Football Management

Commentary on the management of over 160 English football clubs by Dr John Beech, winner of the FSF Writer of the Year Award 2009/10 Twitter: @JohnBeech Curator of Scoop.it! Football Finance

Archive for the ‘Merchandising’ Category

So, is it really ‘goodbye Bluebirds, hello Red Dragons’?

Posted by John Beech on June 7, 2012

Like the old joke about anti-social behaviour in a lift, what is happening at Cardiff City is just plain wrong at so many levels.

The root causes of the problem lie in Sam Hammam’s decision to build a new stadium, the resulting deep financial difficulty that Cardiff got themselves into with Langston and the Damoclean debt hanging over the club as a result, and Peter Ridsdale’s decision to involve the club in what was, from the first, described as a ‘strategic marketing alliance’ with Malaysian investors (1).  As he said at the time, “It will be a long-term alliance.  It will include youth development, it will include the opportunity to explore the whole fan base.  It will certainly include sponsorship.  We are already talking to them about shirt sponsorship and stadium naming rights without any definite conclusions at this stage.  We are also talking about their assistance in trying to put this club on the sort of financial footing that we would have liked to dream of when I first arrived at this football club.

Needless to say, there was no public talk of the shirt sponsorship involving what has just been announced.

Indeed, as recently as 10 May Dato Chan Tien Ghee said, in an open letter to fans, wrote:

The new club crest and home colours which were being discussed were intended to demonstrate the symbolic fusion of Welsh and Asian cultures through the use of the colour red and the predominant featuring of a historical Welsh dragon under the Cardiff City FC name. This would have been a springboard for the successful commercialisation and promotion of the club and its brand, driving international revenues and allowing us to fund transfers and success locally, thereby giving the club the best chance of competing at the higher reaches of competition.

This was not meant as a slight in any way shape or form on the club’s traditions or history which we recognise are the lifeblood of any club. It was intended as a positive change to allow us to adapt and embrace the future. Notwithstanding a number of rumours there were no further plans to turn the stadium red or make other radical changes. ” (2)

His use of “were being discussed” and “would have been” must have suggested to many, including myself, that the rebranding of club with a change in shirt colour and change in logo were now a dead duck, a not unreasonable understanding as he continued In the light of the vociferous opposition by a number of the fans to the proposals being considered as expressed directly to our local management and through various media and other outlets, we will not proceed with the proposed change of colour and logo and the team will continue to play in blue at home for the next season with the current badge.

He kept his word for less than a month.

In his open letter he also alluded to the current instability in the club’s business model thus: “It is clear to all concerned that the club simply cannot continue to function and exist in its current state, effectively losing large amounts of money each month, while acquiring more and more debt.”  No one can reasonably disagree with view.

In the debate that has broken out in the last couple of days since the announcement of the decision to do a U-turn (3), or to use the language you might expect from someone engaged in a ‘strategic marketing alliance’ – “Following a comprehensive review of wider supporter feedback via email, letters, media coverage and polls run via the official Supporters Club and Media Wales and as a consequence of the above commitment, Cardiff City Football Club will also reactivate rebranding proposals with a view to exploiting and maximising its brand and commercial revenues in international markets” – attitudes seem to have become polarised into two camps.  On the one hand, what is happening is a Faustian pact which involves selling the soul of the club.  On the other, the club’s survival depends on a business plan that will result in untold wealth pouring in from new fans in the Far East.  As is so often the case, it is difficult to engage in debate regarding the relative merits of these two views because they are based on different meanings of the word ‘club’ (4).  The present attempt at debate assumes that these are two mutually exclusive and opposed views, and that there are no other possibilities, no room for overlap, and no possibility of compromise.  That certainly seems to be the view of the Malaysian investors.  Which raises a number of issues in itself.

It suggests that the future of the club hangs on the fickleness of future supporters in the Far East who a) would support a club in a red shirt but not one in a blue shirt, and that b) providing the club’s shirt is red and has a dragon on it they will support in sufficient numbers to pay off the rest of the ‘Langston debt’, reinvigorate the club’s fortunes (in both senses of the word), and allow the investors to see a return on their investment.  As to a), I think this is simplistic and over-stated.  As to b), I can understand the Malaysian investors looking to the marketing success of Manchester United, but they might better have a word with Balram Chainrai, or those behind the K&K Shonan Management Corporation (5), erstwhile ‘saviours’ of Plymouth Argyle.

What is happening at Cardiff is little short of seeing owners who view a club as a commodity which can have some brand value spray-painted onto it to make it stand out from the rest.  A simple question to Dato Chan Tien Ghee – if the key to your success lies in owning a red club, why didn’t you buy a red one?  If the answer is simply ‘Well, Peter hadn’t got a red one in his briefcase to show us’, God preserve us.

