While many countries have made the decision to either cancel their current season or postpone it for at least the next couple of months, here in Poland there are already plans in place to resume the season which stopped on the 9th of March. The last Ekstraklasa (top tier) game before the lockdown was Korona’s 1-0 win over relegation rivals ŁKS Łódź. The season is now set to resume on Friday 29th May and as things stand this will be one of only a handful of European countries to have their professional leagues back up and running. The most notable re-start will be the German Bundesliga which is set to play again this Saturday (16th May), but without any fans. The Polish league (top 3 tiers to resume) and the German league (top 2 to resume) have put precautionary health and safety measures in place to ensure the players and staff working at the game are best protected. The precautionary measures for Polish football include: no spectators, a limit to 50 people in a stadium (players, staff, doctors media), two additional subs during the first 5 games for each team, two additional 5 minute breaks in the 30th and 70th minute for disinfection, and referees to have electronic whistles. So why do I believe that Polish football, specifically the Ekstraklasa, can thrive in these times? Well sport broadcasters have been forced to show repeats of past seasons over the last two months. Some broadcasters even got professional footballers from their respective leagues to play each other at FIFA in order to give the paying subscribers some of their money’s worth. Similarly, with the opportunity to broadcast live football again, broadcasters from around the world will be looking to snap up the rights for the remaining season. While the Bundesliga already has extensive broadcasting deals across the globe set in stone (€1.24bn for 2019/20 shared with Bundesliga2), this is not the case for the likes of the Ekstraklasa. Currently the Ekstraklasa receives €115m over two seasons domestically, making it the 8th most valued league in this sense. However, the Polish league has already received expressions of intent to show the remaining games of the season from broadcasters in Italy, Israel, and Portugal according to sport.pl. The league could attract further attention from higher profile broadcasters such as Sky Sports in the UK who put all their eggs in one basket with Premier League coverage. With the huge uncertainty over when and if the Premier League will resume then if Sky decided to snap up the rights for the remaining matchdays of the Ekstraklasa it would be a major coup for Poland, especially as it gives the players an increased platform to showcase their skills. That Polish football could garner increased worldwide media exposure is shown by the K-League in South Korea which resumed within the last week. Ahead of the restart of the K-League it was revealed that the league had agreed deals in 17 international markets with Australia, Germany, Austria, and Switzerland being amongst them. The K-League also broadcast one game last weekend on Twitter, which was clearly a tactic to boost interest further. This is why I think that the Ekstraklasa can gain a new fanbase in the current pandemic. While the quality might not match the likes of the Premier League, the broadcasters will be desperate to show some live sport. Also, as we have previously seen with British fans showing an interest in the Belarusian league which has continued (as apparently there you can treat the virus by visiting saunas and drinking alcohol), the fans will be less concerned about quality, they just want some live football to watch!
0 Comments
Purpose
This policy supports the national programme for integration of refugees into the community. It is aligned with the Football Association’s Equality policy. The Association is committed to supporting social inclusion through football by bringing people together to overcome discrimination. The national sports sanctions entities have asked all member organisations to develop policies for integrating refugees into their sport. As the governing body for English football the Association recognises the value of sport and the role of football in supporting the development of an inclusive environment for participation to the greater benefit of society. The United Kingdom has committed to taking 20,000 refugees in 2016, with England taking the most. Coming to a new country is not easy when you do not know anyone or speak the language. Refugees may further be affected by trauma. The Association’s integration strategies aim to help in the best way we can and support the ambitions of government and national sporting bodies. This policy and its supporting strategy and guidance will set out a vision for integrating refugees across all levels of our organisation from recreational to the highest professional level. Scope This policy applies to Football Association and all local associations, organisations and clubs affiliated to it. Policy Statement The Football Association is committed to promoting the integration of refugees into UK society through inclusion in its football development programmes and in accordance with the Equality Policy. The Association will engage with member associations, clubs and other stakeholders to develop strategies and allocate responsibilities and resources to achieve this. The Association will monitor performance of the programme and review the effectiveness of the strategy. The policy is fully supported, and will be implemented by the Association’s Main Board. Objectives: · To provide opportunities for refugees of all ages through football which will enhance their quality of life and enable them to achieve to their highest potential. · To promote integration through developing the language skills of refugees and cross-cultural appreciation in a neutral environment though the shared common interest of football. · To work collaboratively with other sports bodies to ensure strategic alignment and complementary programmes. · To identify new opportunities for funding at local, national and international level to support and develop the programme of activities. · To use existing relationships and build new ones with schools, youth centres and retirement homes to benefit the full age range of refugees. · To offer a wide range of opportunities within football to all refugees for all levels of ability and interest. · To encourage and support all parties involved and promote success. Implementation · The FA’s Inclusion Advisory Board, reporting to the Main Board, will oversee the development, implementation, monitoring and review of the refugee inclusion strategy. · The Association will allocate funding for refugee inclusion as part of the overall inclusion budget which will be administered by the Inclusion Advisory Board. · Refugee inclusion will be included in the annual report and action plan on inclusion and anti-discrimination. · A National Refugee Inclusion Co-ordinator will be appointed who will report to the Director of Inclusion. This role will engage with stakeholders, regional associations, national sports bodies and funding agencies to develop, resource, promote and monitor the strategy. · Regional coordinators will be appointed to work closely with local associations and clubs and local government. The roles will identify local needs and opportunities and support applications for resources to provide suitable programmes. · The Regional Coordinators will organise and promote local events and activities and arrange events cascaded down in support of the Association’s national initiatives and programmes. · A budget will be allocated to each region per the number and distribution of refugees. This will be managed by the Regional Coordinators and monitored by the National Refugee Inclusion Coordinator. · Staff and coaches will be appointed to work under the Regional Coordinator on geographic basis per the number and distribution of refugees. Training programmes will be developed and provided to support existing coaches and staff in this aspect. · The staff and coaches will offer support and guidance to the refugees where required. Strategic Plan The Association’s policy for integration of refugees sets out a single vision to enable all refugees to integrate fully into society by 2022. It aspires to make all refugees feel welcome as well as raising health, education and community outcomes. Our strategy sets out our ambition and how we will achieve it, the actions needed to be successful, the role that the Association will play and how we will work with different parties to achieve our shared vision of integrating refugees into our multicultural society. How we will act to deliver the strategic plan: The Association envisages that the whole process for integration could take between 3-5 years and it will be built on these important principles; · Working together: The FA will work with all stakeholders on a national and local level to achieve the utmost success of the integration of refugees into the society. · Being inclusive: The FA will recognise all the cultural preferences of each refugee, considering the range of diversity. · Maximising resources: The FA will ensure that maximum impact is derived from all allocated resources and that everyone involved in the process will get the best value from them. · Reviewing progress: The FA will review progress of the strategy against the annual action plan to monitor that all targets are being met. Football In The Community The Football in the Community programme will be at the forefront of refugee integration. Football in the Community (FITC) is operated under the auspices of the EFL Trust and is therefore Football League related. It is run individually by each of the clubs within the Football League and below. This programme will be used for the initiative since the FITC scheme is well established and respected. It works effectively with local communities and helps improve the lives of many in need through coaching and socialising with others. The FITC scheme would give refugees the opportunity to be associated to the local professional football team and would enable them to play football with people from different backgrounds or to coach others if they would like to. This would then help form a pathway to integrate refugees into the game and the community. To support FITC and to make all refugees feel welcome we would introduce liaison officers and hold regular language sessions to make the transition of integration smoother. The liaison officer would be each refugee’s first port of call should an issue arise or they need someone to talk to. Whilst we envisage that FITC will have a positive impact on integrating refugees, the Association also acknowledges that some refugees arriving will be high calibre athletes. Consequently, the Association would support refugees seeking a professional career in applying for work permits and enable them to look forward to a more stable future. Inclusion through qualification This is a new initiative to be introduced by the FA which offers coaching and refereeing training courses to refugees of all genders and all ages with the primary focus being on social inclusion for refugees living in the region. The course will be free of charge and will be split into theoretical and practical lessons and like the FITC scheme include lessons in English. The ‘inclusion through qualification’ course will act as a fast track into the football world. Refugees will be assisted by language teachers and qualified referees with the assistance of a course guide that includes rich visual media. Refugee Action Board A refugee action board will also be established to help promote engagement and listen to ideas and concerns of all ages. How we will fund the strategic plan: The Association has lead responsibility for delivering and resourcing this initiative. Some initiatives set out in the policy are already underway and have funding allocated. However, funding for new initiatives introduced will come from a redirection of current funding for the game or from identifying new sources. The funding of the strategy will be phased. Each project will receive an initial allocation with further funding subject to performance targets being achieved. · The FITC scheme will be given an initial 1 million GBP in January 2017. Whilst FITC is currently active and funded the scheme will require additional resources to enable expansion into different areas to cope with the influx of refugees. · ‘Inclusion through qualification’ will be allocated 2.5 million GBP at the launch in January 2017. This larger amount reflects that this scheme is new and the cost structure is different. This will cover the appointment of language teachers, liaison officers, coaches and allow support from qualified referees. The initiative will be subject to annual review and the following performance indicators: · Increase in volunteers in the schemes mentioned. · Increase in qualified coaches and referees from ethnic backgrounds. · Increase in participation in football amongst ethnic backgrounds. This initiative will form the basis of the ‘Refugees: World at your Feet’ campaign which sets out a positive vision for integrating the new influx of refugees into society through football . The Association will officially launch this initiative at a presentation evening for all stakeholders. The following table summarises the implementation programme. I have selected Under Armour as the sports brand to evaluate using the identity prism due to the affinity that I have with them at many levels. Firstly, I admire how the company as risen to prominence, developing over the years in to a major brand through a gradual strategy. In 1999 the brand featured in two American Football films, courtesy of Warner Brothers, with Under Armour launching their first TV add in 2003 (Under Armour, 2016). The advertisement featured three words “protect this house” which acted as a rallying cry to athletes (Under Armour, 2015). Furthermore, it was used for home teams to defend their turf from the opposition in the same way Under Armour protects from competitors. As a result, it attracted a lot more men as well as women to the brand. This kick-started something special as the brand then began acquiring major partnerships such as the Baltimore marathon and partners in Major League Baseball. This is illustrated through the sponsorship