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Business of Football: Time to blow up the Football Club business model

1.06K   //    05 Jul 2016, 12:45 IST
Manchester United fans
Manchester United have one of the largest group of supporters in the world

This is a bit of a theme for me I know but I so often get reminded of this when I meet with similarly minded colleagues in the sport sector.

I recently attended the excellent Catapult Performance Conference (well done by the way). It was superb and an interesting collection of people all looking to share and learn. Like most conferences, I found the chats with individuals often more interesting than the speeches but nonetheless the conference agenda was stimulating.

A common theme in sporting performance has been the 'marginal gains' theory that was probably first made famous in the UK by Sir Clive Woodward and then delivered phenomenal success via Sir Dave Brailsford with British Cycling. This clearly has worked in the sporting sphere and I am not one to argue against it but I have found that this theory is all too often the basis for commercial growth in sport as well.

Of course we should always be looking for the small improvements...clearly, when small improvements are added up big success can follow but when that is all you are chasing then the bigger opportunities pass you by.

I have been struck by the fact that sports organisations, football clubs, in particular, have professed to have massive fan bases. You may recall interesting statements such as Manchester United in 2013 declaring they had 659m fans around the world. Or a few years later Chelsea declaring they had 400m fans. These are impressive numbers except for one small fact...the clubs make almost no revenue from them.

The Deloitte Money League in 2015 stated that Manchester United made £433m in revenues and Chelsea made £324m. These are in their own right significant figures and puts them firmly in the top 10. The numbers demonstrate the improvement year on year in commercial and broadcast revenues above anything - which means of course that the indirectly the clubs make money from fans via the broadcaster, a few by shirt manufacturers and of course sponsors. The only fans they only really make direct revenues from of course are those that attend.

In VERY simplistic terms think about this. The clubs have built large global fan bases but by their own calculations these two top clubs make only 65p or 81p respectively per global fan. At that point, I am less impressed. Don't get me wrong, I think both clubs do a superb job at commercialising their businesses, they hire bright people and they have moved the needle of what is possible quite considerably.

So to me that means only one thing - the business model has to change. Rather than also chasing incremental gains, slightly bigger shirt deals, more sponsorship deals and bigger stadiums we need to look to how we transform how we actually run the football club business model.

To maximise the potential of the fanbase the only way forward has to be to move beyond incremental change and pursue one of the exponential changes. Technological advances have enabled us to change the way we do things - you don't need billions of dollars and massive real estate to dominate the hotel world but rather a clever algorithm and marketing growth hacking as AirBNB has demonstrated.

That doesn't mean we hand over the keys to the kingdom to current tech businesses (Facebook probably knows more about the fans than most clubs), but to utilise technology and to develop a strategy that doesn't view tech and digital as a cost base but as a growth centre. The chart I chose as my graphic was for the very reason that exponential growth can be disappointing at first but once it kicks in you will wonder what linear was so exciting before.

The Club that takes the decision to move first, to accept that being strategic is key to growth, will be the winner. Reconstruct some deals to participate in the upside rather than take cash up front (if you are in the Premier League lets face it the new TV deal should cover your running costs) and begin to construct your business not around how to maximise each sponsorship deal but how to genuinely engage the captive audience you have around the world. Just getting them to spend £1 (or 5 lives on candy crush) and you can double your annual that's exponential growth.

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Sport Business Executive with over 15 years background working in and on behalf of a wide range of sports including: F1, NFL, Football, Cricket and many more. The past five years have been focussed on finding companies to help grow through active investment giving a unique perspective on where value lies in the Business of Sport.
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