Routledge Handbook of Football Business and Management

Simon Chadwick, Daniel Parnell, Paul Widdop, Christos Anagnostopoulos, Simon Chadwick, Daniel Parnell, Paul Widdop, Christos Anagnostopoulos

• Publisher: Routledge
• Year: 2018
• Print ISBN: 9780367732462
• eBook ISBN: 9781351262781
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Soccer is the world's most valuable sport, generating bigger revenues, as well as being watched and played by more people, than any other. It is virtually impossible to understand the business of sport without understanding the football industry. This book surveys contemporary football in unparalleled breadth and depth.

Presenting critical insights from world-leading football scholars and introducing football's key organisations, leagues and emerging nations, it explores key themes from governance and law to strategy and finance, as well as cutting edge topics such as analytics, digital media and the women's game.

This is essential reading for all students, researchers and practitioners working in football, sport business, sport management or mainstream business and management.

1

Introduction to the handbook of football business and management

Simon Chadwick, Daniel Parnell, Paul Widdop, and Christos Anagnostopoulos

Football is commonly referred to as the global game, which is a testament to the sport’s enduring appeal. Many countries claim to have been the originators of football as we now know it, though it is over the last 150 years that the sport which most of us are familiar with has emerged and developed. Initially, football was predominantly a socio-cultural phenomenon in the way that it drew people and communities together under a common identity. As the twentieth century progressed and professional sport took hold, management in football became a key consideration for participants and observers of the game. Later, the influence of North American capitalism began to exert its influence such that, by the end of the twentieth century, the likes of television rights, sponsorships, and club ownership began to fundamentally change the nature and organisation of the sport. And as the twenty-first century matures, there are new issues and challenges, not least those brought about by globalisation, and by ongoing concerns about governance in football. Yet among these many and varied changes to the game, there is still great affection for it among fans; its relationship with the media remains symbiotic; governments still recognise its importance; and businesses know it makes good commercial sense to be involved with it.

Now more than ever, good management is required to ensure that football remains robust and relevant. Rapid societal and technological changes mean that the sport now has serious competition for its dominance of the sport, leisure and entertainment narratives. At the same time, the level of scrutiny that football is now exposed to ensures that decisions made on everything from event-bidding to the signing of sponsorship contracts are examined at an almost forensic level of detail. There are new challenges too, not least in the growing influence of states and corporations on football. With elite professional clubs increasingly owned by American investors, Asian governments or those intent on building franchise networks, this potentially has profound consequences for everything from player transfer markets through to branding, marketing, and financial decisions. At the same time, the lifeblood of the sport – players and fans – continue to occupy a prominent position in football’s landscape. Fans are consuming it in new and different ways, whilst retaining the fervency and strength of their team affiliations. Players are always in demand; spotting, acquiring, retaining, and rewarding them are arguably now bigger challenges than ever before.

In this context, there has arguably never been a more important time for managers in football, especially given the additional business pressures that clubs, representative associations and other related organisations must contend with. As such, the purpose of this book is to highlight and analyse the most important issues facing the sport. Drawing from their extensive experience of the game (as players, fans, advisers, consultants, researchers, and observers), the editors have drawn together a group of leading writers who examine the sport’s most salient issues and challenges using a combination of academic and practical insights. We deliberately adopt a business and management approach in the book which, whilst addressing commercial aspects of football, nevertheless acknowledges and embraces its socio-political dimensions too. As such, the reader will find that the book covers fields such as sponsorship, agents, and social media, while also addressing grassroots football and governing bodies.

The book is targeted at students and staff studying or working on football and sport business management programmes in universities across the world. Given the book’s multi-disciplinary nature, we also believe that it may also be of interest to event management, sport studies, sport sciences, and sociology of sport students and staff. Other programmes, which contain sport management or business modules are also likely to find considerable relevance in the work presented here. Furthermore, we envisage the book being of interest to people working in football, and to people generally who have an interest in the sport. As such, we have sought to ensure that the content of it is as accessible to as wide a range of audiences as possible. This has been achieved through, for example, the examination of prominent issues, and the use of appropriate case material.

To further supplement the readings in this book, the reader’s attention is drawn to the Twitter timelines for each of the editors:

• Simon Chadwick @Prof_Chadwick

• Dan Parnell @parnell_daniel

• Paul Widdop @Fire_and_Skill

• Christos Anagnostopoulos @chrisanagno

In addition, readers may find the following are activities, in which members of the editorial team are engaged, to be helpful:

• Football Collective https://footballcollective.org.uk

• China Soccer Observatory http://www.nottingham.ac.uk/iaps/cso/index.aspx

2

A framework for diversification decisions in professional football

Sascha L. Schmidt and Florian Holzmayer

Introduction

The burgeoning European football market has provoked increasing competition between clubs for further growth. Besides strengthening the core football business, new related revenue sources will be decisive for the future growth of football clubs. Digitalisation offers numerous opportunities for a football club’s growth portfolio as it entails new technologies and changing consumer behaviour. These opportunities, however, also increase the complexity for clubs to act in a changing environment. As such, they may lead the clubs to advanced management requirements in terms of corporate strategy, which is defined as “the scope of the firm in terms of the industries and markets in which it competes” (Grant, 2016).

In order to ensure competitive longevity, a structured strategy development approach has become inevitable for football clubs. The implementation of such an approach entails two main aspects. First, a football club is required to answer the crucial strategic question – where to compete? (Grant, 2016). From a corporate perspective, this means finding the right level of related versus unrelated diversification. The level of relatedness must be examined in terms of business activities and geographical reach. Second, clubs need to consciously manage a portfolio of growth initiatives that leverage and combine its existing resources with those that are newly acquired. This structural approach will support clubs in countering the interdependency of financial and sportive performance in football.

