Archive for the ‘Revenues’ Category
Posted by John Beech on September 7, 2014
As the Ricoh electronic sign facing the road running past the stadium puts it, Welcome Home Coventry City. Undoubtedly it was an emotional moment on Friday evening to see the end of exile in Northampton. This display of emotion by ACL, the Ricoh company, was lessened to some extent by the fact that that it is one of a series of advertisements that cascade, so not entirely overwhelming. Among the others is one declaiming ‘NERF WARS Ten players for £99′. Turf Wars might be nearer the truth.
A return to the Ricoh has been from the very beginning a no brainer. Everybody lost with the move to Northampton – Sisu, through the boycott by Coventry City fans (although I suspect that the massive drop in gates was not solely out of reasoned protest by ‘real fans’ but also done to inconvenience for the less less-committed, but still important financially, fans.
I suspect that ACL, recognising what a no brainer the return was, always anticipated a return. The club logo, visible through the left-hand sector of the elliptical frame, never disappeared from the stadium throughout the period of exile, a slightly unnerving take on reality.
The details of the current ceasefire in the war between ACL and Sisu are subject to commercial confidentiality. The fact that a professional mediator was involved suggests to me that concessions were eventually made by both parties. Sisu have put on a bold face on and still talk bullishly but vaguely in terms of a new stadium, while ACL have not swung the might of their PR company Weber Shandwick into overdrive.
What little is known as fact is that the new agreement is one for two years with the option of a further two years. Seven years in and £40m+ sunk into the club by Sisu, SISU are far from OUT. Dreams of a Pompey-style takeover of the club by the Sky Blue Trust remain just that.
However jubilant fans may feel, there is little at a deeper level to celebrate, and they need to recognise that the ‘war’ is not over. They may be content to watch football at where they see as the rightful home of the club, but until more fundamental issues are fully resolved, we are now in a clod war scenario, with the prospect that hostilities will resume as we come up to the end of the current two-year ceasefire. Whatever deal has been reached over rent and matchday revenues is inevitably a compromise. The depressing reality is that neither Sisu nor ACL cannot afford to compromise as they both need all the monies in question.
One unknown in the equation is how many fans will maintain an anti-Sisu boycott. It will be interesting to see the level at which attendances settle as the season progresses.
Posted in Assets, Fans, Investors, Matchday revenues, Ownership, Revenues, Stadium, Trusts | 7 Comments »
Posted by John Beech on August 15, 2014
It was a difficult choice of topic after so many months, but Coventry City is probably the obvious choice for me – I live about a mile from the old Highfield Road ground and could hear the roar on matchdays.
By chance, I was turning out last week and came across a copy of the Coventry Observer from 20 December 2007. My reason for keeping it was apparent on page 3 – two stories which began thus:
- Last minute deal secures football club’s future
Coventry City were just half an hour away from going into administration when pen was finally put to paper on a long-awaited takeover deal.
with the clock ticking towards Friday’s 4pm deadline for a deal to be struck, the Sky Blues confirmed shortly before 3.30pm, the takeover by SISU Capital was going ahead – securing the club’s future and banishing the threat of administration…
- Arena pledges support for club’s future
Ricoh Arena chiefs have pledged to support SISU Capital’s efforts to return Coventry City to the Premier League…
Clearly much has changed since December 2007. The club had been through a disastrous period in the years immediately before. Debts had been reported as running as high as £38 million; year after year the club made operating losses; and investing in the new £60m stadium had proved a step too far. Indeed, the stadium, the brainchild of the club’s then Chairman, Bryan Robinson, had only become reality by the club passing the stadium project over to Arena Coventry Ltd (ACL), a joint venture company consisting of Coventry City Council (50%) and the Alan Edward Higgs Charity (50%), a trust set up to help deprived children from Coventry.
The then owners of the club – the major shareholders, owning 90%, were Craigavon (City MP Geoffrey Robinson’s family trust, and Sir Derek Higgs, son of Alan Edward Higgs) – announced their intention of placing the club into Administration. Apart from Sisu, the only potential buyer was ‘Greek billionaire businessman Alki David’, who rapidly backed off when he realised the scale of the debts he would inherit.
The club thus stood, to borrow the recent words of David Conn (or a Guardian sub-editor perhaps) on the edge of an abyss.