agreements that they have had with athletes of increasing prominence over the last decade. In 2006 they were associated with Bobby Zamora (an English footballer who was not that well known outside the UK), whereas Under Armour now has agreements with the likes of Tom Brady (NFL), Stephen Curry (NBA), Michael Phelps (swimmer) and Lindsey Vonn (Alpine ski racer), all of whom are well-established athletes in the US. These types of agreements have helped Under Armour overtake Adidas in the American market (Shah, 2016). The brand in its slogans and adverts mirror my determination to succeed as a person. For example, of their many powerful slogans one is “Our job is to make you better” (R204DESIGN,2013), which acts as a call to arms and suggests to the consumer the notion of Under Armour being on the consumer’s side. It also links to a product performance characteristic, it suggests that the product provides high comfort and better performance when exercising. I also have affinity with Under Armour as I admire their aspiration to be the market leaders in innovation as suggested with “the latest innovation isn’t available yet, but it’s being built at Under Armour” taken from a TV advertisement (R204DESIGN, 2013). Kevin Plank the CEO of Under Armour states that they are not worried about the current competition, “they’re worried about the competition that doesn’t exist yet” (National Retail Federation, 2016). These various statements from Under Armour outline what a forward-thinking organisation they are and how rapidly they are expanding. This is further outlined through their mission statement in which Under Armour expresses its main aim to create “game-changing products to give athletes an advantage” (Under Armour, 2016). When they first launched onto the sports market they solely focused on sporting under garments before expanding into other fields after creating a foothold in that specific field. Below is Kapferer’s brand identity prism and SWOT analysis focussing on Under Armour and how they have become a major sporting brand. Physique is of key importance as this is what the consumer associates with the brand first and foremost. Under Armour’s main physical appearances are the symbol and the logo, otherwise known as the brand mark. According to Brassington and Pettit (2006, p.305) the brand mark is the element (without words) which offers visual brand identity and makes it instantly recognisable. The colour which Under Armour uses for its brand mark according to the colour emotion guide is one to show balance within the brand as well as remaining neutral (Ciotti, 2016). This is shown with product ranges appealing to both sexes and not just being male or female driven. Furthermore, the physique of Under Armour shows a brand which is strong and athletic and being a both indoor and outdoor brand, thus reflecting the neutrality again. The personality of Under Armour is one that is athletic, strong, serious and fit as demonstrated with the sponsorships and the brand ambassadors the company has. They have endorsement contracts with the likes of Andy Murray and Stephen Curry as well as Lindsey Vonn, thus proving that the Under Armour brand does not belong to one specific sex and targets both men and women. The personality can also reflect Under Armour’s will to be the best sports brand as the athletes they have signed up all demonstrate a will to be the best in their specific field. Strong brands are built on strong culture which is what Under Armour portrays with Kapferer (2008, p.183) stating that “every brand should have its own culture to which every product derives”. The values that it relays to the audience are clear and concise, so the consumer knows exactly what Under Armour stands for and more importantly what the Under Armour brand is. Under Armour is firstly an American brand having launched in 1996 with its headquarters in Baltimore. The brand – also projects a modern culture due to its innovative products it producers along with a strong teamwork culture as seen in the brand’s advertisements (i.e. protect this house). The brand portrays its relationship to its consumers through a number of eye catching slogans which gets the audience hooked. On the brand identity prism, there are such slogans as “I will” which immediately fills the consumer with empowerment and a drive to succeed. The phrase also portrays that the brand is for winners and wants to strike a winning mentality amongst its consumers. Reflection is the view of the sender and how it is representative of them. The brand identity prism shows that Under Armour wishes to demonstrate that with the right application anyone can succeed through the underdog tagline. This would have a wide appeal as people do generally have an affinity with the underdog and the prospect of success against the odds along with being highly competitive. Under Armour also reflects an image which is successful and fitter suggesting that if you wear our brand you too can be seen as a more fit and successful person. This reflection shows that Under Armour wishes to work with the consumer through having a broad appeal and that if the consumer puts in the hard work it will pay off, thus becoming fitter. The self-image which Under Armour wishes to show is one of innovation with high quality within their products. This gives the impression to the consumer that when they purchase an Under Armour product it will be of leading quality in design and performance. The innovation part is important as they try to distinguish themselves from other sports brands by leading in innovation - most consumers love to try something new on the market. Furthermore, the brand wants to show everything that the company produces is of high calibre meaning that the price of the products is worth it as it aims to satisfy the consumer by giving them the ultimate comfort and enjoyment from it. References
Brassington, F. and Pettit, S (2006). Principles of Marketing. London: Pearson Education Limited. p305. Ciotti, G. (2016). The Psychology of Color in Marketing and Branding. Available: https://www.entrepreneur.com/article/233843. Last accessed 6th Dec 2016. Farhana, M. (2014 ). Implication of Brand Identity Facets on Marketing Communication of Lifestyle Magazine: Case Study of A Swedish Brand. Journal of Applied Economics and Business Research. 4 (1), p23-41. Gaines, C. (2016). Under Armour has a brilliantly simple strategy to do something Nike has been unable to do — conquer the golf world. Available: http://www.businessinsider.com/how-under-armour-plans-to-do-something-nike-failed-to-do-conquer-the-golf-world-2016-3?international=true&r=US&IR=T . Last accessed 7th Dec 2016. Kapferer, J.N (2008). The New Strategic Brand Management. 4th ed. London: Kogan Page Limited . p158-189. Kapferer, J.N (2012). The New Strategic Brand Management. 5th ed. London: Kogan Page Limited. p182-193 National Retail Federation. (2016). How Under Armour Is Changing The Way Athletes Live. [Online Video]. 5 February 2016. Available from: https://www.youtube.com/watch?v=IOkzta6p8ME. [Accessed: 30 November 2016]. R204DESIGN . (2013). Under Armour retail concept . [Online Video]. 19 February 2013. Available from: https://www.youtube.com/watch?v=vdTPqPzvK9g. [Accessed: 30 November 2016]. Shah, O (2016). ‘Are Nike and Adidas under pressure from Under Armour?’, The Times Style. 28 August 2016. p20-21. Smith, G. (2015). Putting an End to a Preventable Scourge. Available: https://www.whitehouse.gov/blog/2015/02/26/putting-end-preventable-scourge. Last accessed 5th Dec 2016. Under Armour. (2015). Our history. Available: http://www.underarmour.jobs/why-choose-us/our-history/. Last accessed 4th Dec 2016. Under Armour. (2016). The UA story: story. Available: http://www.uabiz.com/company/history.cfm. Last accessed 4th Dec 2016. On deciding who to focus on for the personal brand an interesting observation was that athletes who are successful brands position themselves differently depending on the sport they are associated with. For example, a rugby player may position themselves as being sophisticated, sharply dressed and gentlemanlike whereas a basketball player may want to brand themselves as being very hip and street (fashionably current and cool) in order to appeal to that sports-specific audience. Furthermore, even athletes within the same sport position themselves differently which is how they variously attract endorsements from rival brands such as sport clothing companies like Nike, Adidas or Under Armour.
Stephen Curry, in my view has developed into a very reputable and valuable brand over recent years, building up a successful brand portfolio thanks partly due to success on the court. His achievements over a recent period have helped to establish him as one of the best players in the league, thus attracting attention from global brands. The reason why I think he has become a reputable brand is because he has managed to distinguish himself from other big name Basketball player brands such as Lebron James and Kobe Bryant. Unlike James and Bryant who are both seen as very “in trend” in terms of fashion and slightly edgy, Curry’s appeal is in demonstrating a positive lifestyle that is at the heart of a number of charity campaigns
Brands may be distinguished through their different components. Similarly analysing each person as a brand will reveal different characteristics. Physically someone may be male, while another is female, one may have blue eyes the next green eyes. Also the way we portray ourselves varies as some are very outgoing, others are shy, and some people have a very sporting personality with fitness and keeping in shape being important for them. The point is that everyone is unique with potential to stand out. The brand identity prism shows this through six elements which we can analyse a brand such as a major retailer or in this case ourselves, an athlete and a sports team or a sports company.
“Brand personality has been the main focus of brand advertising since 1970” (Kapferer, 2008, p.159). The personality of the brand concerns how the brand portrays itself through its characteristics. Various methods can demonstrate these, for example the colour scheme used, the logo or the style of writing. Also, the brand could portray itself through brand endorsement in an advert. This allows the consumer to identify with the endorsing person that reflects the brand and then compare and align it to themselves. Personality is arguably one of the most important elements of the prism as it gives a brand a human identity, characteristics if you would. The way I try to portray myself is a very kind and humorous person which can also help to show a warmth and welcoming presence. Another part to my personality is being reliable, gentle and trustworthy which again shows a warm presence and demonstrates that the brand can be trusted by the consumer and hopefully endears itself to them. I am also competitive meaning that I strive for the best and persevere, which would appeal to the customer knowing that they are getting a quality brand that wants to compete with the other brands in the same field. The culture of the brand is in essence the values and principles that underpin it. For example, certain brands reflect the country of origin as with the reputation of German cars. Kapferer (2012, p.160) states that the “cultural facet of brands’ identity underlines that brands are engaged in an ideological competition”. Using the culture element of the identity prism on myself, a key part of this is being British as until now I have spent my whole life living there. This infers an association with British values and culture and their perception, where if the British brand is damaged this could cause negativity for my brand. However, culture can be seen as much more than just national identity, it can represent beliefs of the brand and what its ideology is and aspirations for the consumer. My main beliefs as a brand would be loyalty, kindness, social conscience and ethics, which would be reflected in the consumer of the brand. These four beliefs interlink as together they reflect a strong brand that aims to get the consumer’s trust and confidence so that over time they develop the same loyalty that the brand represents. Acting in an ethical way is a key element. The relationship part of the prism would position me as very down-to-earth, which means that I am very realistic person and have a practical mindset. Part of this is being family and friends orientated, underling that I am a very caring person so as a brand I would care what the consumer thinks. Also by having these close links (i.e. with family and friends) illustrates the brand would have close ties with its customers and thereby gain the consumer’s brand loyalty and the relationship would reward that loyalty and mirror it. This reinforces the culture dimension of the brand. Reflection is part of the constructed receiver part of the prism (how others see me) and develops an image over time that reflects the buyer. It is what image the buyer would like to be associated with and aspires to as opposed to what they are known for. The brand that would be reflective of me and thus the buyer would be one that represents being fitter, younger, ethical and successful. This would not necessarily appeal to every young successful person who is active, but it would appeal to people aspire to be like that and be associated with this particular brand. For example, the brand does not target the older generation, however they may buy it because of the association of being younger, successful and active and may feel these characteristics as a result of buying the brand. Self-image, just like reflection, is in the receiver part of the prism and is related to how the consumer feels about the product and their association with it. Many brands make the consumer feel differently, for example people who buy the drinks brand Pepsi feel cool and smart, whilst people who purchase a BMW feel powerful and important. In my view the brand which I represent would make the consumer feel optimistic and upbeat and that they are trying something innovative (leaders in innovation). It would make the consumer believe that they are in charge of their own destiny and able to make bold decisions without being judged. Although the consumer would not feel wealthy and up market it would however give them a sense of comfort and belonging to a respectable brand.
