Fans, followers and football club valuations

When The Athletic was sold to the New York Times for $550m the other day, the valuation prompted a few comparisons to other sports properties, specifically European football clubs. The same thing happened when MLS team Real Salt Lake (average attendance 15,000) was acquired for around $400m, with Newcastle (av. attendance 51,000) going for a similar amount.

These are obviously not like-for-like comparisons, but it is interesting to look at Manchester United, for example, who claim to have 1.1bn global fans and followers, with a current market valuation of $2.4bn (around $2 per ‘fan’).

Compare this with The Athletic’s 1.2m subscribers being valued at $458 per head (which itself seems very optimistic, but clearly the NYT sees lots of potential to grow that number and capture more value from them, synergies with their other brands etc).

So what’s going on?

I’m no finance expert, but it seems that either football clubs are terrible at monetising their fan base, and/or an awful lot of these claimed fans have a pretty tenuous relationship with the club (which almost never results in a parting with any cash) and/or a lot of these “fans” simply don’t exist.

The first part of that is probably true and is a result of things like the collective selling of media rights around the world and (in England at least) the risk of not always qualifying for the lucrative Champions League…hence the ESL project.

For the second and third parts, we can dig a little deeper into those fan/follower numbers.

I think that 1.1bn number for Man Utd is quite an exaggeration. According to Global Web Index data, 371m people aged 16-64 in the 46 most developed markets have some interest in the club (behind Real Madrid, Barca and Liverpool). Even at 371m fans, the market only values Man Utd at $6.50 per fan.

Of the 371m who have some level of interest in Man Utd, 132m support them as their main club, 149 as their secondary club and 91m just have “an interest” in them.

In the UK, there are 3.2m who support Man Utd as their main club. This is what we might call the traditional fan base, although there will obviously be a smaller, core set of fans that actually go to most of the games. Based on just that number, the club’s valuation is suddenly $750 per fan, which is a lot more like it. In total, just 6.1m of Man Utd’s 371m followers are in the UK (1.6%).

So 65% of the club’s global “fans and followers” either have another, main, club they support, or just have a fairly passive interest. The challenge is clearly in making money from this fairly light-touch relationship. Looking at where these people are based gives a sense of why this is difficult.

55% of Man Utd’s 371m fans and followers are based in India, China, Indonesia and Brazil. Big, fast growing economies with huge populations, but not necessarily with huge spending power. In fact, 92% of Man Utd’s followers are based outside Europe.

By the way, these big clubs all have a fairly similar distribution of global followers, although for obvious reasons the two Spanish clubs are more popular in Central and South America.

These clubs will look enviously at not just The Athletic’s valuation, but also those of the big social media platforms. As pointed out in the excellent Unofficial Partner newsletter a while back, TikTok has 689m users (arguably a similar number as Man Utd followers) with its parent company apparently valued at over $350bn.

The reality of course is that football clubs aren’t set up to be the cash machines that a social media platform can be, but this gap in revenue per “user” and valuation explains a lot about where big football seems to be heading.

As the ESL fiasco showed, these attempts to monetise the global follower can lead to serious tension with the core fan, who see “their” club being taken further and further away from its traditional role as a cherished community asset.

The problem is, once you have things like football clubs being listed on the markets, or owned by ambitious VCs and the like, that need for growth is never going to go away, and it can only realistically come from the global fanbase.

Clearly there are limitations in how much value a club can extract through sponsorship deals, media rights and pre-season tours. Selling stuff direct to these fans has to be the way to do it, so the options are: merchandise (but counterfeiting), direct TV/content subscription (but a lot of these followers aren’t interested enough to pay for that and can’t afford it), monetising social followers (but most of the value goes to the platforms) and then you’re into things like Fan Tokens and NFTs…You can see why a lot of clubs are rapidly trying to build up first party data on their followers, to give them a fighting chance of selling something to them.

No easy answers here, but while looking for ways to extract value from their casual followers, these big clubs definitely need to tread carefully and recognise that their core supporters are the most valuable, in more ways than one. The ESL showed the power of those fans to push back (but for how long..?) and lockdown showed the importance of fans in the ground in creating the atmosphere that goes a long way towards making “the product” worth watching around the world.

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