Coming in then as saviours of a club in distinct danger of liquidation, how then did we reach today’s situation of repeated legal confrontation and the club’s exile?
Sisu were by their own admission new to the football business. They brought in football business experts such as Ray Ranson and Ken Dulieu. Their judgement proved questionable and both departed. As the performance on the pitch deteriorated and the club suffered a further relegation to League 1, the fans became severely disenchanted, a situation compounded by Sisu’s almost non-existent transparency or engagement with the fans.
Opposition to Sisu became public and organised, and we drifted into phases of protest characterised by a series of slogans.
The first of these was the unequivocal SISU OUT. Understandable though this was, in my eyes it always seemed at best only half a strategy – and what next? The further Sisu sank funds into the club, the less likely it was that anyone else would want to buy the club. In the six and a half years of Sisu’s ownership only the brief appearance of Preston Haskell IV presented any viable alternative to Sisu. It became abundantly clear that a presumption of the SISU OUT slogan – that Sisu were willing to sell – was ill-founded, and even wishful-thinking.
The straw that broke the back of many fans was the decision of Sisu, in an attempt to force ACL’s hand in the increasingly bitter disputes over rent and matchday revenues, to take the club into exile at Northampton. We then entered a phase where the slogan of choice was BRING CITY HOME. A perfectly simple proposition on the face of it, but one which begged the intractable questions of how and under what conditions.
The most recent phase has seen protests with banners saying LET DOWN, which begs the question of by whom. Moz Baker of the Sky Blue Trust when interviewed on local television earlier this week cited Sisu and the Football League, and it’s not hard build an argument for either nomination. I would add to this list ACL and its joint owners, Coventry City Council and the Alan Edward Higgs Trust. I would also add to the list the previous owners of the club, for it was they who precipitated the current situation by deciding to move away from the old stadium at Highfield Road, which resulted in the separation of ownership of the club and its stadium.
From a business perspective, it is perfectly understandable and indeed reasonable that the club owners would want the matchday revenues, particularly with the restraints that Financial Fair Play protocols now place on spending . Equally understandable and indeed reasonable is that the owners of the stadium would also want the matchday revenues, particularly as the football stadium is the core of the revenue generating potential of the infrastructure.
So, we are in the situation where the entrenched positions of the two main proponents are understandable and reasonable from their own perspectives. The only way out of the impasse would be compromise by one or both parties. At present we have a war of attrition. There are unsubstantiated rumours that talks are taking place between Sisu and ACL. If true, we can only hope that ‘jaw jaw’ will stop ‘war war’. The present situation with the club in exile is patently bad for the owners of the club, for the owners of the stadium, and, above all, for the fans, and indeed for the Council Tax payers in Coventry (of which I must put my hand up as being one). The only gainers are the lawyers.
A return to the Ricoh is a no brainer. There must surely be some way forward through compromise.
[A reminder – this is a personal blog which is moderated. Abusive comments will not be posted; counter-views are not considered inherently abusive.]
Posted in Assets, Cashflow, Debts, Football League, Governance, Insolvency, Ownership, Revenues, Stadium, Strategy | 5 Comments »
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: Cashflow, Debts, Fans, Investors, Marketing, Merchandising, Ownership, Stadium, Strategy | 5 Comments »
Posted by John Beech on March 24, 2012
The decision by UEFA to increase significantly the compensation fee paid to clubs for releasing their players to play in Euro 2012 (1) – for Euro 2008, the total compensation was €43.5 million; for Euro 2012 a total of €55 million had been proposed, but the figure is now to be €100 million (£83.4 million) following pressure from the European Club Association (ECA) (2) – is not entirely unexpected, and not entirely unreasonable. I have my concerns about it though…
Professional football was born on the back of the issue of broken-time payments – compensating amateur players for time they had had to take off from their day-jobs. It’s hardly inconsistent, over a century on, that clubs would seek broken-time payments for players released for international duty.
Nor is it inconsistent that, in a post-commercialised football age, the selection of a player for international duty has little to do with honour and duty, but rather more to do with maximising revenues for the national team.
Certainly international duty, notably with respect to the African Cup of Nations, can have a worrying impact on particular clubs.