This dissertation would not have been possible without the support of the University of Hull and most importantly my dissertation supervisor Richard Andrews. Firstly the University of Hull have gave me support over the 4 years which has allowed me to progress, develop my skills and ultimately finish my degree in business management. Also I would like to further than the University for allowing me to do a topic for my dissertation which I feel really passionate about and hold a major interest in. Secondly I would to thank Richard Andrews, my dissertation supervisor, whose support and encouragement has enabled me to produce this report through his academic guidance. Furthermore the various discussions held with Richard Andrews helped narrow the ideas and thoughts down and transfer them into the final report. Abstract Financial regulation has been present in a number of European leagues for some time now and other leagues are following suit as UEFA introduce their Financial Fair Play to introduce fairness between clubs while at the same time keeping the competiveness with each club. The increased interest of football globally means every club has an opportunity to generate further revenue as they look to gain a share in the global football market. However in order to increase revenue, each club needs a respectable strong brand which will attract more fans to invest in their product. But as clubs try to develop a strong brand, they take investment risks which do not always pay off and leaves the club with severe debt on occasions. With these inevitable risks it is more important than ever to introduce financial regulation that will safeguard each clubs future. It is further important to have these regulations as clubs in some cases spend vast amounts of money in trying to achieve success as they know the reward is huge. The report provides analyses of how financial framework and brand value interlink with each other and how by implementing or not implementing financial regulation effects the league as a brand. The study comprises all of the ‘Big 5’ leagues in Europe (England, France, Germany, Italy and Spain) and compares the amount of or lack of regulation in each of the five countries in terms of income streams and total revenue, while also taking into account average attendances in each of the leagues and varying ticket prices. The literature review comprises of various sources such as recent articles, books and journals which help build up the overall picture and contribute towards a balance view which ultimately contributes to the conclusion of this thesis. The various authors cited within this text have vast amounts of experience and are widely respected within this this area which helps with the validity of the research. The methodology uses a secondary approach as this was deemed the appropriate method to use which allows the most accurate results and reasonable outcomes to be reached. Within the methodology the various approaches rely upon brand finances ‘brand value’ index which takes into account various factors in order to interpret the overall outcome that is the value of the brand. The findings take into account the results from the method along with the information gathered from the various resources used. They outline that financial regulation is a vital tool within the World of football nowadays and highlights the differing financial results within the 5 countries. 1. Introduction The aim of this thesis is: ‘To investigate the impact of the model of financial regulation in football on the successful development of the league as a brand’. This outlines the bigger problem in the football industry as brand has become of increasing, if not dominant, significance in developing its commercial exploitation reflecting its globalisation. Football is generating ever increasing revenue, especially at the top end, yet many leagues and clubs are running at increasing losses. There is also disparity in revenues within the leagues and many teams overspend to try to achieve success, although ultimately many fall short and end up in debt. However as Thompson (2013) stated it shouldn’t matter if clubs have debt as they can be seen as different from other businesses. Furthermore a number of clubs in some leagues have been bought and heavily subsidised by wealthy private investors. The football authorities at national and transnational levels are increasingly concerned about the sustainability of clubs and competitions running at high levels of debt and are introducing financial regulations to limit these losses. This thesis investigates whether financial regulation can go hand in hand with the brand through examining the following four key objectives: • Examination of the impact that the relatively well established financial regulations in the French league have had on its development as a brand. • Comparison of the French League with other variously regulated major European leagues, such as the other four “big 5” (Desbordes, 2006. P.83) (England, Germany, Italy and Spain). • Investigation of relative brand value by comparing the revenue streams of indicative clubs in the French League with those of similar level teams across Europe. • Assessment of the potential effect of UEFA Financial Fair Play Regulations on a League’s brand. From this it should possible to conclude whether financial regulations can be a positive or negative influence for the football industry and for the brand of the leagues and their clubs. Over the last 10 years finance in football has become increasingly important with some clubs spending beyond their means, subsequently going out of business. Finance in football is important to each club as this helps dictate the strength of the brand, with research into brand equity being conducted since the 1980’s, due to the competiveness and link to market value (Bridgewater, 2010). Trends in brand value and presence in the Deloitte top 20 over recent years are shown in charts 1.1 and 1.2. Further information is contained in appendices 1.A & 1.B. With this has come a need to monitor finance in football as according Hamil and Walters (2010) European football significantly lacks profitability and financial management, with King (2011) stating that financial troubles have followed as a despite income rising in the ‘Top 5’ leagues. Many argue that financial regulation is unnecessary and clubs should be allowed to control their own affairs, with owners, fans and shareholders backing their club regardless of the financial state it is in. However recent work by Beech (2008) states that despite an increase in revenues many clubs still operate in the red and that the situation in England mirrors that of European football in general with Italy being one of the countries with the worst financial management, the other, according to Gomez et al (2011), being Spain. Andreef (2007) reports that despite rising debt levels within the Spanish game, clubs increase spending on transfer fees and player wages. This view is echoed by Kuper and Szymanski (2012) who state that many supporters have been worried about their clubs financial state for over a decade, with people becoming increasingly worried after the recession. An example pointed out by Kuper and Szymanski is that Chelsea and Manchester United’s combined net debt levels when they met in the 2008 UEFA Champions League final stood at £1.3 billion. This was a worrying sign, so worrying that in 2009 UEFA President Michel Platini stated that if this trend continued it would not be long before major European clubs faced going out of business. These concerns have been taken seriously as in 2012 UEFA announced their intention to introduce Financial Fair Play (FFP) which would mean clubs would have to be more stringent with their finances. However, contrary to Platini’s concerns, Kuper and Szymanski (2012) state that the idea of football clubs being “inherently unstable” (Kuper & Szymanski, 2012. P.81) is wrong as they rarely go bust despite being “incompetently run” (Kuper & Szymanski, 2012. P.81). Furthermore Kuper and Szymanski (2012) state that the various football authorities worry too much about finances of clubs and are often concerned about the wrong clubs. This sentiment is supported by a comparison between the 1923 English Football League and the 2007-2008 season, where 97% of clubs (85 clubs) that competed in 1923 still competed today. Furthermore 75 of the clubs still remained in the Football League (top 4 divisions) and quite astonishingly 48 of the clubs were in the exact same division as 1923 (please note this may of changed from 2008). Also only 9 clubs from 1923 had moved divisions by 2 or more. These figures support Kuper’s and Szymanski’s argument that football clubs are unstable but rarely go bust, which begs the question should financial regulation be for all clubs in the beautiful game or not? Furthermore if European clubs’ debt did cause them to collapse then “surely there would now be virtually no European football clubs left” (Kuper & Szymanski, 2012. P.89). However Beech, Horsman and Magraw (2007) argue that recent research has shown worrying incidence of English clubs facing insolvency. Between the years of 1986-2007 there have been 56 clubs becoming insolvent (68 in total as it happened more than once with some) (Beech et al, 2007). In part the figures were influenced by ITV Digital’s (then TV rights broadcaster) collapse in 2002 which had a disastrous effect on the Football League clubs, however Hamil and Chadwick (2010) state that more significant factors affecting solvency were poor on field performance and relegation. The main problem Hamil and Chadwick (2010) identify is that English football has failed to deal with the commercialisation of the sport, since only in the last 10 years have clubs “come to terms with a post-commercialised phase” (Hamil & Chadwick, 2010. P.260). However whilst the Premier League has adapted to the business needs of the industry, this has been not entirely successful. Despite the considerable revenue streams which have been created and spent by clubs, the control of costs to guarantee profit has proved very difficult. Financial sustainability has consequently appeared on the agenda of regulatory bodies. Most notably UEFA has introduced Financial Fair Play (FFP) criteria for the 2013-14 season, which restricts clubs to a €45M cumulative loss over 3 years and a maximum loss (if the owner does not inject equity) of €5M over the same period (Thompson, 2013). Participation in UEFA’s club competitions (Champions League & Europa League) (UEFA, 2014) is dependent on meeting these requirements with UEFA monitoring each clubs accounts for compliance. Furthermore, according to Conway (2014,) clubs cannot spend more than their generated revenue and they are expected to meet all their transfer and employee payment needs. The sanctions in place for any club breaching the rules range from warnings and fines to a ban from UEFA competitions. An investigation of 76 clubs competing in this season’s (2013/14) Champions League and Europa League thought to be breaching the regulations has been completed although the evidence will not be released until the end of the season with the first action being taken in April 2014. Michael Desbordes has researched financial regulations in the French league over recent years. Desbordes (2006) states that the French method of managing finance is unique and aims to avoid bankruptcies part way through the season, which makes the league a “true championship” (Desbordes, 2006. P.86). Similar systems to the one in French football are used in rugby, handball and basketball. The Direction Nationale du Contrôle de Gestion (DNCG) is the system which monitors French football finance and is an internal commission to the French Football Federation (FFF). Desbordes (2006) cites that the system acts like “French football’s policeman” (Desbordes, 2006. P.86). The tight financial regulations tie into increased value of TV deals with Desbordes (2010) stating that Ligue 1’s TV deals have increased from the end of the 1990’s through “two successful deals” (Hamil & Chadwick, 2010. P.303). According to Repition (2008) the deal signed in 2008 enabled clubs to share €668 million. Furthermore the latest deal signed in April 2014 for the 2016-2020 seasons saw the sum increase again with the rights for Ligue 1 going for €726 million and the Ligue 2 (2nd tier) for €22 million each year (LFP, 2014). Comparison with the Spanish League (La Liga) shows a contrasting situation with looser financial regulations and many clubs in the top flight holding severe debt. However according to Ascari and Gagnepain (2006) Spanish football has seen significant economic activity with its matches being well attended. This is supported by statistics which shows La Liga had the 4th highest average attendances for the 2007/08 season in Europe (Deloitte, 2009. P. 14), and the 3rd largest revenues overall from TV broadcasting (Deloitte, 2009. P. 13). However there is a lack of competitiveness since up to the 2007/08 season, 77 league championships had taken place, but only 9 teams in that time won it. Indeed 3 of the 9 have only won it once (Sevilla FC, Deportivo de la Coruna & Betis) with the majority of league championships going to either Barcelona or Real Madrid (Hamil & Chadwick, 2010). Marti et al (2010) state that the increasing wealth generated by a few football clubs in Spain could lead to an increasing imbalance in the league. Marti et al (2010) suggest further that participation in International competition goes someway to explaining the financial imbalance with only a few clubs obtaining a large amount of money. Gomez et al (2008) supports this view by acknowledging that the “existence of an elite International competition (e.g. UEFA Champions League), automatically creates imbalance in the national competitions” (e.g. La Liga) (Hamil & Chadwick, 2010. P.267). Italy is another of the ‘big 5’ leagues with financial difficulties. This is evident in the recent Deloitte Money League (2014) which states that Italian clubs, apart from Juventus, are struggling to grow resulting in them sliding down the Money League. Deloitte (2014) highlights the fact that with the majority of clubs not owning their stadiums this makes it difficult for them to generate match day and commercial revenue on par with other clubs in the ‘big 5’. Furthermore Cherubi and Santini (2010) echo this view by stating that the economic financial situation is dire in every area apart from broadcasting income upon which clubs are “highly dependent” (Hamil & Chadwick, 2010. P.291). However it is worth noting that like Spain the country’s poor economic climate has had an impact. Germany on the other hand has tighter regulations like France with many clubs being debt free. This is partly down to the various governing bodies which regulate different levels of German football. These governing bodies include the German Football Association (DFB) which regulates the game generally, then within that is the Fussball Liga GmbH (DFL) which governs the Bundesliga (1st & 2nd tier). According to DFL (2008) the annual turnover of the Bundesliga in 2007 was €1.45 billion, with Buhler (2010) stating that the Bundesliga is “considered one of the most business-like leagues in the World” (Hamil & Chadwick, 2010. P. 327). Buhler (2010) states that German football saw major growth throughout the 1980’s with the introduction of privately owned TV companies, which led to more competition in the broadcasting market resulting in higher income streams for the clubs. A further rise in revenue from broadcasting rights was seen in the 1990’s with the introduction of pay-per-view. Other success factors in Germany include high attendances and cheap ticket prices which in turn help generate healthy revenue. Financial regulations are also being introduced in England with FFP applied to the English Premier League and Championship (1st & 2nd tier) for the 2013/14 season. This supplements existing regulations for England’s League 1 and League 2 (3rd & 4th tier). The Premier League FFP include a maximum of permitted losses of £105M over 3 seasons, while the maximum loss is £15M should the owner not inject equity (Thompson, 2013). There are no restrictions on wages if they are below £52M per annum. Each club will be monitored through their annual accounts along with the clubs’ projections which will be submitted to the Premier League at the end of each season. An aspect of financial regulation is the effect on the brand. Bridgewater (2010) looked into the development of football as a brand. The importance of brands to business and to marketers has increased over recent decades with developments in branding in a broader range of sectors (public sector, charities & e-markets), which ultimately gives the customer something that they can identify with. Brand value in football has an essentially emotional basis. Bridgewater (2010) examined the evolution of the support base from local allegiances in early times into modern global tribes, i.e. groups with shared interests. Part of the value to the supporter was suggested as lying in the escapism and the sense of belonging to a community that it offers. Furthermore Cova (1997) identified the role of the shared interest amongst the supporters and the effect on their self-esteem and suggested that brand value lies in a product’s “linking value”, that is its ability to bind this wider community. One example of this is Manchester United whose global marketing strategy has made it as familiar globally as Coca-Cola. Bridgewater (2010) states that the “sporting world has long recognized the fervent loyalty of fans” (Bridgewater, 2010. P.2) concerning a certain team or a sporting icon. This view is illustrated by League Two (4th tier) Luton Town taking 40,000 fans to Wembley for their Johnstone’s Paint Trophy Final. However commercial significance also plays a key part in brand growth. The view of brand being vitally important in the sports industry (particularly football) nowadays is outlined by Ozanian (2005) who stated that the global sports market is worth around $12 billion per year, whereas Bridgewater (2010) stated that the sports market in the United Kingdom in 2008 was estimated to be worth £21.2 billion and growing year upon year. Furthermore Haigh (2013) states the average amount of money paid by sponsors to be associated with 1 of the top 50 clubs increased in 2013. The analyses for this thesis will be based on secondary data relating to the two complementary strands of finance and brand value. By drawing on published data this approach should ensure more accurate, and in some cases tested, information on which to make comparisons. Furthermore the use of secondary data is less time consuming compared with that of primary as there is no use of interviews, which also means there is no reliance on an extra party which may have a detrimental effect on the research, for example through bias or context. Although the thesis uses secondary data only, the researcher has not neglected the HUBS ethical procedures and abided by all the rules (see appendices A for ethics proforma.) In assessing the ‘Big 5’ leagues the factors to be considered are the regulatory framework including the negotiation mechanisms for broadcasting rights; financial indicators such as the value, sources and distribution of revenue, and profitability; and indicators of brand value of the leagues and the clubs such as attendances, commercial and broadcast revenue and sporting competiveness of the leagues. The information is taken from published sources such as core texts and articles relating to football finance and the annual reports of the governing bodies such as UEFA, which should be considered to be reliable and authoritative. Another resource is the index analyses by BrandFinance which assesses the strength of clubs as a brand. The index analysis helps to “benchmark strengths, risks and future potential compared to their competitors” (Haigh, 2013. P.27). Clubs are rated from AAA+ to D for brand strength (strong to weak). Key Performance Indicators (KPI’s) are also used in this to distinguish whether or not a club has a strong brand. These KPI’s consider 5 factors, namely the star players at the club which drive sales of the merchandise; the stadia in which the club’s “product is showcased” (Haigh, 2013. P.27); the club’s heritage which determines how loyal the fans are; trophies won, as Haigh (2013) states that “only history remembers winners” (Haigh, 2013. P.27); and the manager of the team as the club cannot have a strong brand with an un-successful manager or if there is managerial instability within the club. Deloitte’s Money League provides a method for comparing a club’s financial strength. Deloitte releases the Money League annually enabling comparison against previous years to test a clubs success both on and off the field. There are various ways in which relative wealth of clubs can be determined although these can be limited by information not being in the public domain. Deloitte (2014) has developed models which help to predict clubs future cash flow which assists sellers and potential investors. The easiest way according to Deloitte (2014) to test a clubs wealth is through revenue which is the easiest comparable information as well as it being widely available. The following sections outline the various regulatory bodies in each of the ‘Big 5’ countries, indicators of financial health and measures of brand value from various teams across the ‘Big 5’. Ticket prices and attendance figures are also considered. Appendix 4.A shows the Deloitte (2014) Money League analysis of top 20 teams accompanied by a table it showing the country that the majority shareholder is from. The value of TV revenue within each league and its distribution is included as a measure of financial performance and is shown in figures 4.1, 4.2 and 4.3 below, which enables comparison across the leagues. Figure 4.1 TV revenue distribution €M (top-bottom). Figure 4.2 TV revenue distribution ratio (top-bottom) Figure 4.3 Distribution of TV income €M (top-bottom) 4.2.1. Regulatory Framework In France the clubs’ finances are monitored by the DNCG. This organisation requires the member clubs (top 5 divisions) in the league pyramid to submit their accounts at the end of the season. If a club fails to abide by the rules the sanctions that the DNCG can impose include point deductions and demotion of leagues and in some cases expulsion. France’s TV rights are distributed evenly thus mirroring that of England and Germany. The rights are split 50:25:25 with 50% being split in equal parts, 25% based on the television audience and 25% on sport merit which is related to the clubs previous seasons positions. 4.2.2. Financial Performance Many clubs in France still have debt with an increase from 2011-12 season. The average club debt overall was €60M, however 3 of the 20 clubs in Ligue 1 did have positive results. Ligue 1 revenue rose €1.27 Billion (11.4%), but this was predominantly down to PSG and their relationship with Qatar Tourism Authority.
