FDA News Post

Modern day football - Who's Business?

Posted 6 Jun 2012 10:00PM

With Deloitte releasing the wage figures for the Premier League 2010-2011 season it I thought it would be worthwhile having a look at where football clubs will need to get their future revenue from.

The figures are somewhat astounding. Clubs in England's top football league paid some 70% of their income on salaries for the first time. The Deloitte report says that control of wages "continues to be football's greatest commercial challenge".

The Deloitte report also shows the huge growth in revenues since the Premier League was created two decades ago. Premier League clubs' combined revenue reached a record £2.27bn in 2010-11. In the same season, the 92 Premier and Football League clubs' combined revenues were £2.9bn, with average Premier League club revenues having risen to £114m. "There is little doubt that the Premier League is a tremendous success in revenue terms," said Deloitte.

It is clear then that Premier League clubs have made impressive efforts to increase revenue. Average attendances were close to 35,000 in the Premier League in 2011-12, with more than 90% of seats sold.
 

However the growth in revenues has been accompanied by rising costs, especially players' wages. "With stadiums having limited capacities and broadcasting revenueslikely to deliver limited growth in advance of the next Premier League deal commencing in 2013-14, the focus will be on the clubs themselves to grow revenue in areas directly under their control."
So what are some of the areas they can turn to? Barcelona is a leading outfit on the pitch but it also appears they are one off it too. The club estimates it has 349 million fans or followers around the world. Barcelona is looking to use social media not only to inform those millions, stretching from South East Asia to North America, but to attract overseas supporters to become FCB customers too. However it is not as easy as just creating a Facebook and Twitter page and away you go. You have to know what to do with them, but firstly you need to attract the fans. Mr. Lankinen (Barcelona's business intelligence manager) believes that “it all starts with the sports performance, what happens on the field - The 11 guys are our brand marketers, they drive the attention to our club and create windows of opportunity by winning titles."

 

Barcelona is one of the most progressive in using new media and social media to reach those potential fans. Premier League clubs need to take note and explore revenue streams that can develop them globally.

A good example of this is GM’s new 5 year sponsorship deal with Manchester United who GM quote as saying "stand head and shoulders" above other football teams. GM obviously understands the global scale of Manchester United’s fan base and said it hoped the deal would help it "build global icon status" for Chevrolet. Manchester United is a textbook example of a modern day football ‘brand’ development. They famously dropped the ‘F.C’ from their badge to just become Manchester United. In addition to this they have always cleverly used a Manchester United ‘star’ to market products and the Manchester United brand e.g. Eric Cantona, David Beckham, Cristiano Ronaldo and now Wayne Rooney.


In summary, it appears that doing the business on the pitch draws attention and therefore further revenue opportunities. In addition football fans aren’t just fans anymore, they are consumers. Football clubs aren’t just clubs anymore they are global brands. Modern day clubs will have to explore further revenue streams to ensure that business can become sustainable. What might also help is reducing the alarmingly high wage bills but then how do you perform on the pitch? A tricky balance then it seems. Alternatively clubs just need to stay afloat until a rich Sheik comes in with an open cheque book!

 

Luke Thorp - FDA