Others have tried this drastic rebranding, with some commercial success.  An obvious example is that of SV Austria Salzburg, which Red Bull bought and rebranded as FC Red Bull Salzburg in 2005, complete with change in club colours and logo.  The new club has enjoyed considerable success since the takeover, but the old club had also, and that is where the comparison begins to break down.  Red Bull bought an already successful club and turned it into an even more successful one.  But in doing so they alienated fans to such an extent they started a new club, which they called SV Austria Salzburg, and which has already climbed, Wimbledon and FC United of Manchester style, from the seventh tier of the Austrian football pyramid to the third tier.

I’ll leave my final thought to the SV Austria Salzburg fans who are reported as having raised this banner in the past few days.

Posted in Cashflow, Debts, Fans, Investors, Marketing, Merchandising, Ownership, Stadium, Strategy | Tagged: , , , , , , , , | 5 Comments »

The battle of football’s ‘global brands’ – in Morocco

Posted by John Beech on August 31, 2011

Last year I blogged on the case of merchandising in Kenya, noting that while clubs such as Arsenal undoubtedly had a presence there, there was little sign of any commercial activity which they were benefiting from.  This summer’s trip to Morocco revealed a significantly different situation.

The overall impression of the top European clubs’ ‘presence’ is summed up in this graffito from Agadir:

And not necessarily in that order!  What of course was not clear was whether the author was a Moroccan or a Spanish tourist.  One suspects naturally the former as presumably a Spanish tourist is unlikely to have promoted both teams.

Certainly the sale of shirts and other merchandising was aimed at both residents and tourists.

[You can click on each of the images for an enlargement;
these four photos are from the souk in Marrakesh]

Observation would suggest that these items are largely aimed at tourists.  For Moroccans there was really only one shirt of choice – a Barca shirt, with in particular a skew towards Lionel Messi, and indeed all items Barca, official or otherwise.

Moroccan national team shirts were popular (but significantly less so than Barcelona shirts).  Although I spotted a couple of Arsenal shirts, and a single Rooney Manchester United shirt, the English Premier League was notable by its near absence.  Which raises the interesting question of ‘why?’.

Sadly I was unable to obtain a Moroccan equivalent of the Radio Times, but it seems likely that Moroccans have better access to La Liga matches than to Premier League ones.  It strikes me that Morocco is now a lost cause in the Premier League’s attempts at global merchandising hegemony.  Could it be that pushing up the price of broadcasting rights to their perceived maximum is actually going to prevent any Premier League clubs becoming truly ‘global brands’?  Once La Liga, Serie A or the Bundesliga has established itself as the league of choice in a particular country, I suspect it will be very hard to supplant.

And finally a promised mention of someone I met – Ken, a Welshman who lives in North London and is more than willing to spread the word:

Posted in Broadcasting rights, Merchandising, Sponsorship | Tagged: , , | 3 Comments »

Shares, not shirts!

Posted by John Beech on August 29, 2011

A couple of postings back (see Chester revisited) I threatened some more thoughts on my revisiting the Report of the Committee on Football, aka The Chester Report, published in 1968.  This is the first of two, and focuses on how the funding of clubs by fans has changed in the past 40+ years.

Today clubs have three main revenue streams – broadcasting rights (effectively non-existent in the sixties), commercial revenues through sponsorship (banned in the sixties, in spite of Jimmy Hill’s attempts to get the Talbot logo onto Coventry City’s shirts) and merchandising (then as unimaginable as being allowed to buy a School First Team or Prefect’s tie if you weren’t entitled to it – shirts were only fit to grace the backs of players), and direct revenues through ticketing, and to a lesser extent matchday programmes.  Among the direct revenues in those days were donations from supporters clubs – a to-a-large-extent, although certainly not entirely, forgotten form of fans financing clubs.

Chester was able to write back then:

The financial position of a club is determined by several factors: gate receipts in relation to operating expenses (players’ wages, administration etc.); contributions from supporters clubs, sweepstakes etc.; transfer fees; and distributions from the Football League and the Football Association.

The order in which the factors are listed is interesting, and to some extent implies their significance.  Under the heading ‘Miscellaneous Income (including Supporters’ Club contribution‘, the Chester Report states (and it’s worth quoting the full text):

Most clubs obtain a good deal of money from the operation of sweepstakes, bingo, raffles, and a variety of “gambling” devices [sic]. These are sometimes run by the club or a body directly under its control, but more often they are run by the Supporters’ club.  From the published accounts (which by no means tell the full story) income of this kind totalled £4¼ million and provided over 90 per cent of all additional funds to League clubs in 1963-1966.  Its significance varied in different leagues.  It was least important, absolutely and relatively, in the First Division.  In the Third Division, however, it compensated for some 80 per cent of gross operating deficits in 1963-1966 and for roughly two thirds of such deficits in the Fourth Division.  Indeed these two lower divisions, where team and administrative expenses and wages alone exceed total gate receipts, could not have been sustained without money from this source.  The total in the Third and Fourth Divisions during these three seasons alone was £2¼ million as against gate receipts of some £5 million.  In other words, Supporters’ clubs, bingo etc. contributed in the ratio of nearly £1 to every £2 taken at the gate.  In addition such clubs may make contributions to the well-being of their football clubs which do not appear in the accounts, e.g. the improving of terracing and ground facilities.