4.2.3. Brand Value The French league has fared the worst out of the “Big 5” as some teams cut back finances due to lack of on the field success. There are only 4 out of 20 Ligue1 clubs in the top 50 and a worrying sign is all the 4 brands have decreased in value. The Deloitte Money League 2014 (Deloitte (2014)) shows only one French team in the top 20 (PSG) with Marseille dropping from 17th position down to 30th, while Lyon have even fallen outside the top 30 due to missing out on a Champions League place. In comparison the previous Deloitte Money League (2013), placed 2 French Clubs in the top 20 (Olympique Marseille and Olympique Lyon), whereas in 2014 only PSG features. Based on the 2013 Money League, Marseille’s revenue dropped by 10% to £109.8M with the club having a mixed season on the pitch. Whereas Lyon for 2011/12 saw revenue drop by 1% to £106.7M due to decreases in both match day and commercial revenue with them having the second lowest matchday revenue in the Deloitte Money League top 20 2011/12. However this decrease was offset by Lyon’s rise in broadcast revenue. Their main failing was finishing 4th in their domestic league meaning failure to qualify for the Champions League for the first time since 1999. The prediction in Deloitte’s Money League (2013) that Lyon would struggle to maintain a top 20 place for the Money League in 2014 has been proven right. PSG’s revenue has grown substantially from £178.4M in 2012 to £341.8M in 2013. Contributing to this was the acquisition of global brand name David Beckham. Paris Saint-Germain is the highest ever French team in 5th place of the Deloitte Money League due to their “record turnover of €400 Million” (Deloitte, 2014. PP. 18) due to the enhancement of their global brand since the Qatar Sports Investment takeover in June 2011. Kay (2014) states that UEFA’s FFP will test them, having only being allowed to make loses of £37 million. However according to Kay (2014) they have signed a deal with Qatar Tourism Authority worth £570 million over 4 years which should cover their accounts for the years 2012 to 2016. The challenge however is whether UEFA deem the sponsorship unfair due to a possible connection with the owners. In comparison another French giant, Marseille, has been towards the bottom of the Deloitte Money League for the previous five years having peaked at 14 and as low as 16. Despite Marseille winning the League Cup and managing to reach the ¼ finals of the Champions League, the club finished a disappointing 10th place meaning that they only qualified for the UEFA Europa League as virtue of winning the cup. Furthermore the renovations at Marseille’s stadium caused the capacity to be reduced temporarily resulting in a drop in match day revenue by 29% to £14.6M. Ticket pricing influences the picture. Spiro (2013) states that inflated prices are not an issue in France as the clubs try to attract as many fans as possible since only a minority of games sell out. Furthermore Spiro (2013) outlines that for the majority of Ligue 1 teams, spectators can get in for less than €20 (£16.70), with a number of teams allowing spectators in for half of that. It is also worth noting that due to their recent success Paris Saint-Germain has seen an increase in season ticket holders from 10,000 to 31,000. This is despite prices rising at the Paris based club with prices rising over the last 2 years by 11% and 30% respectively. A future impact on the French Ligue 1 brand is the importance of broadcasting rights. The new deal starting from 2016 will provide even more money to share between the teams. This sees a 20% rise from the previous contract, with LFP president Frederic Thiriez stating he wants a “league on the podium of the three best European nations” (LFP, 2014) behind Germany and Spain. Thiriez further states that the deal sees the LFP keep their two major broadcasting partners (Canal+ & BeIn Sports) for the next six seasons. Furthermore by having a record sum for the seasons of 2016 to 2020 its makes “Ligue 1 one of the most valuable leagues in the Word” (LFP, 2014), which can only be seen to enhance the brand. More detail on the new deal can be found in Appendices 4.B. 4.3.1. Regulatory Framework Germany has a similar system to France in that it monitors clubs finances through their submission of accounts and transfer documents. Punishments in Germany should a team enter the red involve point deductions and transfer embargos. The system was created by the DFL and acts as a prototype for UEFA’s licensing scheme as well as being seen as a beneficial model to other countries. The criteria monitored by the DFL include five categories (sporting, infrastructure, personnel and administration, legal and financial) (Buhler, 2005). In 2007/08 as a result of these strict regulations all 18 Bundesliga clubs were financially stable and reporting profits (DFL, 2008. P.173), thus highlighting its success. Broadcasting rights are negotiated between the DFL and broadcasters which allows the revenue to be distributed evenly amongst the clubs in the Bundesliga. 4.3.2. Financial Performance Germany had the second biggest revenue growth out of the ‘Big 5’, these results can be seen in appendices 4.E (4.F shows wage average). The Bundesliga’s main growth in revenue was the success of commercial deals which accounted for over half of the clubs revenue.
4.3.3. Brand Value Germany has seen growth with 8 out of the 18 Bundesliga clubs in the top 50 brand with one of the clubs holding top spot. The strength of the Bundesliga looks set to continue growing with Bayern Munich’s rise and the emergence of Borussia Dortmund. Germany is emerging as one of the most successful leagues in the World, with its recent success coming to fruition after the country hosted the 2006 World Cup. In 2006/07 the clubs in the Bundesliga derived 21% of revenue on average from matchdays, which amounted to €17.2 million (Hamil & Chadwick, 2010. P.330) and recorded the highest attendances throughout Europe with an average of 37,644 fans attending each game. There has been further growth over recent seasons with the 2012/13 season attracting on average 41,941 people per game (12.8 million over the entire season) (Lovell, 2013). Ticket prices are considerably lower than the other ‘Big 5’ leagues and encourages season ticket uptake. This is supported by a BBC survey in 2013, with Lovell (2013) stating that for the 2013/14 season the cheapest match day ticket was at Bayer Leverkusen which cost €10 compared to the most expensive ticket which is found at Hertha Berlin for €89. Low ticket pricing contributed to teams such as Bayern Munich, Borussia Dortmund and Schalke playing in front of sold-out stadiums each week, potentially maximising revenue. Whilst Bayern have been able to generate high grossing commercial revenue for many years (Deloitte (2014), they have recently been overtaken by French club Paris Saint-Germain. Despite this Bayern’s commercial revenue accounts for 55% of total revenue and increased by €35.5 million during the last financial year (Deloitte, 2014). Bayern also saw an increase in broadcast revenue by €25.6 million, thus overtaking Manchester United in the Deloitte (2014) Money League. The Deloitte (2014) Money League and the Haigh (2013) BrandFinance annual report confirm that Bayern Munich are a dominant force within football through impressive revenue streams enabling the club grow as a brand. As Haigh (2013) states Bayern’s “tremendous domestic and European season” (Haigh, 2013. P.3) has helped them achieve number one brand status in the World of football and a brand rating of AAA, overtaking Manchester United. Internal comparison with Bayern’s German rivals shows an overwhelming strength in terms of revenue and brand. According to Haigh (2013) Borussia Dortmund is the second strongest brand overtaking Schalke after many years of hardship and financial turmoil. The change in brand value saw Dortmund’s rise by 15% ($227M in 2012 to $260M in 2013), whereas Schalke’s decreased by 3% ($266M in 2012 to $259M in 2013) (Haigh, 2013. P.4). A factor in Dortmund’s development as a brand is their rise in attendance over the period 2008/09 to 2012/13 from 74,626 to 80,503, reported by Bond (2013). As with Bayern Munich, commercial agreements are key in increasing the club’s brand with Dortmund recently agreeing a long-term marketing agreement with Sportfive as well as extending the stadium naming rights deal with German financial service Signal Iduna. On the field success from domestic success in 2011/12, combined with managerial stability has also helped to develop a strong brand. However Haigh (2013) states with the success Jurgen Klopp is having at Dortmund it may not be too long before other clubs try to poach Klopp, which could have a detrimental effect on Dortmund’s brand. 4.4.1. Regulatory Framework Recently to coincide with UEFA’s FFP, and financial regulations in the leagues below, the Premier League has introduced financial regulations which over a number of seasons aim to improve the clubs debt levels and increase competition. The new rules require clubs to break-even with only a certain amount of the owners investment allowed to count as equity. The Premier League (2013) states that these regulations are “designed to further improve sustainability of clubs” (Premier League, 2013). TV rights are negotiated collectively with revenue spread between the clubs 50:25:25, with 50% being distributed evenly, 25% based on the clubs final league position and the other 25% for the amount of television games a club has (Premier League, 2013). Overseas rights are shared evenly. 4.4.2. Financial Performance The Premier League according to Deloitte (2013, B) is the football world’s leading generator with clubs revenue growing by 4% in £ (16% in €). · Only 8/20 clubs made a profit · Annual revenue: €2500m · Revenue per game: €6.579m · TV income: €1,147m · Range and ratio of TV income share: 71.8 to 46.3 €million / 1.6 4.4.3. Brand Value England’s Premier League arguably has the best brand in the world as it attracts massive global interest, as evidenced by the pre-season tours to Asia by a dozen Premier League clubs each year. The Premier League has the most expensive ticket prices when compared to the other four countries from the ‘Big 5’ leagues. Season tickets can cost up to £1,000 with match day tickets costing £30 on average. The amount of money the Premier League receives for TV rights is substantial. The latest deal saw the Premier League receive £3bn (Hartnett, 2013), which according to Deloitte (2014) will see the English teams rise up the money league in the future, thus improving the clubs and the league as a brand. For example it is estimated that Manchester United’s various commercial activities along with the new broadcast contract will see the club’s revenue to increase above £400M for the 2015 edition of the Money League (Deloitte, 2014). Deloitte (2014) also states that for the 2015 edition it expects to see all Premier League clubs report healthy revenue, with the likes of Liverpool and Tottenham (12th & 14th respectively in the money league) likely to move up. Furthermore Premier League teams currently outside the top 20 are likely to move up and add to the current record of eight clubs from England. The Premier League has the most clubs within the top 50 brands further emphasising its global appeal. However with UEFA FFP coming into effect at the end of the season it is estimated this will adversely affect the Premier League. Arguably the biggest brand in the Premier League is Manchester United, but with other clubs spending power gazumping that of United, could they lose their grip as England’s most valued brand? It is also not helped by managerial change after stability for over two decades at the club. Richard Scudamore (Premier League C.E.O), expressed concern that Manchester United’s recent poor on the field form is having a detrimental effect on the Premier League’s global brand (Bascombe, 2014). One club which may eventually overtake Manchester United, is Manchester City who themselves saw a 10% increase in their brand value this year while United’s decreased by 2%. However UEFA FFP will impact upon City’s future spending as a recent Sporting Intelligence survey (Harris, 2014) shows that their average wages increased by $6 million within the last 4 years, which is a trend that cannot continue. Another trend that cannot continue is the managerial instability with a manager being replaced on average ever 2 seasons as they are expected to win at least 1 trophy per season. As Haigh (2013) states Manchester City need to find alternative revenue streams to make the club sustainable as UEFA FFP prohibits clubs from spending more money than they earn. However Manchester City has signed a number of lucrative commercial deals, including the £12 million per season deal with kit supplier Nike. Further proof that the blue half of Manchester is developing as a brand can be seen with their pre-season tours to Asia each season as well as recently founding a Major League Soccer Franchise, both of which will only enhance their appeal Worldwide. 4.5.1. Regulatory Framework Football in Spain has suffered from debt for some time due to the lack of regulation. However at the start of the 2013-14 regulations were introduced by the Spanish Football Federation and the National Sports Council which requires each club every season to provide information on budget expenditure and revenues, budget funding, investment and divestment as well as a projected income statement according to Football Espana (2013). If a club fails to meet this criteria then they will be unable to sign a player and budgets will also be capped based on income levels. The reason for the introduction is to “contribute to the economic and financial sustainability of professional football, preventing situations of economic instability” (Football Espana, 2013). Broadcast rights have caused huge disparity between clubs at the top and the bottom as the rights were negotiated on an individual basis rather than collectively meaning bigger clubs (Barcelona & Real Madrid) could get the biggest slice. However in the future the league will negotiate rights on a collective basis and shared accordingly. This law was pushed through by the Spanish government which will see an increase in competition between clubs and improve their finances (ESPN, 2013). With the old system Barcelona & Real earned €140 million each compared with Real Vallecano who received €14 million. The third highest earnest was Atletico Madrid who made €47 million (ESPN, 2013). 