There is also the issue of injury while on international duty, although this seems to be resolving itself by the number of declared injuries which somehow heal themselves miraculously quickly once the ‘threat’ of international duty has passed.
By and large then, my view is one from a natural perspective of a mixture of realism and cynicism.
My concern is more at the level of unintended consequences. I’m in the middle of a major research project looking at the concentration in certain European football leagues. Notwithstanding the current difficulties of one of the two clubs, Scottish football, for example, offers no exemplar of healthy competitive balance in its top tier. Since the Scottish Premier League was founded for the 1998/99 season, there has so far been just one single appearance, as runner-up, by a team other than the Auld Firm in the top two at the end of the season (it was Hearts in 2005/06 in case you are scratching your head). The last time another club won the Championship was back in 1983/84 (Alex Ferguson’s Aberdeen), and you have to go back to 1903/04 to find the last season that neither club was winner or runner-up (since you ask, the winner was Third Lanark and the runner-up Hearts; you will be less surprised that Rangers were third and Celtic fourth). While the Auld Firm’s stranglehold on their domestic Championship is the strongest in Europe, the majority of European national leagues suffer from ‘Big 2’, ‘Big 3’ or ‘Big 4’ syndrome (see also posting passim), a fact that is contrary to the principle of maintaining competitive balance within a league.
The reasons that leagues became dominated by a handful of clubs are varied, and the dominance usually dates back to a pre-commercialised era. Our research is beginning to show that the maintenance of dominance in a national league is strongly correlated with the distribution of the broadcasting revenues of the Champions League and the Europa league (and of course their predecessors). In short, rewarding clubs financially for simply being the top clubs reinforces their position, by ensuring that the rich clubs get ever richer, and can hence, afford, the better payers.
As these enhanced UEFA fees to clubs for Euro 2012 will, albeit on a smaller scale, have the same, presumably unintended, outcome, it concerns me that the lack of competitive balance in European national leagues is once again being reinforced, something which is NOT good for the game.
Posted in Revenues, UEFA | Tagged: Revenues, UEFA | 4 Comments »
Posted by John Beech on September 29, 2011
For someone who has no great love of the media, Sir Alex certainly knows how to get himself in the headlines. His latest claim is that football has sold its soul to the TV ‘devil’ (1). Attractive though his choice of metaphor is, with the vision it generates of a BSkyB ‘evil empire’, it just doesn’t really work when his other complaints he makes are vectored in.
He complains that the broadcasters have too much power, especially with regard to their influence on fixture lists. But isn’t that inevitable when you sell your soul to the devil? It’s exactly that power that the ‘devil’ broadcasters have bought. And I don’t recall that the standard ‘devil buys soul’ contract allows for renegotiation of the terms.
He complains too that the broadcasters haven’t paid enough for the rights. That may or may not be the case, and Sir Alex is not being unreasonable in making the suggestion as it is the Premier League who ‘sold their soul’ rather than Manchester United, Sir Alex’s club.
The Premier League though do not of course distribute broadcasting rights to clubs equally, and Manchester United does rather nicely thank you compared with the weaker clubs in the league (who, to maintain competitive balance, should if anything get more than Manchester United, rather than less).
On the whole, I’m not unsympathetic to some of the points he makes, but, in his case, methinks he doth protest too much
Posted in Broadcasting rights, Governance, Premier League | Tagged: Broadcasting rights, Governance, Premier League | 5 Comments »
Posted by John Beech on September 15, 2011
The news the other week that Manchester United had secured a lucrative sponsorship deal with DHL for their training kit (1) rather caught my attention. It wasn’t the unique (?) case of training kit being sponsored – I would expect this to be a one-off, with all new shirt sponsorship deals having a clause requiring exclusivity over all shirts. It was the fact that a global courier service was the sponsor. Their business is truly global, they have previously sponsored sport (2), and a Premier League club would give them global ‘reach’. No doubt we will see UPS signing up next season – they too are already into sports sponsorship (3). They actually offer a handy application form on their website – commercial managers of football clubs get typing!
The news that QPR have finally signed up not one but two shirt sponsors (home/away kits) (4) allowed me to complete this season’s entries into my Premier League shirt sponsorship database. More on this in a second, but I must warn you that the official QPR website has followed the Times in charging for content other tasters – a distinctly retrograde step and hardly fan-friendly. Do these clubs need ‘naming and shaming’?
