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Chelsea’s commercial revenue growth buoyed by status among Europe’s elite

LONDON, ENGLAND - NOVEMBER 09: Tammy Abraham of Chelsea celebrates after scoring his team's first goal with teammate Christian Pulisic during the Premier League match between Chelsea FC and Crystal Palace at Stamford Bridge on November 09, 2019 in London, United Kingdom. (Photo by Mike Hewitt/Getty Images)

Premier League football club Chelsea reported a commercial revenue increase of 8.5 per cent for the 2018-19 season – compensating for falls in broadcast and matchday income over the period.

Chelsea FC plc’s annual financial results for the year ended 30 June 2019 showed a commercial revenue rise of £14.5m (€17m/$20m) to £184.4m, from £169.9m the previous year. Broadcasting and matchday revenues decreased by £3.9m and £7.3m, respectively.

The shortfalls were primarily a result of the club’s participation in the second-tier Uefa Europa League as opposed to the top-tier Champions League in the previous season.

Commercial income grew following the signing of several sponsorships over the 12 months, including deals with Hyundai, Vitality Health, MSC Cruises, Unilever, Beats by Dre and Millennium & Copthorne Hotels. The sponsorship boost was supplemented by increased revenues from online merchandising sales.

The Hyundai agreement alone contributed about £5m to the total. The automotive manufacturer holds a four-year deal, from 2018-19 to 2021-22, that includes shirt sleeve rights to both the men’s and women’s teams.

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According to industry analysts, Chelsea’s second-tier sponsorship values have held up well in recent seasons because of the club’s title-winning status over the last 15 years.

Daniel Haddad, head of commercial strategy at the Octagon agency, told SportBusiness that Chelsea sits within a group alongside Liverpool, Manchester City and Arsenal, where the minimum point of entry for a ‘Global Partner’ deal with brand exposure assets tends to be around the £2m mark.

This, he said, is a function of “football’s commercial axiom” which dictates both value and the speed of [commercial] growth. He noted: “Eyeballs follow talent, talent follows money, money follows eyeballs.

“This ubiquitous rule explains why the [commercial] growth of Chelsea, Man City and PSG [Paris Saint-Germain] has been much quicker than, for example, the growth of Spurs.

“Our view is that there is an elite group of 10 European clubs and then a large gap to the second tier…while the picture is fluid, breaking into this elite group is harder, and more expensive, than ever.”

Overall, Chelsea’s turnover figure rose to £446.7m in the financial year (from £443.4m in the previous year).

The group nevertheless recorded a loss of £96.6m in the year, reflecting player acquisitions and related costs, as well as a lack of Champions League football together with costs associated with the change of first team management.

Despite the loss, the club continues to comply with Uefa’s break-even criteria under the Financial Fair Play regulations.