4.5.2. Financial Performance Barcelona and Real Madrid generate double the revenue of any other La Liga team, thus causing in balance in competition. · Total revenue: €1,622m · Revenue per game: €4.268m · TV Income: €560m · Range and ratio of TV income share: 140 to 12 €million / 11.7 4.5.3. Brand Value West (2013) states that match day tickets in Spain are on average cheaper than in the UK, however this is partly down to the economic problems within the country. However tickets are still unaffordable to some according to West (2013). Comparing the top 3 sides in Spain (Atletico Madrid, Barcelona & Real Madrid), Barcelona have the lowest ticket price at €15 while Real Madrid have the most expensive out of the 3 teams at €28 (Lovell, 2013). Despite, the relatively cheap ticket prices the country’s current economic conditions continue to hamper the growth of the Spanish clubs as a brand with Barcelona’s decreasing in value according to Haigh (2013) by $8 million to $572 million. However Real Madrid’s brand value has increased to $621 million, which is a rise of 4% on the previous year (Haigh, 2013) as a result of high commercial revenue, with the club selling 1.5 million shirts alone. Additionally the international tours that Real Madrid participate in further enhance their brand and increase their share of the global market. However the brand has suffered managerial instability due to the manager (Jose Mourinho) departing the club. The Madrid brand will also be hampered in future years with the announcement that media rights will be negotiated on a collective basis, rather than being negotiated individually since Madrid is one of the clubs that gets to pick the best deals. Despite this Madrid still harvests the biggest revenues in the world of football, $513 million to be precise. In contrast Barcelona, who despite only suffering the slightest decrease in brand value this year (1%), secured domestic success in 2012/13. One way Barcelona are looking to increase their brand is through the acquisition of Brazilian starlet Neymar as they believe he is “hugely marketable” (Haigh, 2013. P.10). Haigh states that the strengths of Barcelona will only help them in the long-term having agreed deals with Coca-Cola and Audi, as well as illustrating strengths in cutting costs. This will also help them meet UEFA’s FFP. Furthermore Barcelona saw a revenue growth to €494 million, however Haigh (2013) states that there is still a gulf between them and Real Madrid with Barcelona never having been the most valuable brand. A further example is Valencia which is the 3rd best brand having seen their value increase by 22% from $68 million in 2012 to $83 million in 2013 (Haigh, 2013). However despite this growth Valencia have dropped down the ranking to 26th, thus emphasising the gulf between Barcelona and Real Madrid and the other teams in Spain. 4.6.1. Regulatory Framework The Italian league seems to lack any real framework which is evident with the number of struggles and scandals affecting clubs in recent years. TV rights are assigned in accordance to various criteria with an advantage to the middle /small sized clubs, but also keeping the bigger clubs happy, thus keeping the status quo. According to clubs TV rights up until 2000 were managed collectively, however pressure from bigger clubs meant it’s now done on an individual basis. Although this is only for private television as the league does still negotiate with public television. 4.6.2. Financial Performance Italy is heavily dependent on TV income and generates the lowest match day revenue out of the ‘Big 5’ · Total revenue: €1532m · Revenue per game: €4.032m · TV Income: €892m · Range and ratio of TV income share: 95.1 to 21.4 €million / 4.4 4.6.3. Brand Value In Italy a club’s brand can be significantly affected by a poor league campaign as shown by Italian club Internazionale Milano (Inter) with a decreased brand of $151 million in 2013. By comparison in 2012 Inter’s brand was valued much higher at $215M, meaning a change of -30%. AC Milan meanwhile experienced similar problems with a dip in form over recent seasons and falling attendances which in turn brought AC’s brand value down in 2013 to $263M compared with $292M the previous year. Furthermore the stadium (San Siro) which is the home to both teams is ageing and losing the appeal which drew in big crowds in the 1990’s, which may further affect the brand negatively in future seasons. However AC’s brand rating is AAA-, which is slightly better than Inter at AA+. The analysis suggests that AC’s better brand rating is down to heritage being founded before Intern as well as winning more trophies than their rivals. However Haigh (2013) states that AC may decrease further in value due to not owning the stadium. However Inter are planning on building their own stadium and follow Juventus’ model, which looks set to become Italy’s strongest brand in the next few years. One of the reasons for Juventus strengthening brand is through owning their own stadium, which is a first in Italy. This allows the club to develop more revenue streams, especially match day. Also Juventus in the top 50 has the 5th highest brand rating with AAA-, but are 13th with their brand value of $180M, which is an increase of 20% from 2012. From Deloitte (2014) it is clear that Juventus appears set to cement itself as Italy’s top club having had consecutive successful seasons over the last few years. Deloitte (2014) shows a rise by Juventus into 9th moving above both Milan clubs in the process to become Italy’s leading revenue generating club. By comparison to Deloitte (2013) Juventus were 13th and 3rd out of the Italian clubs, in the Money League, generating £158.1M in revenue. Deloitte (2014) outline that Juventus’ main success driver was their UEFA Champions League Campaign as well as a broadcast revenue growth to €166M (up by 77%), which was mainly a result of UEFA’s distribution of tournament money. Surprisingly despite only advancing to the ¼ of the Champions League (12/13), Juventus received the highest distribution from UEFA of all the participating teams receiving €65.3M. Furthermore Juventus will see further benefit from Italy’s drop in the UEFA coefficient rankings meaning only 3 rather than 4 teams being able to qualify for the Champions League. This gives Juventus an even “bigger share of the Italian market pool” (Deloitte, 2014. P.23) as a result. Furthermore Deloitte (2014) support Haigh’s (2013) view that Juventus have benefited from owning their own stadium having seen match day revenue at the new stadium treble since opening in 2011. Additionally Juventus are expected to increase their revenue due to the new commercial agreements signed with the FIAT Jeep brand and a new kit deal with Adidas (replacing Nike) which will last for six years. Further deals with the Italian club include Samsung and Bwin with Deloitte (2014) predicting that these will help Juventus cement a top 10 position in future Money Leagues. However a negative within Italian football is financial regulation (or lack of) which affects the majority of Serie A clubs. Also attendances are declining in the Italian league having decreased by 1 million compared to the previous year according to a report prepared by the Italian Football Federation. Italy’s league attendances only exceeded France’s Ligue 1 after attracting 22,591 compared to France’s 19,211 per game. Furthermore the clubs’ revenue from the stadiums decreased by 4.1% (Armagio football stats, 2014). Italian football clubs are highly dependent on the broadcasters (Cherubini & Santini, 2010) which provide the majority of their income. Deloitte (2002) conducted a survey which showed that football is Italy’s most popular sport with a TV audience of over 22 million. This dependency on the media and broadcasters is highlighted with AC Milan's loose relationship with Mediaset and Torino’s with Cairo Communication. Supporting data provided by Lega Calcio emphasises the relationships between the media and football in Italy and shows various phases across the decades in the disparity between the top two leagues regarding revenue distribution. For example the 5 phases ranging from the early 1980’s show that the revenue distribution system was equal until phase 3 in 1996, where Serie A & B shared equal proportions. The Brand Finance (2013) report places Bayern Munich as the top brand at $860M overtaking Manchester United, which drops to second at $837M with the club mainly effected by managerial change albeit retaining their the AAA+ rating. Another German team, Borussia Dortmund, has increased its brand value by 15% to $260M compared to 2012 (Haigh, 2013). Brand Finance (2013) also notes that the Italian and Spanish brands have been affected by the recent economic conditions and that in France all the 4 teams in the top 50 have a decreased brand position with Marseille being the highest placed team in 18th with an AA- rating with a change of -34% (Haigh, 2013). Overall however brand value has seen a 7% increase across the top 50 clubs, thus showing that football is “recession proof” (Haigh, 2013. P.3). Within the top 50 brands the English Premier League has 14 teams which underlines the strength of the league as brand. Another loosely regulated league, Spain, only has 5 teams in the top 50 brands with a big gulf between Real Madrid and Barcelona and the other teams in La Liga. Italy is another country that is unregulated and like Spain has been suppressed by the economic conditions recently, although they have fared better than Spain with 7 clubs in the top 50. Analysis of the closeness of the title races across the leagues suggests that there is little relationship between regulation and the winning points gap, but the Bundesliga has involved more teams that the others in the top three places suggesting more open competition.(appendices 4.E-4.I). The introduction of UEFA’s FFP will requiring clubs to do either or both of increasing revenue or reducing costs. However Deloitte (2014) predicts that the “disciplined and responsible governance” (Deloitte, 2014. P.6) will help rather than hinder clubs and believe this approach should only be encouraged. However only time will tell what sort of impact these regulations will have on a club’s brand. One can suspect it will favour some clubs (most likely from the countries with regulations already in place) in their quest to rise up the money league ranking as well as improving their brand value. Comparison with the highly commercialised US market with American football (NFL) is informative. This tightly regulated franchise-based competition has collective marketing with revenue sharing and re-distribution and a salary cap to reduce disparity and enable small –medium teams to develop and compete. In 2006 Forbes estimated the average NFL team value to have increased 212% in the period 1998-2006 and average profitability increased 5-fold to $31m (Badenhausen et al, 2006). This research indicates that brand value and financial strength of the leagues is influenced by a combination of financial regulations and a quasi-regulatory approach to negotiating and distributing broadcast revenue. Whist both Germany and France have well developed financial regulations, the Bundesliga is much more successful at ensuring profitability and features far more clubs in the top 50 brands and top 20 Money League. Both have a reasonably equitable distribution of broadcast income but the Bundesliga is far more successful at attracting income from this source and in filling its stadia. Most teams are recording profit with no debt according to Bond (2013). The English Premier League has achieved overwhelming success as the leading brand and attracting broadcasting revenue in the absence of financial regulation. Contributing factors to this are the heritage of the league, the number of globally recognised clubs and the financial power to attract many of the world’s best players. A key factor in this would seem to be that as well as having the most lucrative TV contracts, the revenue is shared the most evenly across the league but in a way that rewards success whilst ensuring competitiveness. However, in spite of the success in generating revenue clubs have struggled to control costs with the result that few are profitable. The new financial regulations aim to bring this about. The less regulated Italian and Spanish leagues with less equitable sharing of broadcast revenue struggle in different respects. Decaying infrastructure and declining attendances in Italy and financial scandals have adversely affected the brand, whilst in Spain the grossly distorted TV distribution has created imbalance and lack of competitiveness although this is starting to be addressed. The Bundesliga in Germany could be considered to be the most successful league due to combining profitability with increasing revenue and Brand Value. This seems to have been an organic improvement with steady progress over many years. The tight financial regulations in Germany are a key factor and coupled with UEFA FFP the Bundesliga should continue to grow as a brand. Whist Ligue 1 in France is already strongly regulated it is not as financially stable as the Bundesliga, primarily due to its revenue base being so much lower. The recent investment into PSG has promoted wider interest in this league and is driving an improvement in brand valued PSG seems likely to continue to grow as a brand and the gap may widen between them and the likes of Marseille and Lyon. However this improvement is potentially in contravention to the French and UEFA financial regulations and so highlights a dichotomy in that without financially extending, or indeed overextending themselves, it is difficult for a club or a league to significantly improve its attractiveness. This is also reflected in the English Premier League where new owners have overspent to bring more clubs up to a competitive standard to challenge the established elite, which then adds to global and commercial interest and value. The central question is whether in the long run financial regulation will benefit the clubs and leagues by enabling them to be more sustainable financially. This leads into questioning where brand value lies. Is it with the clubs, or does the strength of the leagues by virtue of being competitive rather than dominated, add greater collective value? Regulations might be seen by the top clubs as restricting their ability to assemble the strongest sides with subsequent impact on their brand. This research shows that more clubs thrive within a more competitive league and that this is supported by a combination of reasonably even TV revenue distribution and regulation to encourage cost control. This should be important for the policy makers in the football authorities and broadcasters since two possible, alternative outcomes can be envisaged. Firstly, by ensuring a more organic system with financially sound clubs and greater competition for honours, the competitions should become as attractive as possible and enable the maximising of the collective income. Without this an increasingly small but super- dominant elite of one or two clubs in each league could emerge. These might have the best and most attractive players but be in effect playing demonstration matches against the others which might not then sustain global audiences and high broadcast revenues. In the long run this might create pressure for a trans-national elite competition to the financial detriment of the remaining clubs in the national leagues. However the risk from such a strategy that the clubs would need to consider is that it might not sufficiently interest a wider national audience as most football enthusiasts in any country would have no particular enthusiasm for the one or two elite clubs. Alternatively, whilst financial regulation would aim for sustainability and a balanced approach across the range of clubs, might this also lead to a tipping point? If enough of the elite are dissatisfied with the restrictions on their ability to attract the best players, dominate competitions and maximise individual revenue perhaps this could encourage them to break away from the current structures and set up new bodies and competitions away from these controls. Ultimately what could the authorities do? It is likely that European employment legislation for example would make it illegal for the players to be prevented from playing for non-affiliated clubs. It is considered that the brand value of a club is dependent on that of its league and vice-versa. Consequently regulations and other collective arrangements need to be sensitive to maintaining this balance with clear, effective and transparent enforcement that clubs at all levels can accept. The experience of the American NFL suggests that this should be possible and this research could be extended by further investigation of this approach for possible application to European Football. At the time of submitting this thesis UEFA has just announced that Manchester City and Paris Saint-Germain have not met the FFP criteria. However there seems to be further prevarication in the announcement of penalties which does not create a great deal of confidence for the eventual success of this initiative. Andreef, W. (2007). French Football: A Financial Crisis Rooted in Weak Governance. Journal of sports economics. P. 1-10.
