What do we learn from football ‘rich lists’?

I've been on this topic before, since every year we're updated with a 'rich list' of European football clubs, and I often ask my students what this means. Everybody understands how financial success and success on the pitch are often (but not always) very closely linked, so it's a question worth asking.

A quick glance at a 'rich list' doesn't actually reveal the richest clubs, but rather the ones that generated the most income (or 'revenue') over the last year. Here are the most recent figures:

• 1. Real Madrid: 513m euros
• 2. Barcelona: 483m euros
• 3. Man Utd: 396m euros
• 4. Bayern Munich: 368m euros
• 5. Chelsea: 323m euros
• 6. Arsenal: 290m euros
• 7. Manchester City: 286m euros
• 8. AC Milan: 257m euros
• 9. Liverpool: 233m euros
• 10. Juventus: 195m euros

Source: Deloitte, 2011-12

But these figures don't express what people normally mean by 'rich'. That concept is more closely linked to wealth, which isn't about what you made last year, but your total stock of value - something which in business are referred to as assets. You'll have to dig a bit deeper to find data on that (let me know if you do!) since that would have to measure the value of players under contracts, stadia, ongoing sponsorship contracts and the intangible value of brands.

Perhaps the most glaring problem with rich lists is that they tell you very little about profits or losses, which is the crucial consideration for most 'normal' firms. Firms might report colossal revenues, but that doesn't tell you a great deal (except perhaps about fame, popularity and marketability) until you consider costs. Stated simply, using the figures from above, we don't actually know if Real Madrid made any profit at the end of the year. I don't have the data, but I do know for instance that club 13 on the rich list is north London's very own Tottenham Hotspur - who made an overall loss of over £4m last year.