Chelsea and the Importance of a Stadium in the Twenty-First Century

The following has been edited and abbreviated for text. For more details and information, along with musical scoring and news clips, listen to the Football Today episode below.

Three years ago, there was an air of expectancy around Chelsea Football Club having fallen behind in the matchday revenue tables, they’d just been granted approval to build a new stadium on the Fulham Road plot and which Stamford Bridge is situated. Fast forward to the present and that planning agreement is set to expire imminently with no indication the club will implement it.

But elsewhere in the Premier League stadium rebuilds and extensions are happening with ever increasing frequency. What do Chelsea’s rivals know that Chelsea doesn’t?

Importance of Matchday Income

Broadcast revenue is agreed on centrally by the Premier League and UEFA so it is difficult to differentiate oneself from other top teams in this regard. Commercial deals are another area to generate significant revenue but this can be limited due a club’s reach and many clubs like Chelsea have maximized this as much as they can. However, matchday income is a revenue source you can more easily control and leverage to great affect.

According to Kieran Maguire (senior teacher at the University of Liverpool’s Management School, specialising in football finance) “If you take a look at the market at present, we have Manchester United with a capacity of 76,000, we have Liverpool at 54,000 aiming to go to 60,000, Spurs are at 62,000, West Ham at 60,000 aiming to go to 62,000, Arsenal are just over 60,000 and then Chelsea at 41,000.”

Now Manchester United generated £111 million last year from matchday income, Chelsea were at £66 million, so that they’re almost 50 million pounds behind. Spurs last year- mainly at Wembley- they generated £71 million, but you can add on £30 million pounds [for this season].

So in the environment in which we’re presently operating, Chelsea could easily find themselves at the start of each season, being 40 million pounds behind their peer group in terms of its ability as a club to generate matchday income, that’s quite a considerable shortfall.” – Kieran Maguire

Closing the Gap between Chelsea and Other Big Clubs

Since 2000, Arsenal, Liverpool, Manchester United, and Tottenham have all either built a new stadium or expanded their current stadiums. In the last year, there have been multiple reports of United wanting to further expand their stadium. There is now a stadium revenue race.

If you take a look at Chelsea’s peer group- we often talk about the phrase ‘marginal gains’- 19% of Spurs income comes from matchday, 19% of Arsenal, 19% of Manchester United, 18% of Liverpool, and 15% for Chelsea. So they are behind the curve. – Kieran Maguire

That is something which can be overcome, but it just makes the managers task that much more difficult. And as I said before, if you start off the season 40 or 50 million pounds behind other clubs, then that makes your job as a club that wants to qualify for the Champions League, wants to be winning trophies, that much more difficult.

Importance for Smaller Teams: Brighton vs Bournemouth

The importance of stadium revenue isn’t just vital to clubs with European ambitions. It’s crucial for smaller teams looking to get an marginal advantage of their relegation rivals. This is evident in Bournemouth and Brighton. Bournemouth’s Vitality Stadium holds 11,329 fans compared to Brighton’s Amex Stadium, which holds 30,750. What does that mean in financial terms.

The finance benefit between those two is that Bournemouth generate £5 million a year from Match Day and Brighton’s is £18 million.

Now that gives Brighton a 10% overall benefit in terms of income

So Bournemouth generate £4 out of every £100 from their stadium for Brighton it’s £13 [out of £100].

The Future of Stadiums: Data is the New Oil

But along with industries, data could the next way football clubs make money off of their customers in the 2020’s and beyond.

“What we are finding increasingly, is that the fans that come to the match, they’re starting to use club Wi-Fi. Well, every time you use club Wi-Fi, you’re giving away huge amounts of data to the Wi-Fi providers, especially the club’s themselves.”

I think what we will find is over the course of the next decade, that data becomes the new oil.

“It becomes one of the most valuable commodities on the planet. And the more people you’ve got in, the more data you can get out of them. And therefore, actually having a bigger stadium allows you to sell on that data or to mine that data to a greater extent than your peer group.”

It’s clear that for clubs- big or small- stadiums are the tremendous way to get a financial advantage on your domestic competition in the coming decade.