Armagio football stats, (2014). Football, definitely the one I'll love forever. [Online] Available at: http://armagio.tumblr.com/post/82689738198/one-million-visitors-less-than-last-season [Accessed 17 April 2014] Ascari G., & Gagnepain, P., (2006). Spanish football, Journal of Sports Economics, n.7, pp. 76-89. Badenhausen, K., Ozanian, M., and Roney, M. (2006). The Tape on the Tagliabue. Forbes. [Online] Available at: http://www.forbes.com/2006/08/31/paul-tagliabue-nfl_cz_mo_06nfl_0831nflintro.html [Accessed 29 April 2014] Bascombe, C., (2014). Manchester United's decline is bad for the Premier League, says Richard Scudamore. [Online] Available at: http://www.telegraph.co.uk/sport/football/teams/manchester-united/10728515/Manchester-Uniteds-decline-is-bad-for-the-Premier-League-says-Richard-Scudamore.html [Accessed 02 April 2014] Beech, J., Horsman, S., & Magraw, J, (2007). The Football Association’s (and the Scottish Football Association’s) changed view of financial difficulty. Proceedings of challenges facing Football in the 21st Century. Reykijavik: Play the Game. Beech, John (2008). On Tour with the Barmy Army: A case study in sports tourism In: International Cases in the Business of Sport. Oxford: Butterworth-Heinemann. Bond, D., (2013). Why Germany's new dominance of Europe may not last for long. [Online] Available at: http://www.bbc.co.uk/sport/0/football/22383346 [Accessed 07 April 2014] Bridgewater, S (2010). Football Brands. Basingstoke: Palgrave Macmillan. Buhler, A., (2010). Germany. In: Hamil and Chadwick (2010). Managing Football: An International perspective. Oxford: Elsevier. Chalabi, M., Sedghi, A. 2013. How do ticket prices for the Premier League compare with Europe? [Online] Available at: http://www.theguardian.com/news/datablog/2013/jan/17/football-ticket-prices-premier-league-europe [Accessed 04 February 2014] Champel, E., (2014). Le Pactole?, Quel Pactole? France Football, 8 April.P.37 Cherubi, S., Canigiani, M. & Santini, A. (2003) Il marketing sportive: analisi, strategi, strumenti. Milan: Franco Angeli. Conway, (2014). UEFA investigates 76 clubs over FFP. [Online] Available at: http://www.bbc.co.uk/sport/0/football/26390770 [Accessed 17 April 2014] Cova, B. (1997). Community & consumption: towards a definition of the ‘linking value’ of products or services. European Journal of Marketing, 31 (3/4), 297-316. Deloitte, (2002-2007). Annual Review of Football Finance. Manchester: Deloitte. Deloitte, (2009). Annual Review of Football Finance. Manchester: Deloitte. Deloitte, (2012). Football Money League. 1 (1), P.1-35. Deloitte. (2013). Captains of industry. Football Money League. 1 (1), P. 1-35. Deloitte (2013, B), Turn on, tune in, turnover. Annual review of football finance: Highlights. 1 (1). P.1-16. Deloitte. (2014). All to play for. Football Money League. 1 (1), P. 1-35. Desbordes, M. (2006). Marketing Football: An International Perspective. Oxford: Elsevier. Desbordes, M., (2010). France. In: Hamil and Chadwick. Managing Football: An International Perspective. Oxford: Elsevier. DFL (2008). Bundesliga Report 2008. Deutsche Fussball Liga GmbH. [Online] Available at: http://www.dfb.de/index.php?id=500016&tx_dfbnews_pil[showUid]=10685&tx_dfbnews_pil[sword]=175,926&tx-dfbnews_pi4[cat]=117 [Accessed 04 April 2014] ESPN, (2013). Spain sell collective TV rights?. [Online] Available at: http://www.espnfc.com/news/story/_/id/1486306/spain-sell-collective-tv-rights-liga-clubs?cc=5739 [Accessed 22 April 2014] Football Espana, (2013). LFP introduce own FFP regulations [Online] Available at: http://www.football-espana.net/27951/lfp-introduce-own-ffp-regulations [Accessed 16 April 2014] Gomez, S., Opazo, M., & Marti, C. (2008). Structural Characteristics of Sport Organizations: Main Trends in the Academi Discussion. Center for Sport Business Management-IESE Business School Working Paper No. 730. Gomez, S., Marti, C and Mollo, C.B, (2011). Comercialisation and transformation in Spanish top football, in: Gammelsaeter, H. and Senaux, B. (Eds), The Organisation and Governance of Football across Europe: An International perspective, Routledge, London. P.182-194. Haigh, D. (2013). Brand Finance. Fussball’s coming home: Bayern becomes football’s most valuable brand. May 2013, P. 1-35. Hamil. S. and Chadwick, S., (2010). Managing Football: An International perspective. Oxford: Elsevier Hamil, S and Walters, G (2010). Financial Performance in English Professional Football: “An Inconvenient Truth”, Soccer & Society, 11 (4): 354-372 Harris, N., (2014). Man City, Yankees, Dodgers, RM, Barca best paid in global sport. [Online] Available at: http://www.sportingintelligence.com/2014/04/15/revealed-man-city-yankees-dodgers-rm-barca-best-paid-in-global-sport-150401/ [Accessed 17 April 2014] Hartnett, J., (2013). New rights spell financial windfall for the Premier League. [Online] Available at: http://www.totalfootballmag.com/features/premier-league-features/new-tv-rights-spell-financial-windfall-for-premier-league/ [Accessed 23 April 2014] Kay, O., 2014. Financial Fair Play still does not add up. The Times Sport, 25 January. P.7. King, A., (2011). After the crunch, a new era for the beautiful game in Europe?. Soccer and Society. 11 (6), P.880-91. Kuper, S., Szymanski, S., (2012). Soccernomics. London: Harper Sport. LFP, (2014). Record sum paid for Ligue TV rights. [Online] Available at: http://www.ligue1.com/ligue1/article/record-sum-paid-for-ligue-1-tv-rights.htm Lovell, M. (2013). Price of football in Europe revealed. [Online] Available at: http://www.bbc.co.uk/sport/0/football/24086153 [Accessed 06 February 2014] Marti, C., Urrutia, I., and Barajas, A., (2010) Spain. In: Hamil and Chadwick (2010). Managing Football: An International perspective. Oxford: Elsevier. Ozanian, M. (2005). The business of soccer. Forbes, January 4th, 25-34.Premier League, (2013). Premier League, (2013). Premier League clubs agree new financial rules. [Online] Available at: http://www.premierleague.com/en-gb/news/news/2012-13/feb/premier-league-clubs-agree-to-new-financial-rules.html [Accessed 16 April 2014] Repition, I. (10th April 2008). Orange defie Canal+ dans la television payante. La Tribune. Spiro, M. (2013). Price of football in Europe revealed. [Online] Available at: <http://www.bbc.co.uk/sport/0/football/24086153> [Accessed 06 February 2014] Sportbusiness International (1st December 2008). Premiere secures Bundesliga rights. [Online] Available at: http://www.sportbusiness.com/news/168376/premiere-secures-bundesliga-rights [Accessed 08 April 2014] Thompson, E., (2013). Financial Fair Play explained. [Online] Available at: http://www.financialfairplay.co.uk/financial-fair-play-explained.php [Accessed 23 March 2014] UEFA, (2012). UEFA Club Licensing and Financial Fair Play Regulations. Nyon, Switzerland: UEFA, 2012. PDF. West, A., (2013). Price of football in Europe revealed. [Online] Available at: http://www.bbc.co.uk/sport/0/football/24086153 [Accessed 06 February 2014] Wilson, B., (2013). Premier League revenues to rise by 25%, says Deloitte. [Online] Available at:<http://www.bbc.co.uk/news/business-22766638> [Accessed 05 February 2014] FIFA 16 saw the introduction of women’s teams into the World renowned series and included 12 international teams for the first time in the game’s history. These teams were. All 12 international received the same treatment as their male counterparts through having the players heads scanned into the game. As part of the introduction of the 12 nations EA introduced mini, World Cup style tournament where the user could play as any of the 12 countries. Despite the introduction of women’s teams in FIFA 16 I feel FIFA 17 can make bigger strides in this field most notably with the introduction of a range of leagues from around the World as well as a wider selection of international sides. Regarding the introduction of leagues I would like and hope to see England’s FA Women’s Super League, Germany’s Fraunen Bundesliga, France’s Division 1 Feminine, United States National Women’s Super League (NWSL) and Australia’s W-League as well as a selection of top sides from other Countries such as Denmark, Norway and Sweden. To coincide with the introduction of the leagues FIFA should use their licenses they hold for the men’s side to scan some of the women’s clubs. For example they could scan the likes of Manchester City Women, Arsenal Ladies, Chelsea Ladies and Liverpool Ladies due to licenses they hold for their male counterparts. Also they could introduce new licenses as well as including new stadiums used by the women’s sides. FIFA could for example strike a deal with Notts County where they could agree a deal for Meadow Lane to feature (used by both the men and ladies) and then scan both Notts County and Notts County Ladies players which would cater for various fanbases within the game. In addition to this EA should look to add more countries to the 12 already in the game. Ideally the majority of the teams from last year’s World Cup could be included, with the obvious exception of Japan due to licensing restrictions. However I know how unlikely it would be including the extra 10 or so nations who competed at the World Cup, so EA could just pick the higher ranked sides. In summary, FIFA 17 should include: · Licensed club sides from the major leagues in the women’s game · Head scans to add authenticity to the game and possibility to use licenses for the male sides which could see the addition of new stadiums (which men/women share). · Add additional countries to the 12 which feature in FIFA 16 · The addition of extra teams should see a career mode for the women’s sides to add an extra element to the game. By implementing these it would add another element to the FIFA brands USP and would lead to added business opportunities for the teams featuring in the game and for the corporation.
