The inspiring Swiss Ramble has been working this weekend on the achievements of Villareal which reveal a record of good financial management that other clubs could learn from.
Their European
achievement
To place their achievement in reaching Champions League
semi-finals into perspective, their €124m revenue is far below €164m required
to be in the top 30 of the Deloitte Money League. Bayern Munich, who they beat
in the quarter-finals, have five times as much with €611m.
Europe is
important to the club strategy, as seen in 2020/21, when the Swiss Ramble estimates they earned
€32m for winning the Europa League. Still a lot less than the Spanish
representatives in the Champions League received, e.g. Real Madrid got more
than three times as much with €111m.
They will earn big money from this season’s Champions
League. The Swiss Ramble’s model suggests around €78m, though is restricted for
two reasons: (a) nothing from first half of TV pool, as qualified via Europa
League; (b) low UEFA coefficient (based on last 10 years’ results).
Having only finished 7th in La Liga, they qualified for the
Champions League by winning the Europa League.
They were bought in 1997 by Spanish businessman Fernando Roig, who made
his fortune in ceramic tiles (plus a stake in a large supermarket chain).
However, unlike many others, this is not a story of an owner pumping in money
so that the club can buy its way to success.
Compared to the European elite, Villarreal have far fewer
financial resources, playing their home games in a stadium with a capacity of
only 23,500, though this would hold almost half of the city’s population of
just over 50,000.
Roig’s philosophy for Villarreal has been very: “Play good
football, invest in youngsters and owe nothing to anyone. We will only spend
what we generate.”
A positive profit
record
In 2020/21 Villarreal posted a rare pre-tax loss of €17.9m
(€14.2m after tax), despite club record revenue of €124m, up €38m (44%) from
€86m. This was mainly due to COVID,
which not only hit gate receipts, but also contributed to player sales profit
falling from €46m to €12m.
The 2020/21 loss was very much the exception to the rule, as
they strive to break-even, having posted profits in five of the last eight
years. They generated €16m pre-tax profit over this period, even after last
year’s €18m loss, which is pretty good in the football world.
Broadcasting and
commercial revenues
The €38m revenue
increase was due to broadcasting, which rose €38m (58%) from €67m to €105m, due
to Europa League success and games deferred from 2019/20 season. Commercial was
up 5% to €17m, while match day dropped €1.5m to €1.9m, as games played without
fans.
After many years of individual deals in Spain, La Liga have
introduced a collective broadcasting deal. This is based on 50% equal share;
25% performance over last five years and 25% popularity (1/3 for average match
day income, 2/3 for number of TV viewers). Gross income reduced by liabilities.
Even after the changes, the big two still receive by far the
highest TV income from La Liga’s TV deal. In 2020/21 Barcelona and Real Madrid
got around €150m, while Villarreal received less than half as much with €67m,
though up €4m compared to previous season.
Despite the
pandemic, Villarreal commercial income rose €0.7m (5%) from €16.1m to €16.8m.
This is 7th highest in Spain, but the top three clubs are out of sight
commercially: Real Madrid €314m, Barcelona €270m and Atletico Madrid €96m.
Comparison with La Liga rivals
Despite the
recent increase, Villarreal €74m revenue growth since 2014 is the lowest of all
the leading Spanish clubs with the exception of Valencia (only up €20m). The
other clubs are all up more than €100m with Atletico Madrid leading the way
with €169m growth.
However, Villarreal €124m revenue is now 5th highest in
Spain, having overtaken Valencia €108m. That said, they are still miles below
Real Madrid €653m, Barcelona €591m and Atletico Madrid €339m, while Sevilla
€171m are also a fair bit ahead of them.
Many clubs in La
Liga had worse financial results than Villarreal €14m post-tax loss, including
Atletico Madrid €112m, Sevilla €41m, Real Betis €37m, Valencia €31m and Athletic
Bilbao €25m, while Barcelona €481m deficit was in a league of its own.
COVID also
impacted player trading, as it depressed the transfer market. As a result, Villarreal
profit on player sales slumped from €46m to €12m, mainly Toko Ekambi to Lyon
and Unal to Getafe. This is far below
the likes of Real Madrid €106m, Valencia €49m and Atletico Madrid €38m.
The club’s business
model owes a lot to player trading, having made an impressive €192m in the last
8 years. The large €46m gain in 2020 included Pablo Fornals’ big money move to
West Ham. Club has a good record of developing Academy players, who they can
then sell for profit.
Wages
The wage bill increased by €12m (15%) from €83m to €95m,
mainly due to bonuses for winning the Europa League. Grown by €38m (68%) in the
last 5 years, but this is much less than Spanish rivals (e.g. Atleti €129m,
Barcelona €94m & Real Madrid €91m) except Valencia.
€95m wages are 7th highest in Spain, but very close to
Athletic Bilbao €99m and Valencia €97m. However, they are miles below Barcelona
€432m, Real Madrid €372m and Atletico Madrid €266m, while Sevilla €133m are
also a fair bit higher.
One consequence
of Villarreal good financial management is the high salary cap allowed by La
Liga’s regulations. In fact, their €159m for 2021/22 is the fourth highest in
Spain (up €51m in last 2 years), in stark contrast to Valencia €31m, and also
above Barcelona’s €98m.
Following the
revenue increase, Villarreal wages to turnover ratio decreased (improved) from
96% to 77%, though the impact of the pandemic meant that this was still quite
high compared to most years. This is mid-table
in La Liga, around the same level as Sevilla 78% and Barcelona 73%.
The 15,753 average attendance in 2019/20 (for games played
with fans) was firmly in the bottom half of La Liga table. Not only miles below
elite Spanish clubs, but also a lot less than others, like Real Betis 48,000,
Athletic Bilbao 41,000, Valencia 40,000 and Sevilla 37,000.
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