Real Madrid end United reign as the game's biggest earner

Real's income to the year ending 30 June 2005 jumped 17 per cent to €275.7m (£190m), but the most eye-catching figure is that 42 per cent of their income now comes from commercial revenue, a lot of that thanks to a boom in post-Beckham marketing.

Real's revenue from club merchandise, such as shirts, jumped 67 per cent in Beckham's first season alone, and climbed another 6.5 per cent in the year to June. Overall commercial income, which includes money from deals with the likes of Siemens, adidas and Pepsi, which have all grown in value with the "Beckham effect", now stands at around £80m a year.

Real also earned £48m (26 per cent of turnover) from match-day income (primarily ticket sales), £44m (24 per cent) from television, and £16m (eight per cent) from promotional activities such as lucrative overseas tours and friendlies, which have also become better earners because of Beckham.

United's last full-year figures showed that in the year ending 30 June 2004, their turnover was £169m, and, crucially, not on course to top the £190m that Real have earned in a like-for-like period to June this year.

And whereas the key indicators in Real's figures point to steady growth and sensible economics, United's did not. Real's income is forecast to jump again next year, to around £204m.

United's half-year results to 31 January 2005 came with a warning that a £14m decline in media revenue will harm the full-year data. And that was before the Glazer family took on debts that will need refinancing, partially from earnings.

And whereas Real's annual wage bill (£98m) now equates to 52 per cent of turnover, and is falling towards an expected ratio of 47 per cent next year, United's wage bill last year (£76.9m) is forecast not only to rise in actual terms, but to creep from around 45 per cent of turnover to more than 50 per cent.

It is quite likely, perhaps conveniently so for United, that it will never be possible to make a direct year-for-year comparison between Real's figures and United's. This is because of the Glazer family's takeover. When they arrived at Old Trafford, saddling the club with some £300m of immediate debt and more to come, they also changed United's accounting year, from August to July, to July to June.

Which means that when United's figures do emerge (and the Glazers are not obliged to do more than register them at Companies House some time between now and the end of April), they will be for only 11 months.

What is certain is that United will not have matched Real's stunning growth in commercial income as a percentage of turnover. Against Real's 42 per cent this year, United's figure last year was 27 per cent. United made 36 per cent of their money from match-day income and 37 per cent from media, mostly television.

Real's upturn in fortunes can largely be explained by the galactico strategy of their president, Florentino Perez, who came to power in 2000, since when Real's merchandising and commercial revenues have more than trebled on the back of signing the likes of Luis Figo, Zinedine Zidane, Ronaldo - and especially Beckham. Real may have spent £340m on buying players in that time, and some £540m in wages, but the investment is paying dividends.

The sale of the club's city centre training ground (for £326m) funded the initial spree. A cheaper out-of-town facility replaced it.

The logic behind Perez's plan was examined thoroughly in White Angels: Beckham, Real Madrid and the New Football, John Carlin's book about the Perez-era Real, which was written with insider access and Perez's full co-operation. Carlin describes the galactico theory as "Perez's riddle", or in other words, how the most expensive players in the world were actually the cheapest. "The reason is that they generate the greatest profits," Perez told him. "The best players are the most profitable players in every sense."

And this has been most true in the case of Beckham, bought from United in 2003 in a deal that would only ever cost Real a maximum of £22m, even if Real had won every trophy available while he played for them.

"Peanuts! They're asking peanuts," is how Real's director of marketing, Jose Angel Sanchez, memorably informed Perez of the price United were seeking for Beckham. Figo had cost £37m, Zidane had cost £47m and Ronaldo £29m, and here was Beckham, already an icon in lucrative Far East markets that Real wanted to exploit, being given away for a maximum of £22m.

Before the deal was done, Perez asked Sanchez: "So how much is Beckham worth to you?" Sanchez estimated the England captain could be worth €500m (£340m) of business. It was a no-brainer.

According to one source in Madrid yesterday: "Even now, there are still people walking around the club shaking their heads in disbelief that Beckham arrived for so little."

If one irony of the situation is not enough - Real leap-frogging United in the cash stakes on the back of a player United no longer wanted - then Perez added a second as he confirmed a continuing upturn in Real's fortunes with the release of positive yearly results on Sunday night.

"We want Real Madrid to remain a club that belongs to everyone," he said. "Real Madrid is not obsessed with economic results alone, but our economic stability will guarantee our freedom in the future."

In other words, while other clubs, either plc-owned or run as personal fiefdoms by profit-hungry businessmen, are motivated by the bottom line for themselves, Real, looking to remain truly independent, are actually outdoing them. And unlike United, under the Glazers, Real have no debt.

And they still have Beckham.

Top of table in the rich league

REAL MADRID

Annual income*: £190m

Biggest earner: Commercial income from merchandise and sponsorship, worth almost £80m a year (42 per cent of income). When Florentino Perez became president of the club in 2000, this figure was lower than 10 per cent of income.

Other major revenue streams: Match-day income (mainly tickets) of £48m (26 per cent of income); television income of £44m (24 per cent); and friendlies, tours and other promotions earning £16m (eight per cent).

Wages: £98m, currently 52 per cent of income, which is forecast to fall to 47 per cent of turnover next year.

MANCHESTER UTD

Annual income**: £169m

Biggest earner: Television income, which was by far the largest chunk of overall media income of £62.5m in the year (37 per cent of income). TV income forecast to fall £14m in the current year.

Other major revenue streams: Match-day income of £61.2m (36 per cent); commercial income of £45.3m (27 per cent).

Wages: £76.9m in the last full-year figures, equating to 45 per cent of income, which is expected to rise above 50 per cent in the next figures.

* denotes year to 30 June, 2005; ** denotes year to 31 July, 2004, but little or no growth expected in year to June 2005.