Executive summary The aim of this report is to evaluate Manchester United’s strategy through a number of external and internal methods. Manchester United faces a number of challenges which include dealing with the debt which arising from the Glazer takeover and to consolidate and develop their presence in the global market. The methods used in this report are the BCG Matrix, 5 Forces, PESTLE, SWOT, VRIO and resource capability model. These methods are considered to be the most suitable for analysing Manchester United’s business approach. This report also assesses market attractiveness through recently published work and figures whilst analysing the strengths and strategies of Manchester United’s domestic and global competitors such as Barcelona and Real Madrid and comparing with the strengths and weaknesses of the ‘ManU’ brand. Recommendations to enable Manchester United to be strategically positioned to continue to compete in a global market include managerial stability, debt reduction to meet regulatory changes and release more finance for team development and to target India as a new market. Introduction Association football is a significant global entertainment product within a sports industry that accounts for 2.5% of international trade (Meeneghan and Sullivan (1999). In 2011/12 the European football market grew to €19.4 billion (up 11%), of which the ‘big five’ leagues had a market share of 48% (€9.3 billion).Within this Manchester United is one of the most significant brands with the third highest annual turnover of £320m (Deloitte, 2013) and ranked second behind Real Madrid in ‘Soccer Team Valuations’ (Forbes, 2013). Commercial links through sponsorship or partnership with high quality global companies such as Nike, Audi, AON, DHL and Turkish Airlines re-enforce the “ManU” brand and its global appeal. It combines financial power with a desirable product, i.e. sporting success, having won 41 major trophies during its 135 year history. A significant change in ownership occurred in 2005 when the club was taken back into private hands following a period as a public company listed on the London Stock Exchange (1991-2003). The acquisition by American businessman, Malcolm Glazer, was achieved using borrowed funds much of which was then transferred into a debt against the club. Following various re-financing packages debt stood at £436.9m as of 30 June 2013 (Manchester United, 2013). The ownership and governance structure is summarised in appendix 1.0 & 2.0. Manchester United Limited is the holding company for Manchester United Football Club with Red Football being the investment vehicle set up by Malcolm Glazer to fund the purchase. Manchester United outlined its strategy in the prospectus to its initial public offering of 10% of the company’s equity in August 2012 undertaken as part of the refinancing measures. This can be summarised as being to increase revenue and profitability through leveraging the brand value, expanding the global retail and marketing presence and exploiting new technologies. There are three significant features that have implications for Manchester United’s strategy. One is internal, one external and the third is a regulatory change that is a combination of internal and external. The internal factor is the succession plan for the managerial position following the long anticipated retirement of Sir Alex Ferguson, having been at the helm since 1986. The Manchester United board has been required to develop a strategy that will continue the playing success at the club on which plans to expand their current business in the growing sports industry depend. In preparation for the eventual retirement of Sir Alex, the club took advantage of a team tour to Asia in 2012 to tie up some important commercial deals. The timing was crucial as there was more chance of extending the deals when Sir Alex was still in post. The risk was that if the new manager was unsuccessful to begin with this could undermine the desirability and value of the contracts. The significant external factor is that Manchester United is not in absolute control of its brand value since this is highly dependent on the brand quality of the competitions that it plays in. Consequently it has a shared interest with its competitors in supporting these competitions. This can be seen a distinguishing characteristic of this particular market. Which manufacturers for example have an interest in their competitors continuing to be at least viable? The introduction of UEFA Financial Fair Play Regulations could have implications for paying down of the club’s debt. These changes seeks to stop the losses being made by a large number of clubs and leagues and place limits on operating losses as a condition of entry into European competitions. Similar requirements are being introduced into the English leagues. The analysis of Manchester United’s business strategy will draw upon a range of tools to assess the internal and external environments, the resources available and the structure of the markets in which it operates. Robert Grant defines strategy as “the match an organisation makes between its internal resources and skills” (Grant, 1991. P.114). Correct strategic positioning requires the organisation to be aware of clear links between three aspects which ultimately create value. Johnson and Scholes (Bridgewater, 2010) state these as environmental forces, organisational resources and competences, and stakeholder expectations. Market & Corporate analysis Competitive environment Nature of the Product A fundamental question is what is the product that is being offered? It is not a product with a physical presence that the purchaser can take home and use. At the most basic level it is the opportunity to watch competitive sport for 90 minutes about fifty times a year. However the value of the industry and the major clubs within this show that it is about much more than this. It is about passion and identity. Bridgewater (2010) reviewed the origins of football allegiance and traces the evolution from local affinity and community belonging in the early days to modern tribes, i.e. groups with shared interests. Escapism, distraction from the daily problems and the sense of belonging to a community are identified as part of the value to the supporter. Cova (1997) links the shared interest amongst the supporters to boosting their self-esteem through a sense of unity and belonging, hence in the modern world the tribe is no longer limited or defined by geography. Furthermore it is suggested that the “thing” itself is not important but it is the linking between people that matters. Significantly “... to satisfy their desire for communion, consumers seek products and services less for their use value that for what is called their “linking value””. Hence the football product is about the emotional properties. This is therefore significant in analysing the market sectors (UK, Europe and global) and commercial partnerships that mutually reinforce their “linking values”. Nature of the Market For Manchester United to continue growth as a club they must aim to achieve continued success in the English Premier League and European competitions due to the revenue generated directly from these and the platform they provide for maintaining their status and profile and driving brand value through global broadcasting. They are therefore competing at three levels, within the EPL against domestic competition, in Europe against the big Continental teams and globally against the major, predominantly European clubs for market share in external markets. The first two markets involve sporting competition and the financial competition to underpin it, whilst the third entails the effective commercial exploitation of the first two. This then requires consideration of how to develop the “linking value” of its product for the more remote global market. Market research conducted by Sport+Markt in 2008 (Kuper & Szymanski, 2012) confirmed the appeal of English clubs based on a survey of 9,600 football fans in 16 European Countries who identified their preferred team. English clubs dominated the top positions (appendix 4.0 & 4.1) whilst the overall preference was for English clubs (estimated 106.5 million). This indicates the appeal of the EPL which ‘ManU’ have exploited and can exploit further in different markets. The Boston Matrix analysis (appendix 9.0) identifies that the domestic and European markets are mature, being saturated with clubs and established supporter bases so offering limited growth but a fairly resilient income stream. In contrast parts of the global market are still developing and have considerable growth potential as their economies and supporting infrastructure develop. South-East Asia has the highest growth and market share reflecting the level of interest in the game. However this is likely to require prolonged investment to embed this to turn it into cash cows. A number of emerging markets such as India have high growth, but low market share, the “question marks”. These offer the potential to be developed with investment into cash cows or stars. Finally there are some mature markets, “the dogs” which although affluent suffer from low growth & market share due to deeply embedded popularity of alternative sports e.g. North America. Market attractiveness The football market continues to appeal with record television deals and the sport growing in a number of other countries such as China. Each year Deloitte publish a money league which assesses the strength of clubs though a range of indicators which include turnover, revenue and on field success. Deloitte emphasises that the clubs with a stronghold at the top (Manchester United are 3rd), have the largest fan bases due to “strong revenue in both domestic and international markets” (Deloitte, 2013). Broadcasting rights continue to increase in value with the new contact commencing in the 2013/14 season for the English Premier League being worth £3 billion, which is a “70% increase on the previous value” (Deloitte, 2013). Overall Manchester United could benefit from a potential £5 billion that the domestic and international markets generate over the 3 year period. Sponsorship rights are also increasing as seen in the new seven year deal between Manchester United and General Motors which is worth €54 million per season starting from 2014/15 with increases in following seasons. This surpasses Barcelona’s deal with Qatar Sports Investments which is worth €30 million per season (Deloitte, 2013). Further evidence shows that Manchester United continue to improve their commercial operations with revenue up 14% to £117.6 million, thus making it the largest element of their total compared to the year before where it was their lowest. The increase was partly down to their global partnership with DHL to sponsor their training kits. This was innovative as it was the first use of a sponsor specifically for training kits. On top of this the club concluded some regional sponsorship deals in the mobile sector which generated £20.7 million of extra revenue. However in recognition of the value of the contract with General Motors, ManU have negotiated an early buyout of their training kit deal with DHL as they look for better value from this. However on-field success is important as this is the main way to attract top sponsors. Manchester United’s failure to advance in the 2011/12 UEFA Champions League meant broadcast revenue fell by 11% to £104 million. Furthermore the distribution money they received was £29.5 million, compared to the previous season when they received for £34.22 million for reaching the final against Barcelona (Deloitte, 2013). Match day revenue also decreased by £12.1 million to £98.7 million as the team played four fewer home games. Competitor analysis Since the inception of the Premier League in 1992, there have consistently been four clubs who have dominated, namely Manchester United, Arsenal, Chelsea and Liverpool. Although Liverpool has never won they have always been near the top. Other clubs like one time champions Blackburn Rovers and Leeds United have threatened but were unable to maintain a challenge. The success of sustaining a high position year on year is down to two elements, the first being on-field success and secondly the business success off-field. The financial strengths of key domestic and European competitors are compared in Appendix 7.0 and 7.1. Most teams show an increase in revenue over the period 2009/10 to 2011/12. Whilst Manchester United’s matchday revenue matches the best, broadcasting revenue is significantly less that Real Madrid and Barcelona and Bayern Munich is by far the most successful in attracting commercial income. The Spanish teams benefit from the individual broadcasting rights allowed in Spain and in the short term this aspect is expected to be improved as a result of the new EPL broadcasting contract from 2013/14. In the longer term the Spanish system is likely to be reviewed as it has undermined the competitiveness and interest of the league. Bayern Munich’s commercial success might reflect the economic strength of German industry. The new sponsorship contact with General Motors will help to close this gap. Manchester United’s domestic strength can be largely attributed to the successful timing of stadium expansion, thus generating extra revenue. Whereas Arsenal also increased their revenue following their new stadium in 2006 they lag on the commercial side of things. Chelsea and Liverpool are both restricted by inability to expand their stadiums with Liverpool being less able to offset this through increased ticket process due to local economic conditions. Both have suffered from failing to increase their broadcast revenue, whilst Liverpool has failed to increase their match day revenue. Globally Bayern Munich is an emerging force that is trying to enter new emerging markets, but faces a challenge in increasing popularity over the established presence of Barcelona, United & Real Madrid. Whereas Barcelona and Real Madrid are popular globally they both suffer with debt and are finding ways to address this. Analysis of the language breakdown of the club websites indicates market presence. Of note is that of their principal European competitors the Spanish clubs target Indonesia whilst Bayern has a Russian version, neither of which Manchester United has suggesting some market specialisation. One of Manchester United’s aims is to grow their online presence and launched their official Twitter page in July 2013 which currently has 1,590,551 global followers (Twitter, 2013). They also have a Weibo site. Web visitor analysis found that in March 2007 Manchester United’s official website attracted 2.2 million hits with 1.3 million from outside the UK. In comparison Liverpool had 1.5 million hits whilst Real Madrid only had 1.1 million (Santomier and Costabiei, 2010. p.39). Real Madrid in 2012 developed plans to open a theme park in the Persian Gulf to attract the “well-to-do Asian and Arab fans of a more recent vintage” (Karon, 2012). This will include a club museum to go alongside a 10,000 seater stadium that will be used for pre-season training and matches. In 2004 Jose Angel Sanchez then head of marketing for Real Madrid, predicted that you will eventually get “six brand leaders” and that people will “support their local side plus one of the Worlds big six” (Karon, 2012). Furthermore Sanchez said that Madrid is not just selling football and history they are “content providers” (Karon, 2012). This is important for Manchester United to replicate and are currently in the position of one of the big six leaders of the market. A feature that distinguishes Manchester United and the EPL from other European competitors in developing and embedding interest from the Far East has been the strategy of signing Far Eastern players (Appendix 6.0) since the 2002 Korea/Japan World Cup, capitalising on the increase in the profile of football in the Asian market. Manchester United has signed three Oriental players, one from each of China, Japan and South Korea since 2004 to maintain a continuing presence in their squad (Appendix 6.1). This is an interesting trend as according to Okubo (2006) the Chinese, Japanese and South Korean markets are the “Eastern Asia Football leaders” which excellent facilities to develop International business (Okubo, 2006. P. 361). As part of the global strategy Manchester United has launched many marketing activities worldwide over recent years in the hope to appeal to the overseas market. These activities include:
