It's a familiar mantra repeated by Premier League Football club owners; there is no money to be made from owning a club. Many a Chairman/CEO has trotted out the line about how difficult and expensive it is and how no one in their right mind should do it. Let's be clear - this is a fallacy. Football clubs are a license to print money.
That is why affluent investors from all over the world keep buying clubs, it is why those who own the biggest clubs cling onto them even when they can't attend the home games lest their presence incites the vitriol of the crowd. Of course there may be some credence to the claim that some of these billionaires genuinely love the sport but other than Roman Abramovich few spring to mind as belonging in that category.
Certainly not "Silent" Stan Kroenke who has infuriated many Arsenal fans who remain deeply suspicious of his motives with regards to their beloved club. Arsenal's lack of spending is well documented yet he handed Arsène Wenger a new 2 year deal despite the club not registering a credible title challenge for over a decade. Last summer fans were as vocal as ever against Wenger and targeted their rage at Kroenke. The crescendo of disapproval reached its zenith when an offer to buy out Kroenke from Russian billionaire Alisher Usmanov was not even considered. Why didn't Stan sell? He could have made a healthy profit and left the grief behind so why not take the money and run?
It's not controversial to state that the Glazer family who bought a commercial behemoth in Manchester United are not exactly Football fans. The family have seen off fan unrest, protests, even a boycott by long term reds who went on to set up their own club, while deftly managing their finances first with the bond, then with the IPO on the NYSE via a failed attempt to float in Singapore. They have purportedly turned down lucrative multi billion pound offers from China and the Middle East which would have seen them walk away with billions in profit from their leveraged buy out of around £800m. Yet they flatly refused all opportunities to exit to cling on to their money making machine. Why?
When another gargantuan English football club in Liverpool were available they were snapped up by America's Fenway Sports Group the moment their previous American owners Hicks and Gillette ran into financial problems. At less than £400m that was an absolute bargain.
Even the supposed vanity projects of PSG (Qatar) and Manchester City (Abu Dhabi) are ultimately designed to earn their investors money. Yes PSG have shattered the world transfer record for Neymar at £200m and for good measure secured Kylian Mbappe in the same window for £165m. City's owners have spent well over over a billion pounds on players alone so how can they possibly make a profit? Why are they spending all of this money?
The answer to all of the questions above is simple - there is a big pot of gold at the end of the rainbow.
Ever since Sky introduced us to a “whole new ball game” by snapping up the rights to the newly formed Premier League back in 1992 the game in England has changed immeasurably. Traditionalists lament the path trodden by the modern game nostalgically looking back at a pre-Premier League era where football was more innocent, more industrial and well… more domestic. Progressive thinkers have embraced the new exciting direction and devour every last over hyped, overexposed drop of the bloated, brilliant contemporary game. Today, anyone, anywhere in the world can tap into the magic and unparalleled drama of the Premier League, the brand is widely considered without equal amongst a list of any league in the world. In a league table of best Leagues to watch, the English Premier League always finishes top.
Of course this is not by accident, the Premier League has worked hard to burnish its reputation on a global scale by accommodating kick off times to suit a global audience, even kicking off games at 11.30am to pander to the voracious appetite of an increasingly influential Far Eastern consumer. Implored by the likes of Florentino Pérez, the Spanish league followed suit by moving La Liga fixtures to early morning kick offs to try to claw back some of the Premier League’s hold on the Asian market but this has largely been in vain - the Premier Leagues grip on the big untapped markets appear to be infrangible.
This is not without cost - the once sacred Saturday 3pm kick off is no longer special with clubs like Manchester United playing just a handful of 3pm Saturday games during an entire season. Even the FA Cup, once the jewel in the Football Association’s crown, is no longer sacrosanct with its kick off time moved to an early evening start and penalty shoot outs introduced in place of replays as the once irresistible pull of the tournament enervates into apathy. We long misty eyed for its halcyon days but alas they are long gone. In 1990 Alex Ferguson kept his job at United by winning the FA Cup beating Crystal Palace in a replay and paved the way for a dynasty that dominated the Premier League for decades. In 2016 Louis van Gaal was sacked by the same club pretty much on the day he won the tournament against the same opposition because "only" winning the FA Cup is no longer enough. The greatest domestic cup competition in the world is now collateral damage in the quest for more money.
