Soccer's Most Valuable Teams: At $3.3 Billion, Real Madrid Knocks Manchester United From Top Spot

1. Real Madrid

Current Value: $3,300 mil.
Revenue 2011-12: $650 mil.
Operating Income 2011-12: $170 mil.

For the world’s most valuable soccer teams, success means turning victories on the pitch into dollars at the bank.

No team has done this as well as Real Madrid, which has usurped Manchester United’s long-held title as the most valuable soccer team in the world. This year marks the first time since Forbes began tracking the value of soccer teams in 2004 that Manchester United has not ranked first. It is not that the Red Devils have faltered. It is just that Los Merengues are simply bigger, more profitable and growing faster than Manchester United.

Real Madrid, which posted revenue of $650 million during the 2011-12 season, is worth $3.3 billion, more than any team in the world. Los Merengues generated operating income (earnings before interest, taxes, depreciation and amortization and player trading) of $134 million, more than any soccer team and second only to the NFL’s Dallas Cowboys ($227 million) among all sports teams.

Thanks to rich sponsorship deals that are underpinned by the team’s storied history of trophies–a record nine Champions League titles and 32 domestic championships–and star players that were or are global bands themselves–Raul Blanco, David Beckham, Ronaldo Lima, Cristiano Ronaldo–Real Madrid’s revenue has increased 62% over the past three years with an average operating margin of 28%. More cash is coming to Madrid: Dubai’s Emirates Airline is close to signing a long-term, $39 million-a-year shirt sponsorship deal with the team.

Manchester United, ranked second on our list with a $3.17 valuation, has been a great investment for Malcolm Glazer since the billionaire bought controlof the team in 2005 for $1.47 billion. Glazer sold shares of England’s most iconic soccer team–which has a record 19 Premiership titles and three Champions League trophies–to the public last August, and those who bought in, including legendary investor George Soros, have been richly rewarded. Most recently trading at $17, shares of the soccer team have outperformed the S&P 500 by better than tw0-to-one since the IPO.

Main reason: Manchester United has also been scoring with its powerful global brand. Just prior to its IPO the Red Devils signed a $559 million, seven-year shirt sponsorship deal with Chevrolet that will begin with the 2014-15 season. In April, Manchester United, sold the naming rights to its training ground as part of a sponsorship deal with insurance firm Aon for an estimated $230 million over eight years.

In hot pursuit of Real Madrid and Manchester United is Barcelona. Barca’s value doubled over the past year, the biggest increase of any top 20 team, to $2.6 billion. Barcelona’s revenue have increased 19% over the past three seasons, to $613 million in 2011-12.

Led by Lionel Messi, the sport’s most prolific scorer, Barcelona is on the verge of coming in first in La Liga this season and captured consecutive domestic titles from 2009 through 2011. It also won the Champions League in 2006, 2009 and 2011. The Spanish powerhouse has parlayed the stellar results into a $38 million-a-year kit deal with Nike and its first ever corporate shirt sponsorship with Qatar Airways, worth $45 million a year through the 2015-16 season.

The top 20 teams are worth an average of $968 million, an increase of 26% over last year. Forbes’ team values are enterprise values (equity plus debt) that are based on multiples of revenue that teams get from television, premium seating, media, licensing, merchandise and concessions. On average, the world’s 20 most valuable soccer teams posted operating income (earnings before interest, taxes, depreciation and amortization) of $42 million for the 2011-12 season, $3 million less than the previous year.

Real Madrid ($3.3 bil.), Manchester United ($3.17 bil), and Barcelona ($2.6 bil.), now command the top three spots among all teams in the world, followed by the New York Yankees ($2.30 bil.) and Dallas Cowboys ($2.1 bil.).

Overall, the Barclays Premier League is the richest in soccer as teams without the marketing cachet of Manchester United are getting much richer thanks to the league’s new television deals. Last year, the Premier League sold its live television broadcast rights to BSkyB and BT for a total of $4.7 billion beginning with the 2013-14 season, more than twice its current deal.

Also, NBC has secured the U.S. broadcast rights beginning next season for $250 million over three years, just under four times what Fox and ESPN currently pay for the rights. By the time all the broadcast deals are completed for the Premier League, total broadcast rights could top $6 billion (overseas rights are shared equally among all 20 Premier League teams while domestic revenue is allocated on a sliding scale based on league position and the number of television appearances).

We factored these new television deals into our valuations, which in part is why five of the top 10 spots on our list belong to English teams. Arsenal, valued at $1.33 billion, ranks fourth, Chelsea ranks seventh at $901 million, Manchester City, worth $689 million, landed in the ninth spot, and Liverpool, valued $651 million, ranks 10th.

New entry: Brazil’s Corinthians Paulista. Ranked 16 with a value of $358 million, the Corinthians are the first non-European team to ever qualify for our top 20 list. The team, which won the Brazilian championship in 2011 andcaptured the Club World Cup in 2012, has been very creative recently when it comes to capitalizing on its brand as well as the popularity of other sports.

In 2011, Corinthians launched the first Brazilian television channel dedicated to a sports team, TV Corinthians. The same year Timão made an unprecedented move by sponsoring Brazilian mixed martial artist Anderson Silva at a UFC event in Rio de Janeiro. Sponsors have taken notice: The Corinthians recently inked a $14 million-a-year shirt deal with Caixa Economica Federal. Hosting the FIFA World Cup next year will heap even more attention on Brazilian soccer.

Forbes.com