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Football 2011 – Feast or Famine?

Football has come a long way since the £20 a week ceiling on players’ wages was lifted in January 1961. Exactly fifty years on, the game is big business; clubs are global brands and players are international icons and multi-millionaires. But has commercialisation been a force for good or ill in English football? Has it brought us better players and higher quality football with more glamour and excitement, better conditions for fans in bigger and better arenas and greater investment in grass roots football? Or has it undermined the ethos of the game, severed the link between fans and players and club and community, weakened the national team and fostered a culture of arrogance and greed? If it’s good for the game, what’s football’s future; if not, what can be done to reverse the trend?

Dave Boyle

Chief Executive, Supporters Direct

Dave Boyle became Chief Executive of Supporters Direct in 2008, having joined the organisation as a development officer shortly after its foundation in 2000. He became Deputy Chief Executive in 2003, overseeing casework, the development of the organisation's services to members and co-ordination of SD's policy work and lobbying.

He is a former local government press officer and has also worked in Higher Education. He has previously been a long-serving National Council Member of The Football Supporters' Federation, was a Director of the Social Enterprise Coalition and regularly appears in the media and at conferences representing Supporters Direct. He supports AFC Wimbledon and was the ‘football advisor’ to series 3-5 of ITV's Footballers’ Wives.

Supporters Direct is a community benefit society, owned by its members. It campaigns for the wider recognition of the social, cultural and economic value of sports clubs and is the UK's leading body working to ensure that clubs are run responsibly and are financially sustainable. Supporters Direct aims to create the conditions in which supporters can secure influence and ownership of sports clubs and promotes the value of supporter ownership to sports fans, empowering them to set up supporters' trusts or become members of existing trusts. Supporters Direct provides guidance and support to groups in more than 16 countries throughout Europe.

Stefan Szymanski

Professor of Economics, City University London

Stefan Szymanski is Professor of Economics and Director of the Sports Business Network Research Centre at the Cass Business School, City University, London.

He was previously the Programme Director for the full time MBA programme at the Tanaka Business School, Imperial College and began his teaching career at London Business School.

Professor Szymanski is also an economics professor, with many published articles on the business of sport, particularly football and the Olympics.

He is, with Simon Kuper, co-author of Why England Lose and Other Curious Phenomena Explained (Harper Collins 2009).

Cass Business School is a leading provider of business and management education and is ranked in the UK’s top 10 business and management research schools. Its MBA is recognised globally as a market leader, it has the widest portfolio of Specialist Masters programmes (MSc) in Europe and its Undergraduate School is one of the best in the UK.

The Sports Business Network Research Centre seeks to promote understanding of the processes at work through leading edge research, to support positive developments in the partnership between business and sport and to provide public commentary on the policy options in business and in government.

Proposition

The game with more money than sense

With ticket prices inflating at the rate of Zimbabwe’s currency and players collecting a weekly fortune for never getting near the first team, football in 2011 seems to be working hard to test the faith of its loyal fans.

Set against folk memories of the players travelling to matches on the same bus as the fans, a wide gulf has opened between the game and the communities which gave it birth. But the problem with commercialism is not simply that there’s too much. It’s that football in this country has lost its compass and doesn’t know how much is too much and how far is too far.

Fans’ legendary loyalty to their clubs makes them a captive market and they’re duly exploited by the rampant commercialism of the modern game. For a long time, football’s conservative culture protected them: the maximum wage kept costs in check whilst the FA prevented directors from making money out of clubs. Neither arrangement was actually intended to benefit fans; the former was to keep the workforce in check and the latter out of a sense that the game’s ethos was best expressed through amateurism and that making money out of football was somewhat vulgar. Nor were either ever particularly well-enforced; ‘boot money’ payments to players ensured that a black market was rife whilst ingenious directors found creative ways to take money out of the clubs.

But over the last 20 years the commercial engine has been driven less by profiteering than by desperation and that’s what has created the problem. Since the abolition of the maximum wage 40 years ago, clubs have increasingly been spending more money than they earn and the deficit is growing each year. Hungry managers demand that the club show ambition and supporters echo the call despite the fact that today’s ambitious transfer is tomorrow’s painful rise in ticket prices. Then the manager is sacked at great expense and the cycle begins again.