The importance of Supporters’ clubs for the financial survival of the lower division clubs , quite apart from their social role in canalising the deep attachment which many supporters feel for their local clubs, cannot be exaggerated.  It is most disturbing therefore, that these contributions were on a slightly declining trend in Divisions 2, 3 and 4 during 1963-66.  Should this trend ever become more pronounced, the financial viability of many of the lower clubs would be in serious doubt.

(To allow for inflation and look at these figures by today’s standards in terms of changes in average earnings, 1968 figures should be multiplied by a little over 25.)

The importance of donations from Supporters’ Clubs is echoed in another report from the same era.  The Political and Economic Planning (PEP) report English Professional Football of June 1966 notes: “Probably only four or five First Division clubs depend on [donations from Supporters Clubs] to a marked degree, yet in the lower divisions many clubs would be unable to exist unless these funds were forthcoming.  During 1964-5 in at least five League clubs, supporters’ donations represented some 60 per cent of the parent club’s total income.”  I find that staggering, especially when viewed from today’s perspective.  Unfortunately the report does not name the five clubs.

There are of course, especially in lower Leagues, some clubs today where the income directly from fans is a key element in the club’s budget.  What is different from the sixties though is that fans would not be prepared to simply subsidise a club owned by a ‘benefactor’ (or maybe in some cases they would and do) without some say in how the club was run.

Direct financial support of a club by a fan today includes the purchasing of endless variants of shirts.  Does it actually matter if this revenue stream has replaced donations through a Supporters’ Club?  I would argue very strongly that it does.  At least if the donation was through a Supporters’ Club, fans had a strong voice, if no significant power.  By seeing income shift from Supporter’s Club donations to the sale of shirts, the fans’ voice has been effectively individualised and thus virtually silenced.  Well-intentioned though recent boycotts of merchandising have been, they have had relatively little impact on club boards.

To regain a voice, and gain a say in how their club is run, fans need to gain stakeholder power through share ownership.  The next time you contemplate spending £40 on the new alternative away shirt, or for some reason feel embarrassed by wearing a shirt with last year’s sponsor’s logo (personally I’m embarassed at wearing any sponsor’s logo – remember, I’m a Pompey fan, and not so long ago we were, for some inexplicable reason, sponsored by Ty, the manufacturer of Beanie Babies), consider the option of instead donating £40 to your Supporters’ Trust war-chest!

Posted in Cashflow, History, Merchandising, Ownership, Trusts | Tagged: , , , , | 3 Comments »

5 ‘Big European Leagues’?

Posted by John Beech on June 29, 2011

I’m not convinced.  Below is a photo of a window display in a sports shop in Limoges, France, that I took on Saturday.  You can click on the image to enlarge it and spot the three clubs featured.

It’s hard to imagine an English, German, Italian or Spanish shop giving such prominence to any club other than their own country’s.

Posted in Merchandising | Tagged: | 2 Comments »

A day of reckoning

Posted by John Beech on May 23, 2011

I managed to follow the great play-off between AFC Wimbledon (to whom, many congratulations) and Luton Town (to whom, commiserations) at least live online.  Football at its most exciting.  I wonder if Andy Burnham chose quite the right words though when he tweeted “Wimbledon back in Football League. Brilliant. A great victory for all football supporters over the money men. Well done to all at AFC.”  I’m sure he wasn’t referring to Luton as ‘the money men‘, although his comment would have been entirely appropriate if Wimbledon had beaten Crawley Town.

Yesterday, with the final day of Premier League games, unfortunately found me in the Tirol in a hotel room, arriving and logging on just after the games had started.  Heady stuff, and probably the most exciting afternoon in the PL all season.  As Alan Hansen was moved to write (1), “The big winner has been the Premier League itself, because this season has shown it to be the most exciting of the lot. ”  I’m not sure that I would enirely agree with his argument.

It struck me, particularly as I was feeling somewhat removed from the action, that it was distinctly odd that all the excitement was over who would or wouldn’t be relegated.  Aston Villa v. Liverpool, Everton v. Chelsea, and Fulham v. Arsenal were attracting very little attention from the twitterati.  Is this the grand scheme of things that the greedy breakaway Chairman of the old First Division envisioned some twenty years ago?  I came to the conclusion that in fact, yes, it was, had they bothered to think their plans through.  To me it is yet another symptom of what is wrong with the governance of English football.  Who is or isn’t relegated is clearly an important part of the general excitment of football, but it surely shoudn’t be the major focus.