Meanwhile the appeal of the Premier League remains immarcescible. The FA have built it, and they have come in their droves. Hearts and minds (and perhaps most importantly the contents of pockets) have been captured and retained across the globe and such effulgence was never going to go without piquing the interest of wealthy investors and shameless chancers alike. Football’s ascent into the big money league with the £1.2billion Sky deal was just the start of a trajectory that has grown exponentially and arguably not yet peaked even with the price for the same package now at a scarcely believable £8.3 billion. Sky already share coverage with BT Sports and now with Amazon very much manoeuvring themselves to be amongst the bidders there is no sign of that figure plateauing any time soon.
It’s no surprise that interest in owning football clubs remains high and I for one wouldn’t surprised to see that trend continue. There is money still to be made and here is why…
Commercial Revenue
About 5 years ago, the Manchester United Supporters Trust (MUST) released a poster campaigning against the United IPO which stated that every last bit of real estate on the Manchester United kit has already been sold so there is no more to be gained by way of commercial revenue. However this is an area has seen significant growth for football clubs this century and Ed Woodward at Manchester United has proved to be adept in this field - boosting revenue to the extent that club boasted revenues of £585m recently. This income above all others has enabled them once again to sit atop the Forbes rich list above perennial competitors Real Madrid, Bayern Munich and Barcelona with a sleeve sponsor yet to come!
Such is the interest in the United brand that AON who were replaced by Chevrolet as kit sponsor stayed associated with the club by shelling out £180m to rename Carrington as the "AON Training Center" and to sponsor the clubs training tops. The number of commercial tie-ins and endorsements is a world away from the days of a basic kit sponsorship deal. Stadium naming rights have crept into the game and sadly I feel it is inevitable that Old Trafford will be renamed one day as it is a form of revenue the Glazers have in their back pocket should the need arise. With the interest in revenue still high, why would the Glazers sell United when incoming cash flow is so instrumental in the overall value of a club? In fact selling the naming rights to OT could well be their trump card when valuing the club to sell off to prospective buyers.
Do not think this is limited to Man Utd with Liverpool, City, Chelsea and Arsenal sitting comfortably amongst the top 20 global clubs for commercial revenue income.
TV Rights
I’ve already touched on the global appetite for Premiership football but the real money is yet to be made in this area. The TV deals that Barca and Real have are the model our big clubs are eyeing up and certainly United and Liverpool are both itching to be given the opportunity to have similar deals. While at Liverpool, Ian Ayre publicly broached this subject to much criticism. However he was only saying what the Glazers and indeed other foreign owners are thinking. It now emerges that 6 clubs namely Manchester United, Manchester City, Arsenal, Spurs, Liverpool and Chelsea - want their greater global popularity reflected in the spoils from overseas TV rights. This is not the end game as far as those clubs are concerned but they have started the discourse towards it.
United, Chelsea and Liverpool have their own TV channels already but they will never hit the big money league until they control live coverage of their own matches. The medium used to deliver coverage is also a factor here, imagine if United could tap into their alleged customer base of 650m fans worldwide by offering them live streams of their games for a small premium. As a football fan if someone offered you the chance to legally watch a good quality stream of a game you could not attend for a token £1 would you take it? What about £2, £3? A lot of people would, on a global scale that is millions of people. If you think this is far into the distant future you’re very much mistaken as Sky have taken a step in this direction already by offering non-subscribers the chance to view games online by paying a small premium. However, club owners will soon be looking to reap the benefits of the very essence which underpins the success of the internet; disintermediation. The bottom line is that Sky/BT are just middle men who can be removed and the club can sell direct to a willing audience online.
Internet streaming is not even the end of it all, Sky have slowly introduced the concept of “Super Sunday” and the big games are hyped up to ridiculous levels. Of course this is marketing for their product but I also feel that the distinction of elite “big games” is a concerted effort to instill these “must see games” into our psyche. This will one day lead to such games being available as pay per view events. I can see a time where your average subscription includes more games but the total list omits the big matches which will (like Boxing) be exclusively pay-per-view events available on TV and via a plethora of internet and mobile devices.
TV revenue has killed the need for squeezing match day revenue. Many Premier League clubs have frozen season ticket prices for 5 or more years. This should not be viewed as a benevolent act - rather it's simply not worth the hassle or bad publicity for such small rewards in comparison to other forms of revenue. This of course also means that clubs are less likely to invest in stadium expansion. It cant be a coincidence that Manchester United quickly abandoned talk of a 90,000 seat Old Trafford around the same time they froze season ticket prices 6 years ago. The extra 15000 can watch it on TV with millions of others!