Two initial views of the data show some interesting trends. First, some data on the country of the sponsor. The graph is a tad grainy as presented I fear, but clicking on any of the images will open it up to a rather more legible size (I kept them small on the posting itself so as not to slow downloading).
Very broadly there seem to be three periods apparent: from the start of the Premier League a steady-state period to roughly to the end of 1997/98, with sponsors falling roughly equally into the UK and foreign categories; a period from then until 2006/07, when foreign sponsors started to turn away, before starting to return; and the most recent period, showing a return to a roughly equal split. I would have to admit that I can’t see a simple obvious reason for this trough of foreign sponsorship in the middle period. Do any readers have any thoughts on this?
While the Premier League began with almost half the clubs sponsored by locally-based companies, there has been a slow but steady decay. This I would simply attribute to the rising cost of shirt sponsorship, with foreign-based multinationals better placed to pay higher fees than the likes of, for example, the splendidly named Reg Vardy Motors, sponsors of Sunderland roughly a decade ago, and now part of Evans Halshaw.
It shouldn’t be assumed that ‘local’ necessarily means a UK company. For example, Peugeot sponsored Coventry City for their first five years in the Premier League – the Peugeot 206 was at that time built at their Coventry site.
Secondly, data on the sponsor’s sector.
The graph shows the four most frequently occurring sectors over the two decades. Financial services are just the largest grouping at 13.5%, closely followed by breweries at 12.8%, although, if the breweries are combined with the occasional sponsorship by spirits and cider manufacturers, alcohol manufacturers, with a combined total of 13.8%, slip into top spot.
It’s clear that financial services have grown steadily as sponsors over two decades, but gambling, the Johnny Come-Latelys of PL shirt sponsorship, is very much in the ascendancy. Together the two sectors now sponsor 13 of the 20 clubs. The early days of the Premier League saw a much greater diversification among shirt sponsors.
Finally a look at the Top 4 v. the rest of the Premier League clubs. One would expect the clubs which have pretensions of being global brands to attract global sponsors, and this is indeed the case.
By playing more televised matches, especially when qualifying for the Champions league, the Big 4 have consistently attracted more foreign sponsors than the other clubs, generally two to three times more. By being able to play a global market in attracting sponsors, they have been able to push their sponsorship charges up, and so increase their financial muscle. There is thus a double effect of reinforcing their dominant position, by greater TV revenues and by greater sponsorship revenues. Whatever happened to competitive balance?
Posted in Marketing, Revenues, Sponsorship | Tagged: Marketing, Revenues, Sponsorship | 7 Comments »
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: Broadcasting rights, Merchandising, Sponsorship | 3 Comments »
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: Cashflow, History, Merchandising, Ownership, Supporters Trust | 3 Comments »
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: Merchandising | 2 Comments »
Posted by John Beech on May 31, 2011
Blatter’s demeanour at last night’s press conference was clearly one of defiance – it seems he really is blind to the mess the world governing body is in. Mind you, if you watch again withe sound turned down (1), his body language is less self-confident – the ceaseless paper shuffling, and constantly tweaking the pair of microphones in front to him as if a pair of nipples had suddenly been thrust at him in some seedy nightclub.
The chances then of some serious reform of FIFA on his about-to-be-extended-unopposed watch are as remote as ever. He is only vulnerable to pressure from outside stakeholders such as broadcasters and sponsors. Broadcasters are unlikely to bother too much – the World Cup will be watched as eagerly by fans whether he or Caligula’s horse is in charge of FIFA. Sponsors may yet prove more difficult to accommodate however, and there are already mumblings (2). Sponsoring is not merely a questioning of gaining exposure for your brand – it only works effectively if there are shared brand values. Interestingly, Coca Cola list their shared company values as ‘Leadership, Passion, Integrity, Accountability, Collaboration, Innovation, and Quality‘ (3). It’s hard to see that the present circumstances are helping Coca Cola present their values of leadership, integrity and accountability much. Adidas too will not be particularly happy bunnies this morning – they state on their webpage for Vision and Governance: “But leadership is not only about results, it is also about how success is achieved. We are accountable for the way we do business… We are committed to good governance“. Not a great deal of brand synergy going on there at the moment either.