The sacking of Ancelotti (2) because “this season’s performances have fallen short of expectations and the club feels the time is right to make this change ahead of next season’s preparations” to me provides yet more evidence of just how dysfunctional the Premier League has become.

Relegation from the Premier League undoubtedly puts serious financial pressure on a club.  When the drop in broadcasting revenues is netted off against the parachute payment, one is looking at a drop of £30m-£25m in revenues.  To this must be added a drop in matchday revenues (reduced attendance and lowered ticket prices) and a drop in merchandising sales, although these will vary from club to club, depending on the loyalty of their fans, in particular how large the core of ’till I die’ fans is.  Clubs may face a contractual drop in sponsorship fees, and may or may not have had the wisdom to include relegation clauses in their players’ contracts.  In other words, any club relegated faces a financial problem, but some may face significantly harder problems than those who had planned for the eventuality.  Clubs will also be in different states of financial health to start with.

Last week I was asked by BBC West Midlands to review the prospects for Wolves and Birmingham City should they be relegated.  On virtually every financial measure Wolves looked far more resilient to facing the drop than Birmingham City.  West Ham will undoubtedly face serious difficulties too, and only Blackppol look reasonably equipped to face the drop.

The Football League season is not quite finished, but further down the pyramid things are clearer with respect to next season.  AFC Wimbledon and Crawley Town are joining the Football league, the epitome of fan ownership and ‘benefactor’-induced financial doping respectively.  At the other end of the Conference National, it’s goodbye to Southport, Altincham (whose luck in benefitting from other clubs’ financial problems finally ran out, Eastbourne Borough, and Histon.  I’m sorry to see Eastbourne Borough go down as they were the most senior English club which is a Community Interest Company (CIC).  As an interesting aside, the Scottish Premier League may well have a CIC as a menber in the coming season – St Mirren (3).  This is a case that is well worth following, as the current owners are seeking to sell the club in a way that was  “making sure it remained sustainable and debt-free” (4).

Lower down the pyramid, the upcoming movements are plotted here.  Good to see resurrection clubs AFC Telford and Farsely on the way up.  It’s interesting to note that Ilkeston are listed as ‘reinstated’, good news for their fans following their resurrection (5), but I wonder what, for example, King’s Lynn fans or Grays Athletic fans will make of the reinstatement decision.

Finally I turn to a football story that is relevant to me in my immediate circumstances, but which does not seem to have well covered by the English-speaking  media, although due credit to Yahoo! Sport (6) for being an exception.  The story quite simply is that a major derby match between Rapid Vienna and Austria Vienna was abandoned after 26 minutes following a major pitch invasion – see here and  here.  Disturbing images that we hope we will not see moving further northwards and westwards.  After thirty minutes of disruption, the police felt unable to guarantee the safety of the players in a resumed match.  We seem to have moved onward from such dark days in England, and it was good to note the Birmingham City fans staying on at White Hart Lane to show what they had in common with Spurs fans (7).

Mind you, I suspect that “Thursday night, Channel Five” is not really going to catch on on the terraces.

Posted in Broadcasting rights, Costs, Economic impact, Fans, Football Conference, Governance, Merchandising, Premier League, Promotion, Pyramid movement, Relegation, Revenues, Sponsorship | Tagged: , , , , , , , , , , , , | 2 Comments »

The scarf your mum knitted and competitive balance

Posted by John Beech on February 22, 2011

I haven’t been enjoying lunch lately.  Nothing to do with the food in the university canteen; it’s my daily read of The Guardian I blame.  That Matt Scott in particular had me choking today (1) over my vegetarian shepherds pie, although the oxymoron itself hadn’t put me in the best of moods.  I was so bothered that I’ve created a new tag (‘financial doping’) as a result, and will apply it retrospectively as time permits.

To be fair, Matt is an excellent writer, and its was the implications of what he wrote that vexed me, rather than the content per se.  His lead story was about a new Sport+Markt report on European Football Merchandising (2), a snip, I would imagine at 5,831 euros (no, I kid you not, such is the price of valuable market research in the football sector these days).

Matt reported:

The key finding of the European Football Merchandising Report, a survey of 182 clubs and 10,000 fans, was that United’s global revenues (excluding television income) have fallen by 10% in 12 months. The report’s author, Dr Peter Rohlmann, told Digger this was attributable to the “green-and-gold” campaign against the club’s owners.

“Our data show the club has lost retail revenue from the year 2009 to 2010 by around 10%,” Rohlmann said. “This is due to the fact that all the circumstances about the ownership and the behaviour of the Glazer family were not positive in the minds of Manchester United fans. This has had a direct impact on their merchandising spend.”

