Brand Finance 2019 Report
November 18, 2019 Club Ranking
Overall Bayern performed well in all covered areas falling within the top 4 in each of the major metrics. Unsurprisingly the only consistent outperformers were the two giants from Spain.
In terms of overall Brand Value, Bayern came in 4th behind Real Madrid, Manchester United and Barcelona, unchanged from the prior year. However Bayern moved up one spot in the Strongest Brand ranking past Manchester United and just behind Real and Barcelona.
(Image: Brand Finance)
Looking at the historical trend in the chart above, it is easy to see the impact of the Champions League on the value of each clubs brand, with Manchester United being an outlier. Real, Barca and Bayern have all peaked around Champions League winning seasons. Club history, each club’s domestic league and the broadcasting deals have a massive impact as well. For example there is obviously a heavy dose of English sides in the top 10 while there are no Italian clubs.
Bayern for instance ranked first in 2013 and 2014 off the back of their treble winning season and Die Mannschaft’s success in the world cup. The Premier League sides seem to have benefited from the massive TV deal that went into place around 2016. PSG was irrelevant prior to their takeover by Nasser Al-Khelaifi but have steadily climbed.
The Stadium Venue performance statistic is an interesting one as well. Real Madrid had the best overall score followed by Dortmund and Bayern at 3. Dortmund had the best matchday experience ranking by a significant margin but Bayern finished top in the appeal to broadcasters category. Perhaps somewhat surprisingly, Bayern also finished ahead of BVB in match impact.
League Ranking
The clubs were not the only measured entities either. Brand Finance also took a look at each league. Naturally the Premier League was ranked first in Brand Value, by a significant margin. La Liga and the Bundesliga are neck and neck at 2 and 3. Serie A and Ligue 1 round out the top 5 at a considerable distance back.
(Image: Brand Finance)
They note that the Bundesliga is still the best supported league in terms of attendances but also stress how not just television but other forms of consumption have become increasingly important for the bigger clubs. Club engagement through social media and other internet resources are important for brand growth and potential revenue streams. One example given is that in China and India, more than 50% of viewers aged 18-24 watch their favorite teams via online streaming.
It is unclear just how well every team is doing in this area apart from a rudimentary breakdown of social media followers in which Bayern are 4th behind Real, Barca and Man. United again.
Big Club Bias?
Breaking down how Brand Finance formulates these calculations, leaves little doubt that the top clubs in the world will always have an advantage in these rankings. The Enterprise Value calculation for instance is something that Bayern will almost certainly excel at for years to come.
The components taken into account are: 1. League Perceptions, 2. Stadium Ownership, 3. Squad Value, 4. Brand Strength, 5 Global Reach of Fanbase, 6. Club Heritage and 7. Operating Margin.
While number 1 is not something they have a tremendous amount of control over, the Bundesliga will likely remain in the 2-3 ranking for the foreseeable future. On the other hand 2 through 7 are all areas they can control and, in general, areas in which they will continue to excel. As of their 2018 Financial Statements Bayern were operating with no significant debt due to paying off their loan on the Allianz. This lack of debt is extremely advantageous for them financially. As a result we can reasonably expect their operating margin to remain higher since they have one less fixed expense to worry about in future seasons.
(Image: Brand Finance)
Brand strength and global reach have also been priorities for Bayern over the last decade and the results have largely paid off. They have a strong presence in both the US and Asia due to their efforts to expand into those markets.
The other two factors are inherent to the big clubs in world football. The history of the big clubs in Europe are set at this point. We all know who these clubs are and it’s something that can’t be bought, no matter how much certain owners would like otherwise. Real Madrid, Barcelona, Bayern Munich, Manchester United, Liverpool, Juventus, Milan…these names ring when spoken in footballing circles.
This of course means that the top portion of this metric is unlikely to change significantly over the near term. It would take years of futility or incompetence to destroy the historical brands at the top of this list and even longer for the newer clubs to truly catch up.
What it means
Brand Finance has put together an interesting metric based on a not insignificant amount of data. In large part the results are fairly predictable as we walk through life and can see who the most popular teams are and thereby the biggest brands. There are however some potential surprises and this data could be used to see which clubs are on the rise or in decline and areas that could be improved upon.
