Football is often portrayed as purely lucrative in the news media. Studies and reports cover the wealth of Real Madrid or high salary of Neymar. But football goes way beyond these clubs and players. In reality, there are between 4,000 and 6,000 professional clubs across the globe, with over 113,000 professionals making their living playing the game (given FIFA’s 2006 Big Count data). And most clubs and players are making a lot less of a living than one might imagine.
The Figure shows estimated average revenues of clubs (in millions of $) in 82 different leagues, across 76 countries (sorry the type is so small but that's what you get with so many leagues on the same chart). The data sources for these estimates vary considerably, including media articles, reports from league or association bodies (like UEFA or national associations) and academic studies. The averages are means (calculated as the total revenue in a league divided by the number of clubs) which is positively biased in most cases because every league has some clubs that are much more wealthy than others. Even with these important caveats, one sees something interesting and important in the figure: VERY FEW CLUBS ARE REALLY THAT WEALTHY.
Actually, most clubs (and leagues) are quite poor. This is the case in Europe, where we have the best data, and is even worse when one considers the game outside of Europe. The average club in many countries’ top leagues is making less than $1 million a year, with some making less than $100,000 a year. It is interesting to note that some non-European leagues are at the top and some at the bottom (the green bars reflect this). It is also interesting to note that all tiers of English football are in the top half of the leagues shown here (see the red bars). Even 4th tier League 2 clubs in England make more revenue than most clubs in other top tier leagues. (This shows that England's system is not representative of the rest of the world...being much more wealthy than many others even at lower tiers).
The have nots are a bigger group than the haves. There are relatively few leagues where clubs make large revenues (note this does not refer to profits, which very few clubs register reliably). Most clubs struggle to make meaningful revenues. This leaves a financial structure that resembles a pyramid. The figure below shows this pyramid in Europe’s top leagues (reflecting the relative wealth of clubs competing in high level tournaments like the Europe and Champions Leagues). Note that 26% of these clubs earn less than Euro 500 000 a year; 50% of these cubs earn less than Euro 2.5 million per year. Only 4% earn over Euro 100 million a year.
This kind of structural concentration of revenue generates an inequality that some may see as inevitable and even reflective of the nature of sport—where the idea of a competitive pyramid is commonplace, at least in European football. Clubs are routinely found in different tiers and it makes sense that the top tiers are more wealthy than others.
But the economics of this inequality might prove less sustainable than many observers would like to admit. Any economic sector with such a large and impoverished base has cause for concern. Why does the word ‘impoverished’ fit here? Simply because the clubs at the base of football’s financial pyramid pay their players and staff below the minimum wage. The following figure shows this for European clubs, going beyond the top tiers and including all clubs considered mostly professional on the continent. These were identified for all 53 countries by examining club databases like Transfermarkt and the association and federation websites (which identify the number of clubs in different tiers in different countries). Wage data was obtained from public sources like UEFA’s annual reports on the top leagues, and from associations and—in some places—from clubs themselves. The numbers are estimates, of both the total number of clubs and their average wages.[1]
The data show that 41% of European clubs pay average wages below Euro 10,000. This is below minimum wage in most European countries. (It is not below the minimum wage in countries like Serbia and Bulgaria, but the clubs in these contexts are at the lower parts of the band shown and many of their players are receiving below minimum wage even in these contexts). The same data can be used to show how many players receive wages below Euro 10,000, and it is a staggering figure, exceeding 26,000.[2]
This is an estimate, but one that draws on conservative assumptions and is robust to various checks.[3] It suggests that about 200 players in about 10 top clubs are making more money than about 37,000 players in 1500 bottom European clubs.
The situation is even more unequal when one includes clubs outside of Europe. Data on clubs outside of Europe are very bad (especially in places like Africa and Latin America). What we do know from the FIFA Big Count in 2006 is that there are many clubs and professionals across the world earning far less than is being earned in Europe. The Big Count noted that there are were 25,000 professionals in South America (where FIFA’s Transfer Management System only covers 258 clubs). The estimated revenue in this region is only $2.5 billion. That means there are 41% of the players one finds in Europe (25,000 as against 60,000) earning only 11% of the revenue ($2.5 billion as compared with about $23 billion). If the same pyramid structure exists as in Europe, but with each player receiving a quarter of the wage (given the ratio of professionals to revenue), one would expect to find 40% of the players (10,000 professionals) receiving annual wages less than $3,000 (taking exchange considerations into account).
Professionals (thousands) |
Estimated Revenues ($ billion) 2013 |
|
Oceania |
0 |
0 |
Africa |
7 |
0.2 |
Asia |
11 |
2.2 |
North America and the Caribbean |
9 |
2.5 |
South America |
25 |
2.5 |
Europe |
60 |
22.6 |
Total |
113 |
30.05 |
Note: these are estimates that do not include all data from Confederations, Federations and other organizing bodies. This additional revenue would not significantly affect the analysis.
The situation in Africa is even more dire. Again, there are no good data on actual revenues and wages in Africa. But using the same logic as above (and the data in this table) one finds 11% of the number of players in Europe making less than 1% of the revenue in Europe. If the same pyramid structure exists as in Europe, but with professionals making 1/10 th of the money, one would expect to find about 3,200 footballers making less than $1,000 a year. 80% of the players (5,600) will be earning less than $10,000 a year in this scenario.
These numbers resonate well with other estimates out there. For instance, a Daily Mail study showed major differences between average wages in different global leagues a few years ago, pointing to gigantic inequalities in global football.[4] Building on these data, and incorporating other estimates, the graph here shows that a top English Premier League player will receive 35 times what the average top league player makes in Algeria; and about 70 times that of an average top league South African. The average top league Greek player is making about 1/16th what a top league player makes in England.
This kind of inequality is a hallmark of modern football. It is certainly the sector that houses Neymar and Real Madrid and other wealthy players and clubs. But they are the minority. The real financial story of this sector is of struggling clubs and players, many of which are at the poverty line or below. The real stragglers are in places one would expect—the poorer countries of Africa and Latin America (among others). One finds thousands playing the game here, but under dire conditions.
- Does this inequality matter?
- Is it just a product of the sport, or of the economics of development?
- Is this a pyramid scheme waiting to fall?
[1]In triangulating data from the UEFA database, associations, and Transfermarkt, one is left counting about 2600 clubs and 65,000 professional players in Europe. These clubs and players are active at different tiers or levels of the game in different countries. The numbers correlate to a degree with FIFA Transfer Management System data, which shows between 2000 and 2200 clubs in the region, and with FIFA Big Count data from 2006 (which showed 60,000 professionals in Europe). It is impossible to specify the degree of error in these data, but they are likely as legitimate as one is going to find currently.
[2] As in the prior note, the number of professionals counted here is about 65,000. This is in the range one would expect given 2006 FIFA Big Count data in 2006 (where 60,000 professionals were counted in the UEFA region).
[3] For instance, given these numbers one comes up with an aggregated wage bill for European clubs of between 12 and 14 million Euro. This is between 60 and 65% of the total revenues in European clubs, which was estimated separately using different data. It is reasonable to expect that this wage to revenue ratio is reliable.
[4] http://www.dailymail.co.uk/sport/football/article-2833020/Premier-League-wages-dwarf-Europe-flight-players-England-earning-average-2-3million-year.html