The Economics of Club Football: Importance of Global Fan Support

Football fans are the sole purpose around which the game has developed into a mass spectator sport. Without fans, commercialization would be a nonexistent avenue in the football world. The extent of the reach of football clubs within the local and world population, in absolute terms, determine match attendance, merchandising, and television viewership as well as on field performance of football clubs. These major sources of revenue in turn largely determine the financial health of football clubs which in turn determine present and future patterns of investments in expansion and promoting the club on a global scale.

Manchester United is one of the clubs which has tapped the Global Market of Football Fans, especially the Asian Market

The question is, how will a country like India, which is so far away from mainstream Europe, have an effect on the various economic factors which determine the working of a football club? Why would the club invest in the first place? What does either party stand to gain? Well, promoting the club on a global scale, would not lead to a direct immediate increase in match attendance. Since match attendance is largely determined by the historically embedded community relationships that a football club develops over time, hence, developing such relationships on a global scale would be a mammoth task to achieve. Even if they do, football stadiums have limited capacity, and hence a limited number of fans can attend. Expanding or relocation to bigger arenas is an option; however there is a cap on the extent to which a stadium can be expanded for purely logical reasons. There might be an odd fan from India who visits a stadium on a trip to Europe now and then, but that’s all what it is going to be restricted to. Never is a situation going to arise, when thousands of fans from India are going to make the trip every week to Europe to watch a football match.

The incentive lies in merchandising and e-audience gathering. The word e-audience refers to the proportion of viewership other than in-stadia presence through mediums like the television, internet and radio. The economic logic is simple, more viewers means more television revenue and more merchandise sales. More television revenue would come about due to the increased demand for viewership amongst an overseas audience. Thus an e-audience largely determines television contracts these clubs land.

David Beckham signing for the MLS was a brilliant way of Marketing the Game and Capturing the US Market

Merchandising is another massive source of income. A single star player (take David Beckham as an example) or the team as a whole ( Manchester United or Barcelona) can trigger huge merchandise sales even in countries separated by considerable geographical distances. Here television or the internet has an important psychological influence, wherein the viewer watches his favourite player or other fans sporting the club merchandise. Simple demonstration effects come into play.

The bigger question is, why would the domestic country( say India) allow for such foreign exchanges? The gains can be accounted for in numbers. To start with, there would be greater flow of expertise, technology and knowledge of a professional level. As a result the quality of the game, the quality of management and administration would improve along with increased participation in football . How does the economy gain? Increased participation would lead to an increase in the demand for related equipment. Hence local manufacturers would gain through increased production brought about by rising demand for sports equipment. Official merchandising would require local manufacturers to take up production under licensing from the clubs, which is a necessity in order to bring about parity in prices and income distribution to sustain such demands and prevent counterfeits. It is possible that demand for televisions, computers, cable connections and internet connection would increase which would in turn improve standard of living and cause greater skill formation through knowledge channeling. The cyclical effect of increased employment, consumer purchases and rising income would trigger economic benefits for the domestic country.

Hence, the greater the worldwide presence of football clubs, the greater are their chances of landing fatter sponsorship deals. In such cases trade is mutually beneficial.

Edited by Staff Editor
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