Ultimately, for Bayern fans, it is an affirmation that the club is still one of the top 4-5 Brands in world football. It is also not unreasonable to surmise that this status is unlikely to change any time soon.
About Brand Finance
“Established in 1996, Brand Finance is the world’s leading independent brand valuation and strategy consultancy with the aim of ‘bridging the gap between marketing and finance’. Brand Finance has developed transparent and accessible brand evaluation and brand valuation methodologies grounded in marketing and investment practice. Brand Finance has been central to the standard setting for both the ISO 10668: Brand Valuation and ISO 20671: Brand Evaluation. They are the only brand valuation practice in the IVSC and have had their methodology accredited by Marketing Accountability Standards Board’s (MASB) MMAP.”
@Marc
Very good summary of a very important report.
IMO the brand finance report is the most important report our management is looking at, more than the KPMG and Deloitte reports.
Our brand value as the defined in every yearly report is the most important goal after sporting success.
It is interesting to note that the stadium factors in so importantly as well, a reason why we invest significantly every year in the AA.
There is not much we can do on our own to increase broadcasting revenues but the BuLi as a whole must work on it to increase its attractiveness to justify higher payment from Media.
But sadly we fall further behind Real in commercial revenues where we were leading for so long, mainly because our investors are not paying enough imo. Adidas are paying about 40-60 mio p.a. more to MUFC and Real!
Also we constantly loose ground in match day revenue where basically all english and Spanish clubs of the top10 are reeping in considerably more, mainly from lounges.
Also in social media we can still improve a lot compared to the other top3.
So many areas to improve which will cement our position in the top4 worlds football clubs despite the huge disadvantage in broadcasting deals.
The slow decline of MUFC should be a warning sign for us and a constant reminder how important it is to appoint the right manager to continue sporting success by pursuing attractive dominant football (Kovac and Anc were the wrong choices from day1); and to invest wisely into our squad ( to buy nearly 3 type identical OM like Goretzka Tolisso Sanches and spending nearly 100 mio is not wise).
Hainer but also Kahn are individuals who understand the importance of brand value.
KHR who is responsible for the brand value in the board will have not too much explaining to do when he hands over to Kahn.
Hainer with his huge network in the sport world will be able to support our management to improve the commercial revenue stream significantly.
So it’s a rosy outlook.
Thank you for your comments. I agree that brand value potentially offers a better insight into the clubs health than the yearly Financials. Of course it is also a difficult measure to gauge, as there is no definitive methodology to go by, which leaves some subjectivity. However, it appears Brand Finance has a well thought out process that takes into consideration many important aspects to every club and applies them consistently to every team.
I tend to agree that we likely have undervalued deals with with Adidas, Telekom…etc but think there is more to Real’s surge to the top than just these deals. They’ve had an incredible amount of success in the CL since 2014, not to mention their overall history. They also have an easier inroad to the vast Spanish speaking parts of the world and typically have a lot of the major stars, which increases the popularity of the club in general world wide. It would be an interesting study to see how much Ronaldo and Messi alone have increased the value of Real and Barca respectively over the last decade.
Bayern have a different approach to these clubs and because of that approach, and other factors, may never reach the heights of those clubs in terms of value, baring an unprecedented run of success in Europe. However, there is something to say for stability, and that to me is where Bayern excels. Their inclination to be loyal to their fans, players and even sponsors goes a long way in cementing their status. A large number of the supporters outside of Germany love the fact that Bayern has a family like approach and that they haven’t sold their soul in the name of profit. Of course they could make more money from game days and advertising, but at what expense? There are many pros and cons to the 50+1 but the match day experience and ability for people from all walks of life to afford tickets is by far the biggest advantage IMO.
As you rightly say, KHR and Uli both have nothing to explain given the growth of the club under their watch. Was every decision correct, of course not, but there is no denying the overall impact of their tenures. I’ll be interested to see how Hainer and Kahn run the club and especially if they can retain the Mia San Mia Bayern or if the club becomes more of a business.
In general though, I think you are correct, the outlook appears bright.