External analysis PESTLE and Porters 5 Forces analyses have been carried out to assess the external market and competition factors (Appendixes 10.0). These are considered to be the most relevant for assessing the current and projected state of the global football market. They lead to the evaluation of the strengths and weaknesses in Manchester United’s strategy for competing with their global competitors. PORTERS 5 FORCES - Summary These analyses show that:
The key findings from a SWOT analysis are shown in appendix 11.0 Manchester United has developed a strong and resilient position on the back of a prestigious history that has enabled them to increase their domestic and global fan bases which enabled them to leverage commercial sponsorships. A stable and effective management team has had a role in this. The development of their stadium into the largest capacity in the EPL and effective ticket pricing provides a stable core financial base. Manchester United also competes in the EPL which generates the largest revenue of all football leagues at 1 billion Euros more than the second placed German league (Deloitte, 2013). The success of the EPL also provides a solid base for its own commercial activities. A weakness is that Manchester United’s squad is the oldest of their key competitors. This suggests a greater need for refreshing this and entails associated risks and costs. The debt burden on the club arising from the leveraged purchase of it also creates a drain of around £40m a year in interest payments reducing the money available for investing in the squad. A trophy-less season can have an immediate impact on finances like (2011-12). Whilst it would be unlikely that one poor season would cause a drop in underlying support going a long time without a trophy could be different. Opportunities arise through expanding their fan base by targeting different continents after proving very successful in southern and eastern Asia which in turn opens new commercial opportunities. Given the popularity of the EPL there could be benefits from targeting countries with traditional links to Britain or that are English-speaking. This could also represent a barrier to entry for other European teams. In relation to this is ManU’s ‘first pioneer’ advantage which they held in China and other clubs have followed suit after proving very successful. The ‘first pioneer’ advantage means the first organisation in a certain field to exploit opportunities in a new region (Bodet & Chanavet, 2010). The principal threat that Manchester United faces would be a sustained period without success allowing rival clubs to attract sponsorship deals away from them and erosion of global fan interest. In turn this can cause difficulties in attracting and keeping the best players. Another threat would be if important members of the Manchester United business structure left for a rival club, thus giving their rivals a competitive advantage. An example of this happened when Chief Executive Peter Kenyon left United to join Chelsea shortly after their high profile takeover. Again the huge debt that United currently have, which stands at £389.2M (Sky News, 2013) represents a threat to their competitive position. Internal analysis Resource and Capability Model and VRIO analyses have been carried out to assess the internal strength of Manchester United. (Appendixes 12.0-13.0). These highlight the internal factors within Manchester United’s control that can be deployed to competitive advantage over their competitors. VRIO The VRIO analysis considers the value, rarity, cost to imitate and the ability of the organisation to capture the value of its resources. Barney and Hesterly (2006) describe VRIO as a good tool to examine the internal environment of an organisation. The analysis shows the value of the supporters due to the level to which they can be exploited. The players and manager are significant due to the rarity value of their qualities. Resource & Capability Model This analysis shows that Manchester United is relatively strong through the playing squad. However the financial management is as important but weaker due to the level of debt the club holds. Several debt re-structuring exercises have reduced but far from eliminated the debt and it is important for Manchester United to resolve this with the introduction of the UEFA Financial Fair Play regulations. Recommendations The key for Manchester United is maintaining the virtuous relationship between financial strength and football success as failure in one can undermine the other. Maintain managerial stability in its broadest context to enable sustainable evolution of the business. The replacement of Sir Alex Ferguson as team manager has been completed with this in mind through selecting someone with a similar philosophy of combining development of players from within and restrained acquisition of established stars. Minimal changes to backroom staff have been made to avoid disruption. Such changes are inevitably a major risk and it is currently too early to assess the success of this transition. It is recommended that sufficient time and if necessary supporting resources are provided for the new manager to consolidate this change. The squad is the oldest amongst their principal competitors and will require refreshing in the very near future. Given the current debt interest burden and impact from the FFP regulations consideration should be given to capitalising on the values of players nearing the end of their most effective periods to fund new acquisitions. Reduce or pay off the debt to enable more profit to be used for team development as interest payments are a significant competitive disadvantage that could undermine success on the field to the longer term financial detriment. Given that owners appear to lack independent means to do this then a further minority share sale or invitation of new investors on to the Board should be pursued. However, given that he IPO in August 2012 raised £70m from approx. 5% of the shareholding, the paydown of the outstanding debt of around £400m would require a further 30% of equity to be sold, which might be unattractive to owners. A more appealing strategy might therefore be to target a complimentary investor with expertise in technology and content delivery bearing in mind lessons from the regulatory problems that arose when this was attempted with BSkyB in March 1999. The club has been successful in developing a strong foothold the Far East which needs to be consolidated given the success here also of competitors. New opportunities are presented in other markets with India being a very good prospect due to historic links with Britain, English as a second language, the size of its population (1.237 billion) and prospects for economic development. It is also passionate about sport, albeit for cricket. According to TAM Media Research in 2011, the TV viewers for football currently stand at 83 million in India which is the 3rd highest viewership behind Cricket (122 million) and Wrestling (96 million) (Akinyemi, 2011). These features might also present a barrier to entry by clubs from other European countries. The challenge is to develop India whilst consolidating the Far East. It is recommended that:
References Akinyemi, A., (2011). Soccer on the Subcontinent India’s blossoming passion for football. [Online] available at: http://edition.cnn.com/2011/SPORT/football/04/19/football.india.kolkata.derby/index.html [Accessed 27 December 2013]. Arsenal. (2013). Home page. [Online] Available at:<http://www.arsenal.com/home> [Accessed 16 December 2013] Baber, M., (2013). United adds to its Asian roster, Old Trafford MUST stay as home ground. [Online] Available at:<http://www.insideworldfootball.com/premier-league/12993-united-adds-to-its-asian-roster-old-trafford-must-stay-as-home-ground> [Accessed 23 December 2013] Barcelona, (2013). Home page. [Online] Available at: <http://www.fcbarcelona.com/> [Accessed 16 December 2013] Barney, J. B., & Hesterly, W. S. (2010). VRIO Framework. In Strategic Management and Competitive Advantage (pp. 68–86). New Jersey: Pearson Bayern Munich, (2013). Home page. [Online] Available at: <https://www.fcbayern.de/> [Accessed 16 December 2013] Bodet, G., Chanavat, N., 2010. Football's big four and building brand equity in Asia. [Online] Available at: <http://www.emeraldinsight.com/learning/management_thinking/articles/brand_equity.htm> [Accessed 30 December 2013] Bridgewater, S., (2010). Football Brands. Basingstoke: Palgrave Macmillan Chelsea, (2013). Home page. [Online] Available at: <http://www.chelseafc.com/> [Accessed 16 December 2013] Conn, D., (2013). Premier League finances: the full club-by-club breakdown and verdict. [Online] Available at: <http://www.theguardian.com/football/2013/apr/18/premier-league-finances-club-by-club> [Accessed 21 December 2013] Cova, B. (1997). Community & consumption: towards a definition of the ‘linking value’ of products or services. European Journal of Marketing, 31 (3/4), 297-316. Deloitte, (2011). The Untouchables. Football Money League. 1 (1) P. 1-44. Deloitte, (2012). Fan Power. Football Money League. 1 (1) P. 1-44. Deloitte, (2013). Captains of industry. Football Money League. 1 (1), P. 1-35. Desbordes, M., (2006). Marketing Football: An International Perspective. Oxford: Elsevier Forbes, (2013). Manchester United. [Online] Available at: <http://www.forbes.com/teams/manchester-united/> [Accessed 20 December 2013] Grant, R. (1991). The resource based theory of competitive advantage. California management review. Spring 1991. pp.114-135. Grant, R., (2013). Contemporary strategy analysis. Chichester: John Wiley & sons ltd. Karon, T. (2012). Why Real Madrid Can’t Beat Barca on the Field, But Leads Comfortably in the Market. [Online] Available at: <http://keepingscore.blogs.time.com/2012/03/23/why-real-madrid-cant-beat-barca-on-the-field-but-leads-comfortably-in-the-market/> [Accessed 24 October 2013] Kuper, S., Szymanski, S., 2012. Soccernomics. London: Harper Sport. pp.60-243. Liverpool, (2013). Home page. [Online] Available at: <http://www.liverpoolfc.com/welcome-to-liverpool-fc#> [Accessed 16 December 2013] Manchester United, (2013). Fourth Quarter and Full Year Results [Online] Available at: <http://ir.manutd.com/phoenix.zhtml?c=133303&p=irol-newsArticle&ID=1855756&highlight> [Accessed 23 December 2013] Manchester United, (2013). Home page. [Online] Available at: <http://www.manutd.com/Splash-Page.aspx> [Accessed 16 December 2013] Meeneghan and Sullivan, (1999). Marketing & Football: An International Perspective. In: M. Desbordes, ed. 2006. Oxford: Elsevier. pp.132 MIDAS, (2013). Economic overview. [Online] Available at: <http://www.investinmanchester.com/why-manchester/economic-overview/> [Accessed 29 December 2013] Okubo, O., (2006). Marketing & Football: An International Perspective. In: M. Desbordes, ed. 2006. Oxford: Elsevier. pp.338-365 Osterwalder, A., Pigneur, Y., (2010). Business model generation. Amsterdam: Wiley published. Real Madrid, (2013). Home page. [Online] Available at: <http://www.realmadrid.com/cs/Satellite/en/Home.htm> [Accessed 16 December 2013] Santomier and Costabiei, (2010). Managing Football: An International perspective. In: Hamil, S., Chadwick, S., 2010. Oxford: Elsevier. P.39 Sky News, (2013). Manchester United revenue record as debt falls. [Online] Available at:< http://news.sky.com/story/1143354/manchester-utd-revenue-record-as-debts-fall> [Accessed 23 December 2013] Twitter, (2013). Manchester United Official account. [Online] Available at: <https://twitter.com/ManUtd> [Accessed 28 December 2013] UEFA, (2013). Financial fair play. [Online] Available at: <http://www.uefa.org/footballfirst/protectingthegame/financialfairplay/> [Accessed 30 December 2013] Wood, R., (2013). Top French Court Upholds 75% Tax While Footballers Eye Exit. [Online] Available at: <http://www.forbes.com/sites/robertwood/2013/12/30/top-french-court-upholds-75-tax-while-footballers-eye-exit/> [Accessed 30 December 2013] World Economic outlook, (2013). [PDF] Washington: International Monetary Fund. Available at:<http://www.imf.org/external/pubs/ft/weo/2013/01/> [Accessed 28 December 2013] Appendix 3.0: Manchester United End of Year Financial and Business Highlights: 2013 Fourth Quarter and Full Year Results (Manchester United, 2013) RECORD ANNUAL REVENUE UP 13.4% TO £363.2M SPONSORSHIP REVENUE FOR THE YEAR INCREASED 44.1% ADJUSTED EBITDA FOR FISCAL 2013 UP 18.6% TO £108.6M ADJUSTED EBITDA OUTLOOK FOR FISCAL 2014 UP 18% TO 22% Annual Highlights FAPL Champions in 2012/13: a record 20 English League titles. Adjusted net income for fiscal 2013 increased 282.2% to £17.2m and adjusted earnings per share was up 266.7% to £0.11. Commercial revenues grew 29.7% for the year 2013 to a record £152.5m - 42.0% of total revenue. During the fiscal year, we announced: 7 global sponsorship partnerships including a world record shirt deal with Chevrolet 4 regional sponsorship partnerships, and 9 financial services and telecom agreements. Opened our first regional sales office in Hong Kong in August 2012 which has made an excellent contribution, concluding multiple deals. Acquired the remaining one-third stake in MUTV – securing full control of all our content generation and distribution capabilities. Reached 34 million Facebook followers and 32 million unique records on our CRM database compared to 26 million and 15 million respectively a year ago. Refinanced all our outstanding £177.8m GBP bonds and $22.1m of the US dollar bonds with a new term loan, resulting in interest saving of around £10m per year. It is also worth noting that in recent years City rivals Manchester City have started rivalling for similar honours. Appendix 6.0: Asian players in the Premier League Table showing Premier League teams (at the time) since 2000 that have signed Asian players as they aim to get a foothold in the market. (Green= Still at club) (December 2013) Appendix 9.0: BCG Matrix
Appendix 10.0: PESTLE Analysis Political
Social
Appendix 12.0: VRIO shows the resources that impact upon Manchester United’s competitive advantage. Appendix 14.0: Manchester United Web Presence noting range of language versions and key sponsors
(Manchester United, 2013) |
Archives
May 2020
Categories
All
|