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

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.

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One Response to “The scarf your mum knitted and competitive balance”

  1. Steve Grant said

    Speaking of broadcast revenue and the distortion it assists with, I was horrified to discover that every one of Manchester United’s last THIRTY-ONE FA Cup ties (both normal games and replays) has been screened live on TV. That will obviously become 32 when they play Arsenal or Orient in the quarter-finals. Genuinely staggering figures.

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