How Major Clubs Balance Their Budgets

Key Revenue Sources and What's New

There are three main income streams for major clubs:

• Major clubs generate revenue from both domestic and UEFA/international broadcasting rights.
• Match-day income includes hospitality, stadium tours, tickets, and VIP tickets.
• Commercial income includes sponsorships, merchandising, licensing, retail, and international tours.

Real Madrid's income exceeded €1 billion in the 2023-24 season, totalling over €1,045.5 million. It "did it" with substantial increases in match-day income (the Bernabéu refurbishments played a big role) and solid commercial growth.

Manchester City earned around €837.8 million, while Paris Saint-Germain earned around €805.9 million. Global sponsorship arrangements and merchandising provide more income for the teams. However, keep in mind that each area's income share is fluctuating. Commercial income is increasingly important, particularly for the top ten teams.

Big Cost Centres and Financial Risks

Increased sales do not imply "easy profits". The large costs include:

• Wages and Salaries (Players + Staff)
• Player amortisation and transfer fees
• Operating expenses (stadium upkeep, travel, and training grounds).
• Debt servicing occurs when a team borrows money for a stadium or buys players.

For example, PSG spent a large portion of their personnel budget in 2023-24 (salaries and amortizations). While they received tremendous sales, they incurred a net loss of almost €60 million that year. 

Manchester City, on the other hand, managed to produce a net profit (about €86 million) despite their similarly large spending because of tighter control, diverse income streams, and effective cost management.

The second danger is excessive spending in relation to income. Many clubs have had to cut their "wage-to-revenue" ratio. If too much of the money is spent on salaries, there is little left over for investment (transfers, infrastructure, etc.).

Strategies Clubs Use to Maintain Good Financial Shape

The majority of clubs employ the following methods (or knacks, if you prefer). Some are basic, while others are more challenging.

Stadium Redevelopment and Non-Matchday Use

Stadium spending isn't just for show. If you renovate, you may charge extra for VIP tickets and hospitality, hold concerts or other events on non-match days, offer tours, and so on. Real Madrid's Bernabéu is a prime example: remodelling added additional VIP seats and improved facilities, increasing some of their match-day revenue.

Global Branding and Commercial Partnerships

Big sponsorships, merchandise, and licensing provide consistent cash sources. When a club is performing well or has a global reputation, it becomes easier to secure deals. Even if the form suffers, a large fan base and strong branding can absorb the impact. Deals with multinational partners (sportswear companies, technology, etc.) provide high-margin profits

Youth Academy & Player Trading

Owning players saves on transfer costs, while selling them generates profit. Good academies are long-term investments. Some teams bet (spend excessively), and the payoff is not always quick.

Cost Control

Cost control is achieved by controlling salaries, repaying transfers over multiple years, reducing loan costs, and being more prudent with operational expenses. These sorts of teams, like Manchester City, seem to be better at handling massive pay budgets while keeping other costs under wraps. However, PSG is often responsible for paying exorbitant salaries.

Financial Regulation/Fair Play/Profitability Regulations

Because of the hazards (clubs overspending and being bankrupt), most leagues/UEFA have restrictions stating that you cannot spend enormously more than you bring in. Healthy or almost balanced finances, no excessive borrowing, and so on: these keep them under control. And prudent budgeting also helps—if you budget for the Champions League but fail to reach it, the loss of money may be devastating.

Sponsorship and Revenue Streams

We recently discovered that, aside from traditional sponsorships, betting has a closer connection to team revenues than many fans realise. It is not without risk, but it may be a reliable source of income at times. In certain countries, teams have agreements with bookmakers (as official sponsors) or receive financial support from media programs linked to betting platforms.

Such agreements can include popular formats like sports betting or even live keno (Arabic: كينو مباشر), which help keep these partnerships profitable. These collaborations add another layer of complexity and opportunity for teams and organizers.

Real Outcomes: Profits, Losses, and What's the Difference

Some clubs profit, while others do not. The margin is often determined by whether revenue growth keeps up with increased expenditures.

• Real Madrid exceeded €1 billion in income in 2023-24, owing to match-day and commercial expansion. 
• Despite its large sales, PSG incurs incredibly expensive expenditures and continues to lose money.
• Non-elite clubs have additional challenges: losing out on European competition reduces TV revenue; smaller stadiums restrict match-day revenue; and a weaker brand limits sponsorship.

Thus, profit is not guaranteed. As income grows, it is anticipated that keeping expenditures under control (most notably salaries and amortisation) will be critical, particularly from less match-result-sensitive sources.

What Smaller Clubs Can Learn

Maybe you're thinking, "Okay, that's for large clubs—but what about smaller clubs?" Several lessons:

• Diversify your income: don't rely just on ticket sales or a single TV arrangement.
• Have a fantastic brand locally and globally (merch, community, social)
• Invest (wisely) in infrastructure—stadiums, training, and youth—to generate revenue in the future.
• Maintain financial prudence. Don't spend everything on favorable things; difficult times will come.
• Be savvy about relationships and what is legal/ethical in your industry.

Conclusion

Big football teams are like enormous ships; if a major engine (such as television money) fails, others must step in. Successful clubs do more than just seek trophies; they also establish strong business strategies. They enhance their revenue from match-day, commercial, and brand activities; effectively manage their major expenses such as wages, debt, and amortization; and remain vigilant against potential regulations and risks. It's complicated. Sometimes things become messy. But that's what keeps it fascinating.