From being charmingly naff in the 1970s, club’s commercial appetites are now embarrassingly all-encompassing. Not long ago there was one shirt sponsor in the middle of the shirt; now there are sponsors on both sides and on the socks. Fans’ details are offered up to official partners for endless marketing campaigns and fixture lists are anything but fixed as TV’s needs dictate kick-off times regardless of the inconvenience to the fans in the stadium.

The defence is always that such revenues are essential to the clubs and allow them to sign great players. But even if this is the case – and for many fans it isn’t - should not clubs hold values that eschew certain commercial behaviour? Just because they can make money from almost every aspect of the game doesn’t mean they should.

Most clubs probably feel they have no choice because of the insane inflation in the costs they face. Invariably they announce ticket price increases with regret. But such talk is cheap when they make so little effort to contain them. They make no progress on collective agreements to take the heat out the market in player costs and fuel it further by signing players they cannot afford, confident that in the end the fans will pay their wages.

In the middle of the worst recession for decades which is hitting football’s heartlands particularly hard, that’s a dangerous game to play. At any time for a sport which has any sense of values, it’s an unethical one.

Clubs are obliged by law to be independent, profit-maximising companies. But they are also part of a sport and are sustained by communities which need stakeholder stewardship rather than shareholder sovereignty.

We need to achieve the kind of balance that other countries manage. The German Bundesliga is one of the most profitable football leagues in the world and has some of the lowest prices. There, fans own the clubs and give them a sense of their mission as social enterprises in the heart of the community while also being sufficiently businesslike to support that task. That structure knows that fans can’t just walk away but it also ensures that they don’t have to.

Proposition

English football – in the business of being the best

Fifty years ago last month the maximum wage for footballers was abolished in England. This reform unleashed the power of competition on unsuspecting sleepy organisations which, although organised as limited companies since the nineteenth century, still reflected the values of amateurism in all but name.

Twenty five years ago this experiment could have been pronounced a failure. Football was in deep crisis: in the recession of the early 1980s a dozen or more clubs had almost gone to the wall and most were deemed to be worth more as potential housing redevelopments; hooliganism was out of control; filthy and decrepit stadiums, where investment had been neglected for nearly a century, had become death traps, as the Bradford City disaster so cruelly demonstrated. Though the average price for a ticket in the first division was £2.80 - and £70 would buy you a season ticket at Manchester United - annual attendance at league football matches in 1985/86 had fallen to an all-time low of 16.5 million, almost half of what it was in 1960.

Wind forward another quarter of a century and the fortunes of English football have been completely reversed. Despite the astronomical inflation in the cost of a ticket, attendance is back at the 30 million mark - up by 70% in Premier League and by a remarkable 185% in the Championship, now the fourth most popular football league in the world (behind the Premier League, the Bundesliga and La Liga and ahead of Serie A).

While top English footballers were lured into Serie A at the end of the 1980s, it is now the Premier League that attracts most of the world’s top talent and the quality of the football on offer has never been higher. Almost £3 billion has been spent on stadium improvements over the last two decades almost entirely out of revenues generated by football. The Premier League is now the gold standard of world football, attracting foreign investors and generating almost as much broadcast income from the sale of overseas as from domestic rights. The English have always crowed that they invented the game, but now they can truly claim that the world follows their version of it.

What brought about this dramatic turnaround? Naturally the details are complex and many: the Taylor Report, satellite broadcasting, the virtual elimination of hooliganism, Fever Pitch, “gentrification” and the long economic boom of the 1990s. Relevant as all these factors may be, none are as important as the changes in the organisation of football clubs that took place thirty years ago.

The crisis of the early 1980s caused them to re-evaluate what today we would call their “business model”. In 1982 the 92 Football League clubs commissioned a report into the structure of the Football League and its future viability, which concluded among other things that they had been too slow to exploit commercial opportunities. Observers at the time contrasted the League unfavourably with American sports leagues which were both more profit oriented and had enjoyed rapid growth in attendance and revenues over the previous two decades. At the time FA rules still limited the capacity of clubs to employ paid (i.e. professional) directors and to pay dividends.