Rohlmann did not disclose the figures relating to United’s merchandising income because all disclosures made to Sport+Markt by clubs are on a confidential basis. However, he stated that the report analyses all of United’s self-generated merchandising revenues, along with those of their licensing partners such as Nike.

As United reportedly seek a 50% improvement on their £302.9m, 13-year Nike shirt deal, which expires in 2015, the demonstration of a decline in revenues comes at a bad time for the club. The Premier League leaders’ share of the merchandising market, which is worth €1.2bn for the 10 highest-earning clubs across Europe, has also slipped. They are now ranked sixth, down one place from 2008.

A spokesman for the club disputed Sport+Markt’s findings, saying royalties from the profit-share arrangement with Nike had risen in each of the past four years.

Now let’s just stop and put that into its real perspective.  That’s €1.2bn, or a smidgen over £1bn, or a £100m per club, that the fans of just ten clubs have spent in one year on merchandising.  Rather a far cry from the days when you got your mum to knit you a scarf in your club’s colours, and perhaps splashed out on a rosette on Cup day.

As I said, it’s the implications of this that bother.  Such enormous sums spent on the merchandising of a few clubs results in ensuring that the rich and strong clubs just get richer and stronger.  In other words, it distorts the competitive balance in the respective leagues.  It’s not a million miles from financial doping – the attempt to buy success by distorting the balance of competition.  This is normally in the form of ‘benefactors’ pouring money into clubs à la Manchester City or Chelsea, or, at a different level, Crawley Town.  What’s particularly insidious here is that it’s the fans who are being drawn in to pay for the club’s habit.

There is at least one up-side to this though – the Green and Gold campaign is having the desired impact.  As for me, I’ll stick to wearing my favourite footie T-shirt (available from WSC – who still won’t reciprocate a link on their links page, incidentally).

As this was The Digger column that was provoking this reaction, I should have guessed there would be more to incense me.  Matt also reported:

Any defence whose last line consists of Sébastien Squillaci and Manuel Almunia is vulnerable to the attentions of a journeyman striker picked up from the French fourth division. And Jonathan Téhoué, left, proved it in the FA Cup fifth round against Arsenal. Now Digger can reveal just how valuable the Frenchman’s equaliser is expected to be for Leyton Orient. Arsenal turn over £3m for every home game and under the terms of the FA Cup revenue-sharing agreement Orient will be due 42.5% of the net gate receipts that the Emirates Stadium replay generates.

Although the Gunners have yet to announce ticket prices for the 2 March match, the profit is expected to be in the region of £1.6m, raising £700,000 for the League One club. If the match is televised, it will make close to £1m for Barry Hearn’s club – not bad for one game, considering Orient’s total turnover of £3.3m in the 2008-9 season.

Here there is at least an income to the club related to their performance on the pitch.  Orient certainly deserve some good news after their shabby treatment by the Premier League.  My gripe is not with Orient but rather with the fact that in general the distribution of broadcasting rights has the same result – making the rich clubs even richer and distorting the balance of competition.  And who’s feeding the habit?  It’s the fans again.

Have we really lost all sense of the sporting ethic?  Sadly I think I know the answer to that one.

Posted in Benefactors, Broadcasting rights, Ethics, Financial doping, Merchandising, Revenues | Tagged: , , , , , | 1 Comment »

Are our biggest clubs really global brands?

Posted by John Beech on December 9, 2010

You certainly notice the presence of Premier League clubs in Kenya (where I’ve just been on a somewhat delayed ‘summer’ holiday).

Can any Manchester United fan supply the vintage?

Curio seller in the middle of nowhere, Kenya. Can any Manchester United fan supply the vintage?

Well, of the predictable few.  Arsenal are, on the basis of an entirely unsystematic and unscientific survey of shirts and baseball caps and a pretty small sample, the clear number one English club of choice for Kenyan fans, followed not so far behind by Manchester United, with Chelsea a poor and third. That was it really. I did see Liverpool mentioned on a sandwich board outside a bookies, but no shirts. In fact the only other shirts were either local Kenyan clubs or Brazil.

The presence manifested itself not only through shirts, but also by slightly crudely painted club crests on cafés, and, in one case, the rather unexpected ‘Gunners Hairdressers’.  Presumably their Boro Primorac isn’t that popular with customers.

Apart from the fact that I found in yet another country only the famous few were present, two things struck me.

First, what did the clubs actually gain from their presence?  I would suspect that those wearing shirts had not contributed to direct sales, and that few Kenyans were avidly using the online club shops.  They certainly weren’t buying tickets for the games.  And how did a baseball cap with ‘Fly Emirates’ as the obvious feature do anything for Arsenal (as we passed, I didn’t even spot an Arsenal logo)?  Again only a suspicion, but I doubt that Arsenal have been leveraging up their price to Emirates on the basis of this particular exposure.  If there was any return, it was for the sponsor but not for the club.

