Introduction
The majority of elite sport leagues and clubs are organized as profit-oriented firms that must be managed in the same way as any other professional businesses. In European sport, football is the most advanced sport in this regard. The top five European clubs, Real Madrid CF, FC Barcelona, Manchester United FC, Paris Saint-Germain FC and FC Bayern Munich, generated Ă2.61 billion during the 2014/2015 season (Deloitte Sports Business Group, 2016). Sponsorship, media, and match day revenues from the largest 122 European football clubs reached Ă13.27 billion in 2014, which is equivalent to 67 per cent of the total revenues of the four major North American sports, the National Football League (NFL), Major League Basketball (MLB, the National Basketball Association (NBA) and the National Hockey League (NHL) (UEFA, 2015). European football leagues such as the English Premier League, the Spanish La Liga, the Italian Lega Serie A and the German Bundesliga are continuously seeking additional income.
Over the last years, most clubs and leagues focused on domestic markets to generate income. Even in sport management research, the analysis of match day revenues or gate receipts played an increasingly important role (e.g. Becker & Suls, 1983; Bird, 1982; Borland, 1987; Borland & Lye, 1992; Crains, Jennett, & Sloane, 1986; Czarnitzki & Stadtmann, 2002; Davies, Downward, & Jackson, 1995; Janssens & KĂ©senne, 1987; Jennett, 1984; Peel & Thomas, 1988, 1992, 1996; Schofield, 1983; Siegfried & Eisenberg, 1980; Simmons, 1996; Wilson & Sim, 1995). The English Premier League was one of the first leagues to invest in marketing activities in foreign countries. This export of the national league enabled the Premier League to sell broadcasting rights as an opportunity to generate additional income in new markets outside Europe. Besides revenues of ÂŁ5.14 billion from domestic broadcasting rights in the UK for the period 2016 to 2019, the Premier League is about to get ÂŁ3.2 billion from international broadcasting rights for the same three years (Daily Mail, 2016).
The example of the Premier League shows that the focus in European football is on the export of national sport leagues. Of course, other opportunities to generate income such as merchandise, ticketing, sponsorships or naming rights still belong to the main income sources of leagues and clubs. Nevertheless, our focus is on the export of national sport leagues due to the large economic potential. Moreover, capacity restrictions do not exist. Stadium attendance has a natural boundary â the stadium capacity. The export of national leagues either via television or via internet broadcast does not possess any capacity restrictions. Additional TV viewers all over the world do not compete for a limited amount of tickets. Furthermore, TV or internet broadcasts generate additional income but the additional costs for these broadcasts are rather low. Broadcasting signals usually exist for the domestic markets. Transmitting matches to foreign countries may create a need for foreign language commentaries but the infrastructure for transmitting signals already exists.
Due to the competitive advantage of the English Premier League over other European football leagues and the economic potential of the export of national sport leagues in general, we address the following research questions: How will international sales of European football leagues develop in future years? What are the opportunities and risks? What needs to be considered by the leaguesâ management to be attractive for international sales? Where are the most attractive target markets?
In order to answer these questions, this chapter first provides a theoretical background to sport broadcasting demand. A new theoretical demand model for the export of sport leagues is introduced. Second, the results of an empirical study with football managers in Europe involved in international sales activities of national sport leagues are presented. Third, based on the theoretical demand model and empirical insights, the opportunities and risks associated with the export of national sport leagues are discussed.
A demand model for the export of sport leagues
Export opportunities for national sport leagues only exist if there is a demand for broadcasts in foreign countries. Hence, the demand for sport broadcasts is the pivotal point. In general, the demand for sport broadcasts can be compared with the demand for stadium attendance. Relevant literature on stadium attendance is extensive, as is the list of possible influences on attendance. Among these are sport-specific influences such as the popularity of clubs and players (e.g. Baimbridge, Cameron & Dawson, 1995; Czarnitzki & Stadtmann, 2002; Janssens & KĂ©senne, 1987) or the competitive balance in a league (e.g. Borland, 1987; Borland & Lye, 1992; Czarnitzki & Stadtmann, 2002; Dobson & Goddard, 1992; Hynds & Smith, 1994; Peel & Thomas, 1988, 1992, 1996; Szymanski, 2001). Furthermore, the relevance of each match in a championship competition has an impact on attendance (e.g. Borland & Lye, 1992; Czarnitzki & Stadtmann, 2002; Dobson & Goddard, 1992; Wilson & Sim, 1995) as do weather conditions, day of the week, or time of the day (e.g. Baimbridge, Cameron & Dawson, 1995, 1996; Czarnitzki & Stadtmann, 2002; Janssens & KĂ©senne, 1987; Peel & Thomas, 1988; Schofield, 1983; Siegfried & Hinshaw, 1979). Last but not least, fan identification and motives influence sport spectatorsâ behaviour (Borland, 1987; Borland & Lye, 1992; Campbell, Aiken & Kent, 2004; Czarnitzki & Stadtmann, 2002; Donavan, Carlson & Zimmermann, 2005; Funk, Mahony & Ridinger, 2002; Kahle, Kambara & Rose, 1996; LeAnne Spenner, Fenn & Crooker, 2004; Matsuoka, Chelladurai & Harada, 2003; Peel & Thomas, 1992; Robinson, Trail, Dick & Gillentine, 2005; Sutton, McDonald, Milne & Cimperman, 1997; Trail, Robinson, Dick & Gillentine, 2003; Trail, Fink & Anderson, 2003; Wann & Branscombe, 1993; Wann, Melnick, Russell & Pease, 2001; Woratschek, Durchholz, Maier & Ströbel, 2017). The influence factors listed affect both stadium attendance and TV audience ratings, although the strength of the influences might be different for stadium attendance and TV audiences. Nevertheless, these influence factors determine the demand for stadium attendance and TV broadcasts.
