River Plate Relegation Heavily Damages TV and Sponsorship Revenue
June 28, 2011
River Plate, Argentina’s most successful soccer club, faces a major financial overhaul after their relegation from the top flight of Argentinian soccer left the club facing a possible 90% drop in broadcast revenues.
The Buenos Aires-based giants were relegated to the Primera B Nacional for the first time in its 110-year history after failing to overturn a two goal deficit against Belgrano in a play-off on Sunday. The match ended 1-1 and was abandoned with a minute left to play due to security fears as angry fans fans ripped up seats and threw them on the pitch.
Reports state that TV rights revenues could drop from the US$7.5m to US$850,000, an amount which is the equal share earned by clubs in the second tier. In addition to this, River’s sponsorship contracts, which were so lucrative with the club being in the top flight, are expected to fall by about 50%. These deals include a US$20m contract over six years with Adidas and a deal worth US$2.5m per year with Petrobras.
Advertising revenue is also expected to fall from just short of US$1m to just US$300,000 per season. These drops in revenue means River may have to sell many of it’s squad members to reduce the club’s wage bill and ease the financial burden of relegation, particularly as the club announced in November that it was in debt to the degree of US$53m, which is the biggest deficit of any Argentinian club.