Secondly, the presence of so many hand-painted logos might be seen as some sort of compliment to Arsenal, but the unlicensed use of logos said something about the nature of the clubs’ presence and the weakness of any commercial basis.  It was a kind of artificial presence.  The Arsenal or whichever brand did not have a presence on a par with that of a truly global logo such as Coca Cola.  And that’s probably the point – Coca Cola has an enormous presence in Kenya through their products and the infrastructure to support and develop the sale of their products.  Any unlicensed use of their logos would stamped on by locally-based Coca Cola staff,with the zeal of the IOC spotting that I had mentioned that event which is taking place between 2011 and 2013 in the UK capital by its conventional name.

Because of the lack of product presence, other than, that is, the intangible product presence through broadcasting, it’s hard to justify even the biggest Premier League clubs as global brands in any conventional sense.  The sale of official merchandising at the café (or hairdresser) can only be a dream.  The opening of Manchester United shops in the Far East, for example, is the first steps in becoming a truly global brand, but it is frankly just scratching the surface of an enormous potential market.  To be successful, these clubs will have to produce a radically different marketing mix with new 4Ps (product, price, place and promotion).

Posted in Broadcasting rights, Marketing, Merchandising, Sponsorship | Tagged: , , , | 3 Comments »

Who loves fans? Who doesn’t?

Posted by John Beech on July 26, 2010

There’s an interesting pair of stories in the news today.

First comes the news (1) that UEFA have introduced a new requirement in their club licensing requirements – the necessity for a club to appoint an operating supporter liaison officer (SLO).  The purpose of this rather clumsily named role is to “to ensure a proper and constructive dialogue between a club and its fans“.  The need for this is so fundamental and obvious that it is amazing that UEFA have only just come up with it!  In fact, they did so at the prompting of our own Supporters Direct (SD) and its SD Europe arm.  The SD website (2) offers this expansion on what exactly an SLO is:

Supporter Liaison Officers at clubs already exist in a limited number of European countries and primarily help improve the dialogue between the fans and the clubs they support. Most importantly, SLOs must be credible with fans, and therefore should have experience with and contacts to the networks in the fanbase at the club.

They inform the fans about relevant decisions made by the club management board and, in the other direction, communicate the needs of the fans to the board, as well as building relationships – not just with various fan groups and initiatives, but with the police and security officers, They will also engage with fan liaison officers of other clubs before matches to ensure that the fans behave in accordance with security guidelines.

To implement the new requirements, a network of SLO project contacts from each national governing body across Europe will be created and work together with the UEFA club licensing team and Supporters Direct to assist clubs and supporter groups improve communication in each of the 53 UEFA member associations. This year more than 600 clubs applied for a UEFA licence with many more applying for domestic licences based on the same or similar principles. Hence, the broad scope and significance of the SLO project.

Like the licensing system itself, the implementation and development of supporter liaison officers will be a tool to raise minimum standards; a dynamic system changing over time, and focussing on developing and improving the dialogue between the fans and the clubs.

An excellent development – here’s hoping it would be accepted throughout the English football pyramid rather than just by clubs hoping to play in Europe.

On the other hand, there is the news (3) that the vast majority (it appears to be all except Arsenal and Liverpool) of the Premier League clubs are simply ignoring the 2000 Premier League Charter which pledged that replica strips would be released every two seasons at a minimum.  Worst offenders are Tottenham, who have launched three new kits every year for six seasons in a row.  This coming season they will have different sponsors, and hence, it is reported, shirts, for their Cup games, resulting in no fewer than six shirts being offered, although at the time of writing only three shirts are being offered on the club website (4).

It’s not exactly difficult to see which is more pro-fan – UEFA or the Premier League.

Posted in Merchandising, Organisational culture, Premier League, Public relations | Tagged: , , , | Leave a Comment »

The trouble with new stadiums 2

Posted by John Beech on July 8, 2010

[See also The trouble with new stadiums 1, which looked at the argument that "We’re a club with ambition and we need more seats to reflect that ambition".]

The second case put for building a new stadium is:

  • We’ve got the wrong sort of stadium.  We need one better suited to maximising our revenue streams.

The first part of this argument I have no real problem with.  Virtually all English football stadiums are either ‘new’ (less than twenty years old) or ‘old’ (from the Victorian era), and, if your club’s stadium is in the latter category, then it is almost certainly suboptimal for players, fans and revenue generation.  Remember, I’m a Pompey fan, and Fratton Park was a disgrace for a Premier League stadium.

‘We need a better one’ in these circumstances can then seem perfectly reasonable.  However, there are two key questions a club needs to ask itself: a) Can we afford it? and b) Is this the most effective way of maximising revenue streams?