Over the following two decades these policies were completely reversed: highly paid professional directors together with support staff have been brought in to exploit every revenue-generating opportunity: high ticket prices, expensive merchandising, constantly changing replica strips, luxury boxes for well-fed corporates, naming rights and sponsorships for everything imaginable - to name but a few.

I have no wish to persuade those who find this distasteful that it is otherwise. For many in Britain, “commercialism” will always be a dirty word especially when it is copied from the United States. All I ask you to consider is that without this commercialism, English football would have continued inexorably along the downward trajectory on which it had been heading since the 1950s and by now be more or less extinct. In 1985 English football was dying on its feet: it was commercialism that breathed the life back into it.

Response

No-one who watched football in the 1980s could dispute Stefan’s pin-point analysis of the state of the game then, but his choice of saviour is off-target.

The real game-changer was quite simply football getting its matches on TV regularly. Gates went up as people realised that football was actually a cracking dramatic sport to watch; in 1989, Arsenal won the league when Michael Thomas scored with the last kick of the season live on national TV. Then a mercurial Geordie kid cried at the world cup and sealed the deal.

Stefan’s  visionary directors and managers actually had to be forced by law to improve their facilities and were provided with public funds to help, with Sky TV providing the rest. They were canny though; most bought into clubs (or inherited them) when the game was at rock bottom and, as David Conn brilliantly details in his seminal book The Football Business, all profited beyond their wildest dreams when they floated them on the stock market in the 1990s.

The investors who bought those  shares mostly lost their shirts. The machine looked swish, but it was the same clunky old engineering under the hood. Managers liked a bung, administrators earning comparative fortunes paid players and their agents with alacrity, relying on the next TV deal to get them out of the hole that their overspending on the current one had caused. And in between times? Just raise the prices. They’ll still turn up!

Pretty soon, the clubs which had floated were back in private hands, unable to cope with the rigours of acting like normal enterprises. Everyone was earning ten times (and sometimes hundreds and thousands) more, the fans were paying the price and clubs were more in debt than ever.

We can grateful that fans aren’t dying at the hands of their directors’ apathy but that’s a very low bar to be congratulating ourselves on clearing.

Response

Dave seems not only to regret that we do not live in a golden age but senses that perhaps there never was one. I think he agrees that things are better than they were - but could they not be better still? Could we not have a bit less commercialism and a bit more social responsibility? He would prefer a model of football social democracy to the football capitalism which we have developed. In short, couldn’t we be like the Germans?

But I’m not sure the German model is all it is cracked up to be and the myth that they are better regulated does not stand close inspection. German clubs still get heavily into debt (Dortmund and Schalke 04 spring to mind), their finances are not at all transparent and the regulator can still be defied.

True, ticket prices are lower, but that also means German clubs cannot afford the best players, as their performance in Europe demonstrates: the last time a German club won the Champions League was more than a decade ago. In head-to-heads over the past decade, English teams have won 32, drawn 14 and lost only 17. Money buys success and English commercialism buys more success than German social democracy.

Some would say this only shows that the Premier League should be cut down to size. My own view is that social democracy is a good idea in a world of cutthroat competition when we do not want the “losers” to be punished. We want a benefit system to protect the weakest in society, and those of us who are strong should be willing to carry the burden. I don’t want others to suffer because they are not as wealthy or as lucky as I am.

But in football I have no such qualms. Sport is ruthlessly elitist or it is just not serious. Its mentality has been fashioned in the image of the gladiatorial contest – who cares about “friendlies”? All this is tolerable, in the end, precisely because it is only a game.

Conclusion

It’s a shame Stefan picked the two German clubs which have most consciously strained to ape their English counterparts rather than the Bundesliga as a whole, profitable as it is in a way that England’s top flight hasn’t managed in a generation. As they say in the accountancy game, revenue is vanity, profit is sanity.

