Looking at Premier League football in England from a business perspective is quite difficult. The beautiful game is no doubt about big business – but is big business increasingly just a rich man’s toy?
The World Cup as business
Let’s think about the basics of running a good business. A good product sold at a competitive price and delivered to the satisfaction of its customers. And, of course, makes a profit.
Do you remember this year’s World Cup? It was an event which coincided with our summer (you know, when days were sunny). Our team (England, that is) of world beaters were due to conquer most of what came before it and return home, if not with the cup, at least in a blaze of glory… nicely in time for the new football season. Well, we know it didn’t quite happen according to the script. In business terms, the price was pretty high – especially for those people travelling to South Africa. The product was pretty average. Expectations weren’t met and… I’m not sure whether it actually matters anymore. The football season has started, the World Cup seems to have been forgotten (where were the boos at Wembley?) and life seems to be tootling on as before.
From a business perspective this just seems all wrong. Don’t deliver the right product, continue to push prices up and expect the tribal loyalty of your fans to underwrite all your deficiencies. Not only is this ethically suspect, the clubs can’t seem to make any money either.
Germany’s Bundesliga v the Premier League
One of the interesting aspects about the crushing defeat at the hands of Germany was the apparent strength of that country’s Bundesliga. Fairly strict regulations mean that its expenditure against income is closely monitored and over-inflated wages are not paid to players. The clubs need to be sustainable. Obvious business principles. Now no one is saying that the Bundesliga is anyway near as important or big time as the Premier League but as a business concern (and we’re a business school) it seems to make sense and its shop window (the national football team) seems to have performed pretty effectively.
Multimillionaires ‘ shopping spree
Here we have to really ask, is Premier League football a business at all? The back pages are full of which international multimillionaire is going to buy which club – a pathway we’ve been well down:
- Manchester City were acquired by an Abu Dhabi organisation in 2008 and are currently spending around £1m a day (that’s right, a day) on new players.
- Liverpool were bought by a couple of American sports magnates but it doesn’t seem to have worked out. Last season was their worst for decades. Yet there’s a queue of other investors ready and willing to take on the mantle.
Well, Liverpool are a big time club and Manchester City at least come from a big time city. But there are lots of other interested parties hovering around the Premier League.
- Indian billionaire Ahsan Ali Syed is rumoured to be on the brink of buying Blackburn Rovers. He admitted he’s never been to Blackburn and I imagine he wouldn’t know how to get there anyway. But he seems to be prepared to throw huge money at the club.
And so it goes on. And it could be that this is the future of football. Because the statistics are staggering. A recent review of football by Deloitte found that Premier League clubs are spending an average 67% of their revenue on wages. And this on a trajectory that seemed to be continually rising in spite of the recession. Liverpool itself have been trying to build a new stadium but are rapidly running out of money. And so it goes on.
Whose business? Whose success?
Back in 2005, I wrote a case study for a text book written by Professor David Jobber of The School of Management. The case study was all about Premier League football and predicted a downturn in its success because the game had become divorced from the fans. Well, it seemed to do better than my predictions. It became (largely through TV rights) the wealthiest league in the world and attendances remained strong. All very rosy then!
Well, no not really. My assessment of the gap between supporter and club has actually been proved right. Tribal nature appears to be more fiction that fact. Supporters need very deep pockets to support their teams – taking a family to a Saturday game will put you back hundreds of pounds. Watching Match of the Day this weekend I was struck by the rows of empty seats.
For the owners, money is in an altogether different league, so to speak. The jury’s out on whether Manchester City can buy success in the way that Chelsea did a few years ago. Manchester United, once the wealthy club in British football is now complaining that it finds it impossible to compete in the transfer market with its local competitor. Every potential new owner of a club says almost matter of factly that money will be no problem as it looks to buy success.
Who’s the success for? There is no business logic to any of this. None of the owners of Premier League football clubs can, hand on heart, say that the money they’ve put into their clubs has either generated a realistic return or massively improved the profile and success of their other portfolio businesses. A lesson in commercial success is better delivered by airline Emirates. Sponsorship has massively benefited their brand. Are they interested in buying a team? I don’t think so.
Perhaps it’s time to stop thinking of football as a business at all. Think about it instead as the plaything of the rich, their very expensive poodle, subsidised and supported by a loyal fan base who will take almost anything they get to watch, and pay almost anything they’re charged just to say they were there. Right product at the right price exceeding customer expectations? You tell me.