League last season, the Blues have fared well enough in terms of monetary gains.
According to KPMG's report, Chelsea are the seventh-most valuable club in the world with an estimated value of €1.765 billion. They have shown a 10% increase in their EV in contrast to the previous year.
In seasons 2015-16 and 2016-17, the Londoners managed to win only one title. They did cap off a disappointing 2017-18 campaign by clinching the FA Cup, but that hasn't guaranteed them a Champions League spot after a fifth-placed finish in the league this season. Undoubtedly, Roman Abrahamovic and co will experience a fall in the match-day revenues which will affect their value next year.
Following are Chelsea FC's followers on the social networking sites:
Facebook - 47.8 million
Twitter - 15.1 million
Instagram - 11.3 million
Chelsea's total fan-following of 74.2 million makes them the fourth-highest followed side on the social media. With a 7% increase in their fan-following on the Internet, they have accumulated 4.6 million new followers this year. Amongst the top 20 most followed players on the Internet, 15th-placed David Luiz's 52 million followers have played a significant part in increasing Chelsea's fan base around the world.
Arsenal (€2.102b)
In the past two seasons, Arsenal have won the FA Cup and the Community Shield. However, much like Chelsea, they too seem to have a thing for financial competitions with the best clubs in Europe.
Arsenal are sixth on the list of the most valuable clubs in football with a valuation of €2.102 billion. In contrast to the previous year, the Gunners have increased their EV by 7%.
Arsenal's absence in the Champions League in the for the second consecutive season in 2018-19 is bound to take a toll on their financial gains. However, the fans have been given new hopes after the club decided to replace Arsene Wenger with Unai Emery following the Frenchman's retirement.
Arsenal's social networking stats are as follows:
Facebook - 37.9 million
Twitter - 13.8 million
Instagram - 11 million
In total, Arsenal's Internet fan base adds up to 62.7 million. However, the absence of on-pitch success seems to have affected their ability to attract unique followers. Amongst the top 10 valuable clubs, the Gunners have notched the lowest number of unique followers (3.9 million), after increasing their followers by 7% in contrast to the last year.
Mesut Ozil is the only player who makes it into the top 20 most-followed players list, ranking seventh with a fan-following of 69.8 million. The German's combined social media figures on all three platforms are higher than that of Arsenal's entire Internet fan base.
Manchester City (€2.160b)
Premier League champions clinched a domestic double this season, displaying an electrifying style of play under manager Pep Guardiola. That certainly is an improvement in their success on the pitch, considering the fact that they managed to win only 1 trophy in the past 2 seasons.
The financial backing of Sheikh Mansour has been the most crucial reason behind their rise on the footballing stage. Manchester City have been valued at €2.160 billion in accordance with KPMG's report. In comparison to 2017, they have increased their EV by 9%.
The Citizens have recorded the second-highest EV growth over a time span of two years(33%). Also, having the third-highest valuable squad(€793m) has helped them extend their lead over Arsenal on the list.
Manchester City's social media statistics are as follows:
Facebook - 33.4 million
Twitter - 10.8 million
Instagram - 6.6 million
Manchester City's total fan base on the Internet is 50.8 million. The club's growth on social media is down to two factors: winning the Premier League in 2017-18 and merging their men's and women's Facebook pages, which added 1.5 million followers overnight.
They have shown the highest increase in the number of followers, accounting for 29% on all platforms in relation to the previous year. They have gained 11.5 million new followers since 2017. But in spite of showing a considerable increase in the popularity department, they still have a lot of room for improvement.
Bayern Munich (€2.552b)
Season 2017/18 has been a bitter-sweet campaign for German champions Bayern Munich. Following a disappointing start to the season, they were the top contenders for clinching a treble before being shown the doorway in the Champions League by Real Madrid. They could only salvage a league title in this term, followed by a disappointing DfB Pokal final loss to Eintracht Frankfurt.
Bayern Munich's value has added up to €2.552 billion. according to KPMG's five-metric formula. The Bavarians have increased their EV by 4% in comparison to 2017.
In seasons 2015-16 and 2016-17, Bayern won 2 league titles, a DfB Pokal cup and a DfB Pokal Supercup. However, their semi-final defeats in the Champions League in both the seasons has taken a heavy toll on their broadcasting revenues. However, the club is expecting to see a substantial increase in that department after the new domestic Bundesliga TV deal became effective in season 2017-18.
Bayern Munich's social media figures are as follows:
Facebook - 45.9 million
Twitter - 6.1 million
Instagram - 12.3 million
Bayern's total fan base on the Internet adds up to 64.3 million. The club has shown an increase of 9% in their fan-following, gaining 5.4 million unique followers in the process.