Regardless of their comparative records in the Champions League - and English clubs would seem to have less to crow about since the pound’s value fell against the Euro - most German fans are far happier with a decent national team, superb stadia where they can afford to watch football without being feeling fleeced with a drink in their hand and an atmosphere which sends tingles down the spine, supporting a team which, because of the genuine competitiveness of the league, might this year just escape relegation and next year win the championship or vice-versa.

In Germany, all this tells you that you, the fan, is what the game is all about; it’s you who drives what the club is for in a land where liquidation and insolvency are as unfamiliar as players so overpaid and rootless that they go out in their luxury cars and then forget they owned them, never mind where they parked them.

But in England football has mostly been run by people who haven’t understood or cared enough about its place in the social and cultural fabric of communities or the emotional hold clubs have over fans or the role fandom plays in creating a sense of who we are.

A newer generation of owners and administrators has proved more adept at not killing supporters but the commercialism that has been the hallmark of the last 20 years is as blind to the culture of the game as the condescending local worthy-made-good of yesteryear, based as it is on the ludicrous fallacy that football is a free market and that if fans don’t like it, they can walk away.

But in the late 1980s, football heard from marketeers and academics that its problem wasn’t the insane economics or contemptuous attitude of club owners (who would be utterly slated for their appalling stewardship of the national game by Lord Taylor in his report following the Hillsborough disaster). It was that too many of its fans were poor and there could be no commercial future for the game without the well-heeled middle-class consumer. Clubs, we were told, were first and foremost businesses and businesses must be ruthlessly commercial.

But if football clubs were like any other businesses, they’d all have been extinct a long time ago. They still exist simply because the resilience of their supporters and their community trumps the follies of their stewards. Eventually, we’ll stop treating clubs as the commercially-driven enterprises they’re clearly not meant to be but, instead, as the community assets they are. Until then, the commercialism that drives a wedge between the club and its fans and community will continue to push people away from the game they and their families have given so much to support. On a commercial level, that’s silly. Morally, it’s just plain wrong.

Conclusion

We broadly agree about events but we differ on their significance. We agree, I think, that football was dangerously in decline until the mid 1980s since when it has undergone a remarkable commercial renaissance. I think we agree that the overall state of English football measured by attendance and revenue is much better, though Dave no doubt feels that disaster is just around the corner.

He dislikes specific aspects of the game in England - high ticket prices and clubs regularly going into administration. But he would also admit that most Premier League grounds are normally at close to full capacity, because fans think it is worth paying the price in the market, and so far clubs always emerge from administration, because even if financial failure means that the shareholders lose their shirts, the club lives on.

In my view this renaissance can be attributed to the reorientation of clubs away from amateurism and toward commercial activities in the 1980s. I don’t think this process is complete yet, any more than I think that ticket prices have reached their limit, that broadcast markets are saturated or that players’ wages can’t go any higher. The development of commercial attitudes - treating football as a business - has not only saved the English game by generating investment funds for stadiums, it has also made English football the most attractive in the world judged by its international following. And this is no small benefit for English fans, for whom the quality of football is far higher than in other countries.

I attribute this largely to organisational structure rather than the specific agency of individuals. I’m not arguing that a generation of great men and women have “saved” football. In my view people everywhere are more or less the same; what differs are the incentives that they face. The creation of commercial incentives in English football allied to the existing corporate structure established a form of competition which benefits the fans at the expense of the shareholders who lose money. Shareholders tolerate the losses because they like owning football clubs.

This is why talk of a general collapse is without foundation. I have researched football economics and finance for over 20 years, and I have constantly been asked if the bubble was about to burst; I still don’t think it will because the EPL has not reached the limit of its potential global fanbase and investors still see significant growth prospects.

This is an instrumentalist view of the world: what matters is that the outcome is a good one not how it was achieved. Critics like Dave do not like this approach. I think he wants football to be run by virtuous people, played by virtuous people and possibly even watched by virtuous people. And he wants lots of regulations in order to legislate for increased virtue.

I think this is a very dangerous path to tread. Dave wants what is best for football. The trouble is that without the discipline of the market, powerful people are free to indulge in their own vision of what is “best”. And those visions are often very scary indeed.