The majority of the existing literature focuses on the demand for certain matches on a certain day at a certain time. These analyses explain why the number of spectators fluctuates between different matches. Negotiations about broadcasting rights for the upcoming seasons are usually finalized well before the start of the next season. At that time, customers do not know anything about the weather conditions on certain days in the upcoming season. They do not even know which clubs will be part of the league. Relegation and promotion will cause changes. Furthermore, how will star players be involved? Do they still play successfully or might they even play at another club?
Consequently, we need a more general approach for the analysis of broadcasting rights. Information about the attractiveness of a particular national sport league is necessary. Information about the influence factors of average expected demand is more relevant than knowledge of the influence of rain or sunshine on the demand for a specific game. Therefore, the following paragraphs discuss a leagueâs popularity, consumption capital and the buying power of the target market population as well as competition and TV market structure.
Popularity
The popularity of national sport leagues, clubs and players seems to determine the demand for broadcasting rights (Ferreira & Armstrong, 2004). Popularity makes a national sport league more attractive for foreign TV stations and the probability of international sales increases. The popularity of a national sport league often refers to a certain style of playing that is characteristic for the league, for example âkick and rushâ was a long-time characteristic of English football clubs and âtiki-takaâ was particularly associated with the style of playing of FC Barcelona. Of course, the uncertainty of the outcome of the league competitions as well as of single matches is also important. Popularity should usually increase with uncertainty and competitive balance (e.g. Rishe & Mondello, 2004; Schmidt & Berri, 2001).
Furthermore, the national monopoly of the sport leagues is a critical factor in their popularity. The monopoly is a credible signal for spectators that the nominated champion is without a doubt the best national club team. The monopoly is a unique selling proposition for the sale of broadcasting rights both domestically and internationally (Baimbridge, Cameron & Dawson, 1996).
The popularity of a national sport league will further increase if its clubs participate successfully in international competitions. International competitions such as the UEFA Champions League or the UEFA Europa League are important for the popularity of national leagues because clubs and players can present themselves to a broader audience. The better they perform at the international level the more likely the export of broadcasting rights seems to be since the interest of foreign spectators increases. In contrast, poor performance at the international level will reduce the popularity of a national league in the same manner as strong performance increases it. Hence, it is a key challenge for league managers to promote clubs and athletes to deliver their best performance.
Another critical factor for a leagueâs popularity is having star players (Brandes, Franck & NĂŒesch, 2007). Appointing star players from other countries is an opportunity to boost the interest of foreign TV viewers. However, the focus on foreign star players can only have a short-term perspective. A leagueâs popularity will suffer as soon as the foreign players leave for clubs in other countries. Hence, foreign players can be âusefulâ to boost the popularity in a short-term perspective, but long-term investments, such as continuous success in international competitions, are also necessary.
Consumption capital
Exporting national sport leagues will be difficult if the sport and its key characteristics are unknown in foreign markets. The target population should have at least some knowledge of the particular type of sport. In fact, this knowledge does not exist automatically as the intercultural context might lead to different preferences. For example, European football has been relatively unknown in North America for a long time, just as American football has in Europe. Consequently, European and American football teams have started to engage in the corresponding markets with invitation matches, official league matches played abroad or branch offices in order to build up knowledge of their sport. The theoretical background to this development refers to consumption capital theory. Stigler and Becker (1977) argue that consumers derive a higher utility from using products or services if they know more about the corresponding product or service. The same is true for sport marketing. If spectators know the rules, understand the style of playing and recognize star players, they will derive a higher utility from watching a game than spectators that do not have the same knowledge.
Knowledge in the sense of consumption capital is built up by using the product or service and learning more about it. Using and learning are investments in future consumption and lead to higher utility. In terms of European football, learning the rules would be an investment in future consumption for a North American spectator, for example. The same is true for knowledge of certain clubs and players.
In terms of sport in general, playing sport is another way to learn more about a certain type of sport. If a person plays football, watching the games of a national league provides a higher utility since playersâ moves will be understood with reference to his/her own practical experiences. European football is definitely a sport with a high consumption capital. In many countries around the world, children learn at a young age how to play football. Moreover, football is a topic of conversation in social life and in the news. Nevertheless, successful investment in consumption capital depends on the cultural context and society in general. Therefore, t...