Their acquisition of James Rodriguez from Real Madrid on loan seems to have played a crucial part in increasing their fan base on the Internet. James Rodriguez is the only Bayern Munich player in the top 20 most-followed players on social media, ranking fourth with a fan-following of 85.3 million on all three platforms.
Barcelona (€2.783b)
Spanish giants Barcelona finished season 2017/18 on an impressive note by winning the league and the Copa Del Rey title. As good as they have performed on the pitch, the Catalans really need to step up financially.
Barcelona are valued at €2.783 billion; apart from being the third-most valuable football club, they are the second-most precious Spanish club in the world. In the past two seasons
The Catalan giants have increased their EV by just 1% in comparison to the previous year, maintaining their position and financial stability. However, not making a considerable increase in their EV also places them in danger of losing their spot to Bayern Munich who have inched closer to them this year, in terms of financial gains.
Following are Barcelona's social media statistics on the three main platforms:
Facebook - 103.2 million
Twitter - 52 million
Instagram - 56.1 million
La Blaugrana's total fan-following adds up to 211.3 million, making them the second most followed football club on the Internet. With an 8% increase in their followers, Barcelona have gained 15 million new followers this year.
Barcelona have Lionel Messi, Luis Suarez and Gerard Pique in the top 20 list of most-followed footballers on the social media. Also, the club has been benefited by the fan following of Andres Iniesta, a club legend who recently joined Vissel Kobe in Japan.
Real Madrid (€2.920b)
The best football team of the decade, period. Zinedine Zidane's men created history by beating Liverpool and lifting the UEFA Champions League trophy for the third time in a row. They have clinched five titles in the past two seasons, a haul that includes two Champions League trophies.
Real Madrid are valued at €2.920 billion; they are the second most-valued football club around the globe. But surprisingly, their financial gains seemed to have dwindled according to KPMG's five-metric model. They have registered a loss of 2% in their EV as compared to the previous year.
In spite of increasing their operating revenues by 8%, Real Madrid's EV has worsened because of experiencing a decrease in the model's key parameters. Their quadruple in season 2016-17 came at a heavy cost; Los Blancos saw an increase in their staff costs up to 61%. Also, having the highest payroll in the world that includes staff plus player wages (€400m) is a major factor in the decline of their EV.
As a result, they are one of the only six clubs amongst the Top 32 who have registered a downfall in their EV this year.
Real Madrid's social media statistics are as follows:
Facebook - 107.8 million
Twitter - 49.4 million
Instagram - 57.3 million
Real Madrid's total fan base of 214.5 million on social media makes them the most followed footballing institution on the Internet. They have increased their fan-following by 9%. They have gathered the highest number of unique followers (18.1 million), which is equal to the entire population of the Netherlands.
A major part of their fan base is down to the players; Real Madrid have six players on the list of the top 20 most-followed footballers on the list. The followers of Cristiano Ronaldo, Krim Benzema, Marcelo, Sergio Ramos and Toni Kroos account to nearly 600 million, which is amazingly half of India's population and three times more than the club's total fan base on all three platforms.
Manchester United (€3.255b)
Jose Mourinho's Manchester United have finished as the greatest financial power for the second consecutive year in KPMG's valuation of the most valuable football clubs. According to the company's five-metric model, the English club are valued at €3.255 billion.
The Red Devils have shown a 5% increase in their Enterprise Value(EV) in contrast to the previous year.
Manchester United's financial exploits are bound to come as a surprise to many. considering their comparatively shoddy on-pitch success with respect to Real Madrid. They clinched only three major titles (EFL Cup, FA Cup and the Europa League) in the seasons 2015-16 and 2016-17.
The Red Devils saw a slight decrease in the operating revenues in compared to their previous years. The devaluation of the British pound since the referendum on leaving European Union seems to have played a considerable part in this slump. Yet they have amassed the highest operating revenues amongst the top 10 clubs (€676m).
However, their performance in the profitability department has helped them in holding on to their spot. Manchester United have the second-best costs to revenues figures (45%) behind Tottenham behind Tottenham Hotspur.
Here are Manchester United's fan followers on the social media:
Facebook - 73.7 million
Twitter - 19.7 million
Instagram - 21.5 million
The Red Devils have a total fan base of 114.9 million on the Internet; they are the third most-followed football club in the world on social media. They have measured an 8% increase in their fan-following with 8.9 million new followers. Amongst the top 20 most-followed footballers, Paul Pogba ranks the 20th with a fan base of 33.7 million followers on the social media.
Manchester United might be the most valuable club in the football club, but that position is bound to put a certain pressure on the club in terms of winning trophies. In comparison to their monetary gains, the Manchester-based club is in a dire need of improving their quality as one of the best clubs in the world by winning as many trophies as possible.
