Economics of Football

Economics of Football

There are (at least) two schools of thought over the way football should be played.

First, there’s the Jose Mourinho Method‘ the only thing that matters is winning, believes the irascible (and often sacked) Portuguese coach and so if that means stifling the opposition with defensive tactics and use of the dark arts then so be it. And then there’s the Jurgen Klopp Philosophy’  leave your heart on the pitch says the Liverpool boss, run like there’s no tomorrow and entertain the fans who worship your every touch of the ball.

The former is myopic but successful, the latter inspiring but riskier. But it is always the integrity of the second option that truly stirs the soul of football fans and which the businessmen who currently control the Premier League so often neglect to nourish. Today, however, the Beautiful Game may well have found a custodian who recognises that there is more to football than money. Unlikely, admittedly, but possible. Fenway Sports Group, the giant American sports investment company (whose boss, John W Henry, has a personal fortune of more than £1billion), has just performed an extraordinary volte-face and bowed to the whims of the fans.

FSG, run by Henry, Tom Werner and Mike Gordon, has abandoned plans to charge Liverpool fans as much as £77 a seat to watch a match at Anfield next season, following an unprecedented walkout by fans on the 77 minute at the last home match. It would have been a 31% increase on the previous season’s cost at a time when the club is about to benefit, like all of those in the Premiership, from hundreds of millions courtesy of a renewed TV contract. It was the kind of principled, impassioned stand, led by fans organisations such as Spirit of Shankly and Spion Kop 1906, that Liverpudlians are renowned for.

The owners’ statement is astonishing for its honesty and apologetic tone: The three of us have been particularly troubled by the perception that we don’t care about our supporters, that we are greedy and that we are attempting to extract personal profits at the club’s expense. Quite the opposite is true.

More shocking still and this is the real lesson for boardrooms they blundered into a damaging PR disaster and instead of sitting, blinkered, in their ivory towers waiting for the derision to die down, they listened, considered and reversed their decision within days. Thus, they found favour with the public, boosted the image of themselves and their brand and, most importantly, became overnight the kind of customer-centric pioneers that media consultants like me are paid fortunes to engineer.

For FSG and Liverpool are now the figureheads of a new, increasingly powerful movement run by and for the fans. Every leading football club is on the verge of raising its ticket prices. When this happens at Wimbledon or Twickenham, the mostly middle-class fans of tennis and football sigh, raise a knowing eyebrow and fork out the extra cash to be entertained by evermore professional professionals.

But soccer is different. Most of the clubs are in typically urban heartlands and though their owners may be Chinese, Russian, Middle Eastern or American, the clubs’ identities are indelibly aligned to their working-class roots. And, quite understandably, the fans don’t take well to feeling like they’re being bled dry by billionaires especially at a time when almost one in three of the 92 Premier and Football League clubs are now substantially owned overseas (and nine of the 20 Premier League clubs).

It does seem to be a largely UK problem. Among the top English clubs, the most expensive seats can nudge £100, the cheapest are usually close to £30. The cheapest seats for European Champions Bayern Munich and Barcelona are £11 and £17 respectively.

Last season, the 20 Premier League clubs earned more than £3billion but matchday revenue accounted for less than 20% of the total most of the income (£2.6billion) came from commercial revenue and television money. So, ticket prices aren’t the bosses’ holy grail.

The influx of money has, by and large, been a good thing and it has created probably the most competitive arena in all of sport. According to a fascinating account by the highly influential Chief Economist at EY, Mark Gregory, the financial boost has led to a 67% growth in the number of elite players joining the Premier League, ensuring that the dominance long-enjoyed by the top four clubs is at an end. His own club, Stoke, once a fixture in relegation tussles, now boasts more Champions League winners than any other English team and has seen style and technique trump its more combative qualities.

It’s the kind of enlightened approach that FSG, which also owns the Boston Red Sox baseball team, has always been known for. In fact the group has been called €˜the most sophisticated, synergistic player in the coming age of international sports conglomerates’.

In the wake of its wise decision on ticket prices, one of Liverpool’s greatest players hinted at what this decision could mean for football. In doing so, he also touched upon an issue that every brand, and their PR and marketing teams, struggle with how can we make a profit whilst protecting and enhancing the loyalty of our customers? Jamie Carragher, now a commentator, said this: My hope is that Liverpool have created a snowball, one that takes in the rest of the Premier League. What an advert it would be if there was now a unanimous decision among all clubs to review ticket prices.

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