I suspect that in 99 cases out 100 the answer to the first question is a resounding ‘No!’.  Show me the clubs which already have the financial reserves to consider spending on a new stadium!  The new stadium will have to be financed, and if the club is worried about failing to maximise its revenue streams it needs to have a cast iron case that new revenue streams will be sufficient to even cover the cost of the loans needed to finance the new stadium.  Of course there will be exceptions, but it is worth bearing mind that even Arsenal, with a clear need for a bigger stadium and a sound business plan to finance it, have struggled because of the drop in house prices, and the subsequent difficulty in selling the houses on the stadium site.

If you want to maximise your revenue streams, the basic strategy model which is used for deciding the best way to grow your business is one called Ansoff’s Matrix.  This model considers whether to look at existing or new customers, and existing or new markets.  (There is a useful visual representation here which makes it much easier to follow.)  The 2×2 nature of the matrix results in four possible strategies, each with differing levels of risk.

The safest is ‘market penetration‘ – developing the sales of existing products to existing customers.  In other words, the simplest and most effective growth strategy for the vast majority of clubs, which have empty seats on a match day, is to try and get more bums on seats.  Clubs like FC United of Manchester have tried interesting tactics with pricing to achieve this, such as varying the price that fans pay to get a season ticket (see 1 for a discussion of imaginative ticket pricing, and 2 for FCUM’s approach).  Experimenting with different pricing strategies, such as BOGOF (buy-one-get-one-free), is quick, easy, low risk, and provides a useful indication of whether growth is possible – if you can’t get more bums on seats with this kind of approach, where’s the rationale for a new, bigger stadium?

Next two to consider, of medium risk, are:

  • Product development - developing new products for existing customers
    In other words you find new goods or services to sell to your existing fans.  I’ve blogged before (see On clubs and club shops) on what I see as an unimaginitive range of merchandising that club shops offer, and clubs could do a lot more with this medium-risk strategy that does not require vast capital investment.
  • Market development – developing finding new markets for the existing products
    In other words you recruit new fans.  Clubs do make efforts here, trying to encourage whole families to attend games for example.  More could be done, and again without vast capital investment.

The final strategy is the one with the highest risk – Diversification, in other words, moving into to some other area to find new customers to buy new products.  It’s here that the new stadium certainly raises it’s ugly head – without a new stadium we don’t have the right facilities to be able to do this, the proponents moan.  Of course, they are right, but they fail to recognise the attendant problems.  The problems with this case are twofold.

The first is the obvious argument that it is the highest risk strategy, and comes at the highest cost.  It simply does not make sense to attempt it until all the lower risk, lower cost strategies have been tried.

The second problem arises with what exactly the new products to be sold to new customers are.  A good rule of thumb is that the nearer the ‘fit’ with the existing product – in our case, football matches – and the nearer the fit withthe market – in our case, football fans – the better, the lower the new risk.  Why, oh why, then, do clubs who pursue this strategy look to build a new stadium complex with a hotel, restaurants or shops?  Could it just be that they think they are already in these businesses through their experience in ‘hospitality’?  I would suggest that there is a gulf of blue water between ‘pies & bovril’ and even prawn sandwiches, and I know I’m not alone in this view!  Similarly they see themselves as involved in ‘events management’ and see a connection between operating on match days and running conferences.  As someone who attends both, I would again argue that there is deep blue water between attending a football match and attending a four-day conference – they are world apart in terms of customers and the service these customers are looking for.  I would argue that the poorness of fit is every bit as big as it is with running a supermarket.  In a nutshell, building the new stadium with a conference centre attached is as sensible as an existing conference centre which is in poor financial shape deciding to build a new conference centre with a football stadium attached to ‘maximise revenue streams’.  Even if you sub-contract the running of the new business ventures, you’ve set up two poorly fitting businesses on the same site – not a recipe for success.

I’m sure you realise, and I readily, that I am generalising (and I’ll be looking at some exceptions in a later posting).  There is one way of lowering the risk in a diversification strategy, and that is to diversify into something which, for example, the owner is experienced, an area in which he made his fortune which is he is in danger of turning into a small fortune.  That is, with one major exception, which I will be looking at in my next posting in this series.  To give a wee hint as to what I see as the one exception that does not reduce the club’s risk, I’ll just remind you of the third case that is put when a new stadium is proposed:

  • There’s this amazing property deal we can do.  We’ll sell the old stadium for redevelopment and there’ll be loads of money to build the new one.

Posted in Assets, Marketing, Merchandising, Revenues, Stadium | Tagged: , , , , | 2 Comments »

A ‘win-win’ at Livi? Well, perhaps

Posted by John Beech on September 11, 2009

As my e-forays North of the border are rare, I hadn’t expected to be blogging on Livingston for the second time in three days.  But a development between the club and the Supporters Trust warrants comment.

