The UK’s Big Six football clubs could be missing out on £838m in annual revenue by undervaluing and underinvesting in relationships with their fans, according to a new report released today by business transformation consultancy The CLV Group.
Based on new analysis into the economic value of leading UK football clubs’ fanbases and the size of their opportunity to increase revenues by delivering better value to fans, the Fan Relationship Index (FRI) draws upon publicly-available revenue, social media and match attendance data as well as specially-commissioned surveys of football fans in the UK (YouGov), USA and Indonesia (Censuswide) to rank the UK’s top clubs.
Manchester United tops the league table of the UK’s Big Six football clubs (see Figure 1. below), sitting on a potential £216m untapped revenue (129% increase in Average Revenue per Fan) thanks largely to the size of its global footprint, coupled with loss of trust amongst its local fans as well as failure to engage meaningfully with global fans. While Arsenal is next on the table with a potential 124% increase in potential revenue (worth £125m), Liverpool has the second-highest total potential revenue opportunity at just under £148m.
Five of the Big Six (excluding Tottenham Hotspur) were found to have significant incremental opportunities of over £120m apiece within their global fanbases – more than double the current Champions League starting earnings of £50m.
Scoring own goals
This report comes as UK clubs attempt to recover from the recent fan-led backlash against the proposed European Super League (ESL). The CLV Group’s Fan Relationship Index can reveal that the ESL debacle has put the Big Six’s revenues at risk through alienation of fans (see Figure 2. below), with 37% of Bix Six fans saying it has reduced their trust in their club, and almost a quarter threatening to spend less on merchandise (23%) and match attendance (21%) as a result. According to the report’s findings, if the Big Six continues to alienate their core local fans in the UK they could take a 10% hit to their revenues – equating to £221 million in total.
While the ESL has been highlighted as a particular reputational disaster for UK clubs, the backlash was symptomatic of a wider issue, comments Neil Joyce, CEO and Co-Founder of The CLV Group: “Clubs have become over-reliant on a small number of revenue sources, such as media and sponsorship deals, and the Champions League – leading to fans feeling disenfranchised and exploited. This report is designed to help clubs to avoid future errors and identify new revenue streams that acknowledge the importance of keeping their most loyal fans happy and engaged.”
Understanding distinct fan groups
Identifying three distinct types of fan – ‘Fanatics,’ ‘Casuals’ and ‘Followers’ – and calculating the average revenue per fan for each fan segment, The CLV Group’s report outlines a best practice approach for clubs to drive revenue growth by understanding and delivering against the needs of their disparate fanbases.
According to the report, Fanatics (loyal fans who attend at least 10 games per season) contribute an average of 21-30% of current club revenue: a fanatical Manchester United fan spends 654 times more than an average fan does with the club, with Chelsea’s Fanatics not far behind. These are the fans whose trust clubs must win back in order to drive maximum value from the relationship. YouGov’s online survey found that UK ‘Fanatics’ care about how their club is run, with nearly a third (31%) saying they would value more insight into their club’s finances and 28% saying they’d like more dialogue with their club’s owner. Only 25% of Fanatics say they trust the information their club shares with them.
Conversely, ‘Follower’ fans who do not attend games (and are typically based outside of the UK) represent a significant opportunity for UK clubs, providing an average of £100m each in incremental revenue for the five biggest clubs through content-based services such as premium streaming, virtual matchday and eSports services. While Followers care much less about how their club is run, many still think it is too catered towards financial reward than for the fans.
According to The CLV Group’s calculations, the Big Six could double their current Champions League revenues (currently between £50m-£80m per year for the four clubs who participate) by creating better offerings for their global (non-UK) fans, who say they want to increase their spend with the UK clubs they support. In fact, The CLV Group found that if the Big Six could convert 10% of their global fans to spend an extra £1 per month, it would equal a total of over £600m in incremental direct revenue – £168m for Manchester United alone.
Clubs as entertainment brands
The Fan Relationship Index identifies clear opportunities for clubs to generate greater revenues than even those promised by involvement in the European Super League (c. £250m) by engaging with, and investing in, the products and services that fans actually want – as opposed to what has traditionally driven growth. For the UK’s Big Six, this means balancing growth in Follower fan reach and revenue with increased value and trust for Fanatics.
Joyce explains: “A football club’s most valuable asset is its fans. The time is now for clubs to recognise and look at the different types of relationships they have with their fans, as well as the innate sense of value and opportunity that loyalty and fan data can bring. They need to shift their approach beyond looking for media deals and commercial deals – the market is saturated – and think more like entertainment brands like Netflix. A lot of opportunity lies in content, especially when it comes to monetising global fanbases.”
In particular, content is an open goal for clubs with large international fanbases: in the US and Indonesia, two key growth markets for UK clubs, virtual matchday experiences (41% of US fans, 53% of Indonesian fans) and premium content and streaming services (31% of US fans, 52% of Indonesian fans) were flagged as key new services or areas in which they were prepared to spend incrementally more with their club.
“While only a fraction of the Global fanbase of these clubs will ever get to visit the home ground, let alone on a match day, clubs can still create special experiences and a sense of belonging for their global fanbases that drive engagement and revenues,” comments Joyce. “We can’t get every fan into Old Trafford, but we can certainly create a digital ecosystem owned by the club and the fanbase, which drives dialogue between club and fans and offers premium content with real meaningful value to fans – and minimal involvement of third parties. According to our data, the upfront investment required in taking control of content delivery will pay dividends to clubs with large international fanbases who take the initiative.”
On a broader global level, all types of fans are seeking more inclusion and communication with their club, with the most popular option being the ability to purchase a financial stake in their club such as shares (while 19% of UK fans expressed an interest, 26% of Indonesia fans and 30% of US fans are interested in this).
What’s the next step for the clubs in the Fan Relationship Index? “Football clubs should ask themselves three questions,” says Joyce. “How can I create a products and services that cut out middlemen and deliver what my fans really want? Do I have access to the data that enables me to truly understand my fans? And am I willing to take the financial risk associated with not strengthening my relationships with Fanatics and Followers?”
Specifically, clubs must prioritise strategies to gather deep, actionable data about their fanbases to enable them to make the right decisions. There are multiple approaches, comments Joyce, but that “ultimately, the benchmark for garnering actionable data is creating a value exchange with a fan via a membership account on the club’s private platform. This is both privacy compliant and gives back relevant value to fans in exchange for full, 100 per cent engagement, interest and transactional data, delivering the best approach for clubs looking to extract meaningful insight.”
Note: Real Madrid and Everton included to benchmark against the biggest-earning European club and a prominent non-Big Six UK club.