The Business of Football

Posted: February 16, 2010 by mcdonaldtaf in Business
Tags: ,

I’ve started reading Soccernomics and despite only being a third of the way through it I can recommend it to anyone who has an interest in football. I’m not yet fully ‘signed up’ to some of the theories presented; but it certainly opens your eyes to certain aspects of our much-loved sport. If you want to broaden your horizons it’s well worth the few quid.

However, one of the sections argues that business has no place in football. One of the ideas I’m struggling to fully endorse. There are many similarities between sport and business. One of these being that sports teams and businesses alike are always striving for competitive advantage. Whether that’s to tactically out-think another team’s set up or to hone your product range to offer more quality than that of your competitors.

Ironically it is quite likely the seeking of this competitive advantage on the pitch that really opened up the floodgates for the integration of business and football. Within Soccernomics (and a lot of the recent writings by Paul Tomkins) there is a body of evidence which quite clearly links transfer budgets and wages with team success. I like to think there is more to it than just ‘money = success’ and in reality there is; but there is little denying the very strong correlation. That said I believe, that much in the same way small businesses can sometimes rise to the top – past their competitors, there remain unlocked secrets and tactics which can be used in football. Secrets that are not necessarily related to the weight of your balance sheet but to creative thinking. Get the Soccernomics book and read the section about Lyon for an example of creative thinking. Sorry, I digress.

So if we take this correlation and run with it… well you need money. Football clubs of old simply didn’t have the expertise in business to create significant revenues and profits from commercial activities. This is becoming abundantly clear about Anfield’s old regime, who never really grasped the opportunities they had right in front of them. It is more and more apparent that to gain competitive advantage on the pitch it also has to be generated off the pitch. Enter the businessman.

Now there are dangers with the businessman and boy do we know all about that at Anfield. But it should be remembered that the new football model, where business and football combine to create mutual benefits (trophies and profits), remains in its infancy. As such it is learning and sometimes painfully. Like a toddler often falls over and grazes its knee, or worse, so football clubs make mistakes and have to pick themselves up. The difference being that a toddler doesn’t have, or impact on, millions of followers. The baby falls over and only the parents generally notice, a football club slips up and it’s media frenzy time.

The businessman doesn’t do it for love though. It is inherent within most business models that an exit strategy, after increasing value within the business, exists. I’ve said in the past that with every push of a football club to a ‘business model’ there is an equal heave from its community roots. This causes understandable resentment and anger. This is one of the areas that the baby keeps falling down. Football clubs are not managing this aspect of their business very well. If the data I collated for my dissertation is anything to go by they are also failing to maximise their full potential and possibly setting themselves up for a big fall by not managing this transition effectively!

Do football and business fit together? At the moment it would have to be said that they don’t exist in anything near perfect harmony. That is not to say that after a period of learning (and pain) they won’t though. What’s more, realistically while there is money to be made and football clubs need to pay astronomical transfer fees and wages to succeed I fear we’re stuck with it!

(NB: I have quite a few books to read on the business of football and will try and regularly post my thoughts, as they pop into my head, on subjects like these)

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