The one thing that can be said of Blatter is that he is a survivor. Allegations that he acted corruptly date back at least to 2002. As Nick Harris reported in The Independent nine years ago: “Sepp Blatter was yesterday accused by 11 senior Fifa colleagues of trying to buy votes to secure his re-election as president of football’s world governing body. The dramatic move could end the 66-year-old’s long career in the game. In an unprecedented move in Fifa’s 98-year history, Blatter became the subject of a formal legal complaint filed in the Swiss courts by five Fifa vice-presidents and six other Fifa executive committee members.” (4) Maybe we can’t expect too much in the way of sponsorship withdrawal as these allegation haven’t stopped them.
Blatter does have an Achilles heel nonetheless. FIFA remains under investigation by Swiss federal authorities (5), as revealed by Matt Scott of The Guardian. The Swiss may be more fussy than Adidas and Coca Cola when it comes to seeing their national ‘brand’ under threat. Exemption from anti-corruption legislation for FIFA may well be lifted, especially as it applies to ‘not for profit’ organisations, an increasingly badly-fitting description for a body with reserves of almost three-quarters of a billion pounds (6).
One way or another, we shouldn’t expect a swift cleaning of the Augean stables, especially as Blatter is no Hercules.
Posted in Corruption, Ethics, FIFA, Governance, Public relations, Sponsorship | Tagged: Corruption, Ethics, FIFA, Governance, Public relations, Sponsorship | 3 Comments »
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: Broadcasting rights, Costs, Economic impact, Fans, Football Conference, Governance, Merchandising, Premier League, Promotion, Pyramid movement, Relegation, Revenues, Sponsorship | 2 Comments »
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).
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: Benefactors, Broadcasting rights, Ethics, Financial doping, Merchandising, Revenues | 1 Comment »
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).
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: Broadcasting rights, Marketing, Merchandising, Sponsorship | 3 Comments »
Posted by John Beech on October 14, 2010
I’ve been abroad for work and then taken a couple of days leave – the net result is a week of only occasional internet contact. A week is a long time in football it would seem.
All my standard searches to keep up with football management affairs have resulted in a total overkill on the Liverpool sale soap. Certainly it’s a fast-moving and ever-changing saga – I was interviewed on BBC News 24 this morning, and already there has been a development, oh, and a non-development.
It strikes me that the focus on Liverpool, understandable though it is, has meant that some very interesting football management stories have been largely ignored. For example, there are stadium stories at Bristol City and Worcester City, not to mention the 2012 stadium confrontation, and the Portsmouth CVA and Sheffield Wednesday’s plight should definitely not be ignored. I hope to blog on at least some of these shortly.
The oddest of largely ignored stories is, to me, the reporting of Manchester United’s financial results (1).
The club has certainly done stunningly well in terms of growing revenues and turning a profit. Turnover is more than twice that of cross-city rivals Manchester City. Wages have risen, but the wages/revenues ratio remains just a vague aspiration for most clubs.
All very commendable, but there is the other side to the coin – an £83.6million loss and overall debts of £521.7million. For all the success with growing revenues, debt management has been rather less successful. Given all the legitimate concerns of United fans regarding the Glazers, there is still room for a glance at Liverpool and the thought that things could be distinctly worse. The difference between the club’s financial positions is nevertheless not so great, even if the relatively small difference leads to quite different outcomes. Highly leveraged debt leaves a club worryingly exposed.
In the way that we are running out of ‘benefactors’ with deep enough pockets, we are also running out of ‘investors’ with sufficient finds of their own to invest. Clubs seem to be convinced that the scenario at Portsmouth could never possibly happen to them. First Portsmouth, now Liverpool. Just how many Premier League clubs to teeter on the brink will it take before Chairmen get a grip on club finances, before they take Mr McCawber’s advice. Unless spending is reined in to the extent that the business model becomes sustainable, we live in danger ultimately of only having a weekly exhibition match between Mansouri City and Abramovich Globetrotters to tune in and watch.
Meanwhile back at Liverpool, or rather at court rooms around the world…
Posted in Costs, Debts, Investors, Ownership, Revenues | Tagged: Costs, Debts, Investors, Ownership, Revenues | 5 Comments »
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: Merchandising, Ownership, Premier League, Public relations | Leave a Comment »