Valencia CF seeks to climb European football's revenue table
Valencia CF will fancy their chances against Manchester United on Tuesday, when the two teams face each other in the Champions League, Europe’s premier club football competition.
The English Premier League side have endured a poor start to the season, with pressure building on José Mourinho, the club’s renowned yet under-fire manager. But the Spanish La Liga team face a longer-term problem.
Manchester United is the world’s richest club in terms of revenues, thanks to domestic broadcasting contracts and international sponsorship deals. Valencia also wants to be one of Europe’s top clubs, but to be among the elite it needs to play regularly in the Champions League, where it can earn more than €50m through prize money and TV rights.
“I think the Champions League is fundamental,” said Anil Murthy, a former Singaporean diplomat who became Valencia’s president in 2017. “Valencia has 100 years of history. It’s always been a big European club. But if you look at the last ten years, the football industry has evolved very quickly, and it’s accelerating.
“If you look at the inflationary pressures [in acquiring and paying players] created by some clubs that have huge budgets, Valencia is not a club that can compete in this field. Valencia has to do something very different. But [it] has to be in the Champions League.”
In football, money matters. Stefan Szymanski, a sports industry academic at the University of Michigan, has shown that the best predictor of a team’s league placing is its wage bill.
Last week, Manchester United released results for the year to June 30, showing revenues of £590m. Valencia’s most recent accounts, relating to the 2016-17 season, show revenues of just €101.3m. Despite spending most of this on players, the Spanish club — unlike United — does not have the money to compete for Europe’s biggest stars.
It is a problem faced by others, such as AC Milan in Italy and Olympique de Marseille in France. Those clubs were also considered heavyweights on the pitch, but a turbulent few years, including failure to feature regularly in the Champions League, have created a financial chasm between them and the continent’s top teams.
In Valencia’s case, the club almost went bankrupt before being acquired by Peter Lim, a Singaporean billionaire, in 2014. Despite helping to reduce heavy debts and investing an estimated €200m of his personal fortune, Mr Lim has proved a divisive figure due to perceived instability at the club. Between 2015 and 2017, six head coaches were fired, with poor performances leading to protests by fans.
Last season represented a recovery. A fourth-place finish in La Liga led to a return to the Champions League for the first time in three seasons. But Valencia’s glory years — reaching the Champions League final in 2000 and 2001, and winning the Uefa Cup in 2004 — seem far away.
“There’s a strong correlation between budgets and performance, it’s absolutely right,” said Mr Murthy. “What we have to do is punch above our weight.”
He suggested Valencia would improve by investing in the academy and picking younger — and cheaper — players. Mr Murthy said the average age of the team last season was 24, typically younger than most elite teams.
Valencia also hopes to increase revenues in other ways. The team play at the imposing but crumbling Mestalla stadium. It began construction on a new stadium in the middle of the city in 2007, but halted construction two years later due to financing issues.
The club has hired Deloitte to oversee the sale of its current stadium and complete work on the new one — expected to cost around €150m — by the 2021-22 season. The aim is to increase Valencia’s annual matchday revenues of just €15m, compared with £109.8m at Manchester United.
Mr Murthy said continued appearances in the Champions League would also lift the club’s profile worldwide, making it able to extract more money from international sponsors. Its commercial revenues are just €16.8m, compared with £276.1m at Manchester United.
But success on the pitch is not guaranteed. In La Liga, Valencia faces three well-funded rivals: Barcelona, Real Madrid and Atlético Madrid, meaning it is likely to be playing for just one of four Champions League spots allocated to Spanish teams each season. The club is currently 14th in Spain’s top division, winning its first league match this season on Saturday.
All of this leaves Valencia in a precarious position — as Mr Murthy admitted the club needs to play in the prestigious continental tournament to maintain its playing budget and meet the ambition to compete for trophies.
Still, over 90 minutes on Tuesday night, Mr Murthy believes Valencia will be a match for Manchester United. “After [United’s recent losses], I think we can win,” he said. “The team that we have this year is able to take on anyone.”