Evidence suggests the existence of an upwards trend between financial and sportive performance in professional football (Szymanski and Smith, 1997; Dobson and Goddard, 2011). As such, superior financial resources increase the likelihood of higher sportive performance through, for instance, investments into new players. At the same time, sportive performance has a positive impact on a club’s revenues (Dobson and Goddard, 2011; Rohde and Breuer, 2016). However, sportive underperformance may lead to a downward spiral. As a result, professional football clubs attempt to reduce the interdependency of financial and sportive performance. New digital business models help to decouple earnings from football success and enable a broader risk distribution. In this respect, professional clubs are on the verge of reinventing themselves and taking on the structure of corporate organisations that operate in a diverse range of businesses.

In order to guide football clubs in their growth development, we introduce the Growth Strategy (GS) framework, which is rooted in diversification literature (e.g., Rumelt, 1974; 1982; Palepu, 1985; Chatterjee and Wernerfelt, 1991; Vachani, 1991; Markides and Williamson, 1994; Kumar, 2013; Kim, Hoskisson, and Lee, 2015). Overall, the 3×3 matrix entails nine distinct principal strategies along the two dimensions – business proximity and regionality. The GS framework is intended to support football clubs in making profound decisions about where to allocate their resources and select the most suitable diversification path in order to stimulate further growth. Case examples illustrate the applicability of the GS framework.

This chapter is divided into six sections. After the introduction, we review the characteristics and recent developments of the European football industry followed by a discussion about the impact of digitalisation on football market growth. Next, we derive learnings from diversification theory. These provide the basis for developing the GS framework, for which we then define principal strategies for each cell and illustrate their applicability with case examples. Subsequently, we describe diversification paths within the GS framework. Finally, we discuss the contribution and limitations of the GS framework and provide an outlook for future research based on our work.

The European football industry

The European football industry is governed by the Union of European Football Associations (UEFA), which embodies one of the most significant members of the Federation of International Football Associations (FIFA). Among a range of activities, UEFA is responsible for delivering some of the world’s most prestigious football competitions. At the international level, it organises the UEFA European Championship for national teams, which is regarded as one of the most viewed TV broadcasts worldwide (e.g., Schreyer, Schmidt, and Torgler, 2017). At the club level, the UEFA organises the UEFA Champions League (CL), which has enjoyed enormous success from a commercial and broadcasting perspective (Drut and Raballand, 2012). In the CL, the top football clubs in Europe stand in direct competition and earn large payouts (Peeters, 2011), regardless of whether or not they perform well in the competition (Pawlowski, Breuer, and Hovemann, 2010). Regular appearance in the CL not only benefits clubs financially, but also the leagues through exposure as they compete in major international TV markets. Clubs from the big five European leagues (i.e., English Premier League, German Bundesliga, Spanish LaLiga, Italian Serie A, and French Lique 1), in particular, have profited as they are consistently part of the CL.

The big five European leagues have been consistently growing by almost 30 per cent over four seasons reaching revenues of € 13.6 billion in 2015/16 (Deloitte, 2016; 2017). Today, and according to Deloitte’s (2017) latest reports, competition occurs mainly between the clubs’ core businesses, comprising broadcasting (49 per cent), commercial (34 per cent) and match day revenues (17 per cent). Broadcasting represents the major income source and is fuelled by recently renewed national TV contracts in the UK, Spain, Italy, and Germany (Deloitte, 2017). Although the core national market remains the most important revenue source for European clubs, the share of international revenues is growing quickly. For example, in the 2013–2016 cycle almost 60 per cent of broadcasting revenues in the English Premier League (EPL) could be accounted to national TV contracts. Yet, “EPL revenues generated from international media rights have become an increasingly important source of income” (Schreyer, Schmidt, and Torgler, 2016c), growing from 24 per cent to more than 40 per cent of broadcasting revenues from the 2004–2007...

Table of contents

• Cover
• Half-Title
• Title
• Copyright
• Contents
• List of contributors
• Acknowledgements
• 1 Introduction to the handbook of football business and management
• 2 A framework for diversification decisions in professional football
• 3 Global football Defining the rules of the changing game
• 4 Structures and policies at the main European football leagues
• 5 Points, pounds, and politics in the governance of football
• 6 Contemporary issues in the management of grassroots football
• 7 Football law
• 8 Football and marketing
• 9 Digital and social media
• 10 Corporate social responsibility (CSR) in football
• 11 Agents and intermediaries
• 12 Managing performance in elite professional football
• 13 The sporting director
• 14 Strategic management in football organisations
• 15 Finance and accounting in football
• 16 Sponsorships, stadia, and naming rights
• 17 Venue management in football
• 18 Human resource management in football
• 19 Fans, spectators, consumers in football
• 20 Sports business analytics
• 21 Leagues, tournaments, and competitions
• 22 Football, networks, and relationships
• 23 Leveraging football events
• 24 The labour markets of professional football players
• 25 Value management in football
• 26 Supply chain management in professional football
• 27 Risk and crisis management
• 28 Women and football
• 29 Managing match officials
• 30 Perspectives on ethics and integrity in football
• 31 Talent management
• 32 Retailing in the football industry
• 33 Sport licenced products in the football industry
• 34 FIFA
• 35 UEFA
• 36 CONMEBOL
• 37 Asian Football Confederation
• 38 Confederation of African Football
• 39 CONCACAF
• 40 Oceania Football Confederation
• 41 Football in China
• 42 Business and governance of football in Qatar
• 43 Football in Brazil
• 44 Football in Turkey
• 45 Management of football in India
• 46 Soccer in the United States
• 47 The rise and rise of the world’s favourite sport
• Index