Livingston are facing an uphill battle (1), and one in which they are currently fighting from a position of weakness, so it is good to see that not only have they manged to acquire a new sponsor (2), but they have announced a new deal between club and Supporters Trust (3) which Chief Executive (of the club) Ged Nixon describes as ‘Win-Win’ for club and Trust.

In a nutshell, the Trust will fund the purchase of merchandising for sale to fans in return for shares, while the club will have the opportunity to turn a profit on the retail sale to supporters.  Hence ‘win -win’ – the Trust gains a larger shareholding, and the club doesn’t have to find the capital to buy new stock for the club shop, but can turn a profit on its sale to fans.

So, is this a model which should be adopted by other Supporters Trusts?  In many cases, yes, but the real answer to the question is ‘it all depends’.

What is being confused here, and in this posting so far I am guilty of increasing that confusion, is ‘club’ – the nebulous sociocultural construct – and ‘company which owns the club’ (see my earlier posting Subbing the company or the owner?).

An arrangement such as this one at Livingston is only ‘win-win’ for a Trust if they are happy to see the current board of the ‘club’ reinforced in their ownership (and there is no implication with respect to Livingston carried in that sentence).

But if the Trust wants to see the present board of the company out, as is the case at Halesowen Town or was recently the case at Merthyr Tydfil, it is definitely not a ‘win-win’ scenario.

In short, Trusts need to look at the broader strategic issues before rushing into what, at first glance, seems a ‘no brainer’.  A few months ago at Livingston itself, with company still being run by the previous owners under Angelo Massone, rushing into such an agreement would have been more a case of ‘no brains’ rather than ‘no brainer’.

Posted in Merchandising, Ownership, Trusts | Tagged: , , | Leave a Comment »

On clubs and club shops

Posted by John Beech on June 30, 2009

An unexpected rescheduling of my diary found me in Bournemouth yesterday with several hours free before I was due in Portsmouth, which gave me an opportunity to visit three grounds in quick succession – Bournemouth, Southampton and Portsmouth. Perhaps not a random sample, but interestingly three clubs with serious ownership issues currently or in the immediate past.

Not surprisingly there was a distinct sameness in all three club shops, in particular in respect with what was on sale to supporters. It was what constituted the sameness that struck me – I could have been in any High Street leisureware shop if I had been logo-blind. Yes, to be fair, it wasn’t all replica kits; there was the usual selection of mugs, glasses, key chains and so on. But I wonder if supporters wouldn’t actually appreciate more diversity in the offer, and be willing to spend even more in supporting their impoverished club if there was a more imaginative range of products on sale. To me at least, noticeably missing were any books about the clubs – their halcyon days, their heroes, their histories. The offer in this respect was entirely in the DVD format, which may well be better in many respects, but not for the detail fans appreciate in studying their club history.

All three shops were not especially busy with customers, but after all it was a very hot day in the closed season. All three were busy with stock, again an indicator of the time of year, but staff had time to engage in conversation with me.

There were some differences between the three however:

  • Bournemouth had the only shop with any sense of serving fans rather customers, but this derived only from a large selection of club programmes on sale, some up to twenty years old. It was the only one of the three where a queue formed, albeit briefly, for tickets. There was an air of activity to the stadium, perhaps reflecting the arrival of incoming Chairman Eddie Mitchell, and it was the only one of the three where there was a strong sense of involvement with the local community.
  • Happenchance had brought me to Southampton on a day which the Southern Daily Echo was billing as a possible ‘D Day’ given the ongoing problems with Administration, the Pinnacle Group proposed takeover and the appearance of foreign consortia (1). I had half expected to find Matt Le Tissier addressing a rabble of reporters [the following sequence contains flash photography] and an angry but caring mob of protesting supporters. The stadium was all but deserted, which was rather eerie in such a modern and spacious stadium (easily the most desirable of the three, were it not for the industrial landscape in which it sits). Staff here were particularly helpful, prompting me to visit Waterstones where specific books on the club were known to be available. A missed opportunity though to sell me something I would have readily purchased.
  • Finally on to dear old Fratton Park with its boyhood memories of Gentleman Jim no longer quite in his pomp. The approach up Frogmore Road with its presentation of the club as something mock Tudor was both reassuring, but also faintly ludicrous for a Premier League club. With a perversity that will be familiar to Pompey fans, the club shop was not actually in the stadium; it was several hundred yards away in a mix of retail and light industrial operations. As befitted a Premier League club it had the largest range of branded miscellaneous items, but none that had me leaping for my wallet in spite of the fact that I was ‘easy meat’. Staff tried to be helpful, but left me utterly confused as to the apparently significant differences between what was on sale on the website and what was on sale in the shop.

All in all, it was an odd afternoon. It left me feeling that clubs are driven by what manufacturers offer them in branded form rather than finding out what fans actually want and would be prepared to buy. I was left with impression that market research had not really been attempted.

Posted in Merchandising, Stadium | Tagged: , | 3 Comments »

 
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