Business and Sport in Spain

More than just a game

According to consulting house Delloite the total revenues of the Primera Division football clubs were more than 1.5 billion EUR in the season 2008/2009. Regardless of the world economic crisis, this season marked a growth of 4%, and the revenue coming from football in Spain makes up 10% of the total revenue produced on the football market of the entire Europe


By ALEKSANDAR ILIĆ
Cooperation with the magazine REFLEJO and Serbian Economic Forum
Translation: MARIJA ERCEG


In the contemporary world, business and sport are becoming more and more inextricably linked. Unfortunately or fortunately, nowadays one cannot imagine excellent sport results without significant financial investment and vice versa - excellent sport results yield great profit. This is why nations today, deserve to be called "sporting nations", not only because of the talent but because of adequate sporting investments. Finally, as a result of talent, good work and investments, the sporting nations become wealthier.

When it comes to Europe, Spain is one of the most successful sporting nations. This country stands out in results made in team sports, but they do not lag behind in individual sports either. Spanish football national team is the current European champion and one of the biggest favorites for winning the World Football Cup. For years, Spanish football clubs have been achieving excellent results in international competitions. The basketball national team is the current European, World and Olympic vice-champion. The water polo players are officially the second in the World, and the handball national team is persistently among the best in this sport (bronze medal in the last Olympic games in Beijing).

Spanish sportsmen are among the best in individual sports as well. Rafael Nadal is the uncrowned king of the tennis courts and one of the best tennis players world has ever seen, and the rest of the Spaniards are at the top - David Fererr, Juan Carlos Ferrero, Fernando Verdasco and others. Not to forget the motosports - Fernando Alonso is the double world champion in Formula 1, and Carlos Sainz in rally.

Analysis of these results raises some questions. First of all, are these achievements the result of a well-designed policy or individual performances and what is the economic effect of this sporting success?

Financial effect of sport

Spanish success in team sports is certainly rooted in organization, which is obvious from the fact that the national leagues are well organized, the issue of ownership is settled (the majority of the clubs are privately owned, while Real Madrid, Barcelona and Athletic Bilbao have specific organizational structures), therefore it yields results and businessmen are interested in investing in the clubs. Consequently, the national leagues - the football league Primera Division, the basketball league ACB Liga and the handball league Liga ASOBAL (side by side with the German Bundesliga) are among the strongest in Europe if we take into consideration the success on the international scene, the number of spectators, the popularity of the competitions and the profit they make.

As it is so popular football is undoubtedly a number one sport and, therefore, the most lucrative. According to Delloite Consulting the total revenues of the Primera Divison football clubs were more than 1.5 billion EUR in the season 2008/2009. Regardless of the world economic crisis, this season marked a growth of 4%, and the revenue coming from football in Spain makes up 10% of the total revenue produced on the football market of the entire Europe. Larger profits make only England (2.3 billion EUR) and Germany (1.575 billion EUR).

In order to get the full picture of how much football influences the national wealth it is necessary to look at the worth of the clubs, what they own, and this primarily refers to the market value of the players. According to the data published on the specialized website Transfermarkt which deals with the market evaluations of football players, the total value of the players playing for the Spanish football teams is 2.49 billion EUR. This makes the Spanish league the second in the World, right behind the English Premier League (3.24 billion EUR) and in front of the Italian Serie A (2.47 billion EUR), the German Bundesliga (1.68 billion EUR) and the French Ligue 1 (1.44 billion EUR).

If we continue analyzing the national wealth as a result of sport activities, primarily football, we could analyze the value of the football players from individual countries. For this purpose we could take a look at the value of the players, currently competing at the World Cup in South Africa with their national teams.

Value of the national teams at the World Football Cup:

1 Spain 565
2 Brazil 515
3 France 450
4 England 440
5 Italy 400
6 Argentina 390
7 Portugal 340
8 Germany 305
9 The Netherlands 280
10 Serbia 185

Source: www.futebolfinance.com

We can see from the table that the Spanish team has the greatest value - approximately 600 million EUR, 50 million more than Brazil, and 115 million more than the third-placed France (their value is going to drop significantly after this championship because of the poor results). According to the gross domestic product (GDP), which reflects the economic activity in a country the total value of the national wealth is unknown) Spain is in a worse position than all the other countries in the list, except Argentina, Portugal and Serbia. This is why the contribution of the Spanish footballers to the national wealth is even greater.

In addition to football, similar calculations could be done for other team sports, firstly, basketball and handball. The best European (in handball even World) teams play in Spanish basketball and handball leagues, which all together contributes to the national growth and strengthening of the economy in this country.

Concentration of the sport wealth

One thing is certain - sport in Spain contributes to the increase of national wealth. However, without arguing this fact, we have to point out one important detail - the sport wealth in Spain is in the hands of a small number of people (clubs), smaller than in other developed countries in Europe. The entire Primera Division earns 1.5 billion EUR, half of which belongs to Real Madrid and Barcelona (approximately 400 million each), and they have left the sport and entered the economic sphere long time ago. These two teams make more income than the majority of companies in many countries.

Let's take a look at Real Madrid and its football section. This team has a rich history and it used to be a synonym for a sport giant. Today, this is more of a business group and, as some call it, "a money-making machine". Today, this is a club that can afford more than 200 million EUR for reinforcement during one transfer period. However, these investments certainly pay off. Christiano Ronaldo was bought for 94 million EUR (it set a record in transfer prices). In the first year 1.2 million shirts with his name was sold and the total revenue from selling shirts and other items with his face printed on them was more than 125 million EUR (part of this goes to the club, part to the footballer himself, and part to the company "Adidas"). Just by selling the shirts, it is expected that the club will cover the expenses of the transfer and his paycheck, and earn good money. The footballer has a contract until 2015 and if he were sold it would make extra profit for the club.

All of this indicates the fact that sport in Spain has acquired a new, economic dimension. This dimension is gaining ground, so a lot of people think that this is no longer sport but something more than just a game - a true business. However, one shouldn't forget that this business still breeds good sport results. Today, this is a rare formula of success.



(Published: 12.07.2010.)