Apps
Surprisingly this is an area that football clubs haven't really made inroads which is a surprise given the profile of big name players and the obsession with image rights. Again Man Utd have made tentative steps in this arena with a MUTV app but without the content to back it up it hasn't had the success they hoped for. Quite why they (or indeed other clubs) haven't developed monetised smart phone apps / wallpapers featuring the team or its stars (past and present) is unclear. Rest assured that this is potentially a huge revenue generation opportunity and it's only a matter of time before it starts being explored.
Dividends
Stan Kroenke angered Arsenal fans when he started taking funds out of the club for his own use. The Glazers started taking a dividend out of Manchester United in 2015 helping themselves to £15m from the cookie jar. This season that figure is up to £18.3m. Well what's the point of having a cash cow if you can't milk it now and again?
Voting Rights
There are only 20 clubs in the Premier League and therefore only 20 votes to be cast when deciding on factors such as how many subs should be allowed and where and how TV rights should be carved up. Owning a Premier League clubs gives you the precious opportunity to influence the evolution of the English game. Basic human nature means that the quid-pro-quo will be at play here. Let’s say that Shekih Mansour owns a TV Channel that aspires to exclusively distribute Premier League coverage to the Middle East. How can he ensure that the other clubs vote to sell the covering in his favour? Well for a start he could pledge his vote to sell rights to another country which may suit another foreign owner. Everyone’s a winner!
Of course as I already stated the clubs would prefer to sell their product direct anyway but they won’t immediately get their way as the Premier League have currently retained a right to veto any decision made by the voting clubs but I wouldn’t give that notion too much credence in the long term. Once the foreign owners make their move they will force the Premier League to bow to their wishes or threaten to leave it altogether. You know what kind of thing they could force the Premier League to usher through? A 39thgame….
The 39th Game
It was raised at a PL meeting years ago and (almost certainly) deliberately leaked to the red tops to gauge public opinion as most of these things are but I feel there is an inevitably about this – and isn’t a 39thgame just perfect to be a pay per view event? Just think about it, even the draw to work out who plays who and where will be big news – we may end up paying for the privilege of watching the live draw! The 39th game of course is not just a single game. With the fixtures scattered across the world and therefore a number of time-zones the entire fixture could be played out over several days allowing a global audience to watch a number of the games. Just like any major sporting event, the host countries will be queuing up for the prestige of having a “proper” Premier League fixture being played on their soil. The ever loyal English football fans will of course travel on mass so as not to miss their clubs games emptying their pockets in foreign climbs in the process. Can you envisage how much a single ticket will cost for such a game? We’re talking Champions League Final prices to watch Bolton v West Ham in Kuala Lumpar! Circling back to commercial revenue, clubs may be offered one off sponsorship deals for this fixture, they may even launch commemorative kits – where does it end? The potential is limitless and if you think it is far fetched take a look at the T20 Cricket format for the Indian Premier League (IPL).
The NFL and NBA have already adopted this approach and just like a pop star going on tour, it will no longer be good enough for our clubs to give the foreign fans the odd glimpse of super star players in a meaningless pre-season kick about. These people buy the shirts, subscribe to the TV channels, are members despite living thousands of miles away and in general pour millions into the clubs coffers – the foreign consumer will start to demand more for their money and if Manchester United have more fans (customers!) in China than they do in Manchester then like any other business the priority will become pandering to the set of fans that produce the most revenue….
Franchises
You’re probably thinking this will never happen but the natural extension of foreign ownership, the 39th game and pay-per-view TV is to adopt a franchise model altogether. Why not just take Manchester United and move them to the other side of the world?
Manchester City's owners are already busy buying up clubs in major cities like New York and Sydney but why not just move Man City?
And while they are at it let’s just get rid of relegation altogether and have the same 20 franchises play all the time in the top flight. This idea has also been leaked to the public and quite rightly has been met with universal and widespread derision. That doesn’t mean it won’t happen one day! Remember when we shook our heads at the idea of a Super League? Well it’s here and we bloody love the Champions League don’t we?
People often ask what will become of football when we have so many foreign owners able to afford the best players. The common perception is that some will walk away as not everyone can win. I don’t agree with that all - imagine a franchise model where players are not scouted and signed by the clubs youth team but instead a NFL style draft system is introduced where the worst team gets first pick. Everyone has a chance of success and everyone makes money.
Don’t like the draft system? How about mimicking player auctions like the Indian Premier League cricket competition? Players have no loyalty any more anyway so why don’t we just do away with the pretence and only have players attached to a club for a single season at a time? The auctions would of course be available on TV (at a cost) and we will all be glued to our screens wondering who will sign up the future Lionel Messi.