One of the tabloids last week, echoing Heinz, pointed out that there were now 57 varieties of nationality represented in British football. I must admit to recently having grown keen on football for the first time since I was a schoolboy.
There are a number of reasons for this, all of which should be of interest to the marketer who follows social demographics: Foreign talent has made the game truly beautiful (the British, with one or two exceptions, aren’t very good at soccer). It’s a booming industry and that, as with any economy, brings a feel-good factor. In my 40s with a knee injury, watching football no longer gives me an urge to play it (a lesson here for anyone who markets action entertainment – it’s not only for youth; there’s money in the relaxed middle-aged). And there is a resurgence of popular new creative culture on the terraces (chant for Arsenal’s Emmanuel Petit: “He’s fast, he’s quick, his name’s a porno flick”).
And, with British industry poised on the brink of recession, football continues to defy the economy despite the nightmare flotations of some clubs and fears of closure among some in the lower divisions. An annual review of football finance by accountant Deloitte & Touche last week demonstrated that gross turnover in the UK football industry has shown a compound rise of 20 per cent per year since 1992, a faster rate of growth than most other British industries outside the computer sector.
Furthermore, revenue for all clubs increased 31 per cent to 675.7m in 1996/7, the fastest rate of growth in the review’s seven-year history. And pre-tax losses across the 92 clubs in England and Wales shrank to 42.6m during that season, down from 98.2m in the previous season.
These overall figures do, admittedly, conceal some distortions. The financial performance gap between the Premiership clubs and those of the lower divisions is described by Deloitte & Touche as “turning from gap, to chasm, to abyss”. That means that clubs such as Brighton and Bournemouth, which have almost gone bust in the past, may be allowed to do so in the future.
I have to respond: So what? Football has always been a business and, like any other industry, there will be those at the top who get their financial act together and those at the bottom who don’t. We can’t bail out football clubs anymore than we should bail out local building societies, butchers’ shops or blacksmiths.
Meanwhile, profitability at the top of football is set fair to grow. BSkyB, itself in rude health partly as a result of its broadcast deal with the Premiership, can be expected to throw good money after good. I love the way Deloitte & Touche puts it: “The money seems to go down without touching the sides.”
But the party can’t last indefinitely. Growth in spending on wages and transfers is almost certain to slow down as foreign leagues catch up with England. As matters stand, the average Premier League club has a higher turnover than a top Italian club – twice as high as a top Spanish or French club. That means that we can pay the best talent to play in England.
The signs are that continental football is catching up with the financial game. We’re told that Bayern Munich sells more replica shirts than Manchester United, but earns less from the business because it subcontracts it through Adidas. They’ll learn. And if they don’t learn about television deals all by themselves, then the likes of BSkyB will teach them.
Meanwhile, we should congratulate ourselves that we have a leading European industry. It should be at the heart of any developing European super league so that it can lead its construction – Arsenal and Manchester United have already indicated that they’re up for it. It can only serve to gear up the earnings for the businesses involved.
And that makes me wonder why there isn’t a European super league for other industries. The football super league will essentially be a pan-European trading market for football – when Arsenal plays Juventus, it trades with it in terms of gate-fees and merchandise and coverage rights. That raises the value of both businesses.
When the London Stock Exchange (LSE) struck a deal with Frankfurt recently to trade 300 top equities jointly, they were creating their own kind of super league. The difference is that Frankfurt is in charge. It was really rather sweet, the way in which they celebrated the deal round at Throgmorton Street – like hens celebrating the fox family coming to supper.
Among brilliant recent initiatives at the LSE has been the decision to open half an hour later in the mornings, thereby shutting itself out of contract-dealing windows around the world. It’s also in trouble over inefficiencies in its Sets electronic trading system and, in any event, equity dealing is moving towards Internet-based markets. Against this background, it will be asked increasingly what the LSE is for – the question has doubtless already been asked rhetorically in Frankfurt.
My point is that our European leadership in the football markets serves to highlight our lack of initiative in other European super leagues. It will be a sweet irony indeed if Britain’s top footballers of tomorrow are fat cats who trade their English football club shares in Frankfurt and drive Rolls-Royces made by BMW.
Cover Story, page 28.