Football is without a doubt the most popular sport across the world. And naturally popular football clubs are big brands especially the likes of Manchester United, Real Madrid and FC Barcelona. Like major brands in various industries, these brands have their own style of functioning.
Over the next few weeks, we will be taking a closer look at certain aspects of a football club like the hierarchy in place and also analyze a few roles. In addition we will delve into the commercial side taking into consideration the cost and revenue aspects. Further, it will be interesting to see how big a business football really is and what do businessmen look to obtain by investing their money in such brands.
The game of football has undergone immense commercialisation over the past few decades. Football clubs have grown as organisations, players have made a lot of money and club owners have made windfall gains either directly or indirectly from investing in clubs. Every season we see close to millions of dollars being spent by football clubs in player acquisitions, retaining talent, building infrastructure and making the brand popular. This, in turn, poses an interesting question.
Is football really big business?
To begin with, it is important to understand what qualifies as a big business. Big business is one which undertakes commercial operations organised and financed on a large scale with the motive of generating huge revenue and in turn high profits.
While there are some staggering numbers depicting player transfer fees and player salaries, one has to realise that from a financial standpoint, football clubs aren’t really that big. Take the example of Real Madrid. The club from Spain’s capital city generated revenues to the tune of €519 million in 2013 which was the highest among all clubs in Europe.
Yet the record European champions could not match the amount made by packaging giant Viscofan which was listed last in the Spanish stock exchange index referred to as the Ibex 35.
The problem lies with the fact that football clubs have not been able to make enough money. And when they have, they have not been able to do it consistently. The love for the beautiful game has not often translated into sales for the football clubs. Further, the truth is, owners are very well aware of this fact.
Magnates and big businessmen have often looked at owning football clubs not with the view of making money but with the objective of expanding and popularising their business. This is true for Roman Abramovich who, post his acquisition of Chelsea, saw his company’s stock grow by leaps and bounds.
In 2010, the Qatari ruling family bought Spanish side Malaga and with the acquisition came promises of some star signings. The likes of Jeremy Toulalan and Joaquin were brought in but once the owners failed to get a clearance to build a marina in the region, the signings stopped. For Sheikh Abdullah Al Thani, investing in Malaga was considered the way forward to expand his construction business to the region. When that failed, the star signings no longer came.
Further, the aspect of profitability takes a huge hit for clubs aiming to win trophies every season. These clubs incur huge costs in buying new players and though that generates revenue but certainly not enough to make substantial profits. The truth is football clubs have to deal with a very thin margin. The love for the game does not translate into sales directly. It does for say Manchester United fans staying in Manchester as they would be buying season tickets and also official kits from the club’s store. But United stand to gain very little from a fan staying in Nairobi or Dhaka. True there is the lucrative television deal in place now but even that is not enough.
With their immense popularity, it is a shame that football clubs have not been able to match some of the top companies in other industries. But there is no denying that football isn’t big business. It generates a lot of money not only for itself but also some of the related and unrelated business houses. However, it is not as big as it could and perhaps should have been.
Are football clubs more than their balance sheets?
Is it wrong to look at football from a commercial standpoint? Why do we even compare football clubs to other industries? Why do we look at a football club like a corporate house?
These are questions that often crop up and rightly so. Football began as the game of the working class across the globe and has since evolved into a sport that truly unites people. For millions, this is more than just a sport. The game is a way of life.
Also read: How do football clubs make money?
The game in its own way has inspired people. In India, many believe that the exploits of Mohun Bagan inspired the second phase of the country’s freedom movement. Nelson Mandela’s home for 25 years, Robben Island had a football club of its own. Makana FC comprising the inmates of Robben Island showed us how football can triumph over Apartheid. Amidst all this emotion, it just does not feel right to bring money into the equation.
We need to look at football clubs in a different manner, for they are more than just their balance sheets. They are institutions which represent people and their aspirations. They mean something to the fans which cannot be described in words.
That is the reason why it is often said that football clubs are closer to people than governments will ever be.
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