1.3 Globalisation: a force for good in football?

So far you have explored how football has become a global industry and some of the factors that have played a part in this. The next question we will address is the extent to which this globalisation of football is good, bad or a bit of both.

Revisit the second half of the ‘Business of Football’ video which you watched in Week 1 (from 05:56 on the time display) in which ideas about the global spread of football broadcasting and the possibility of digital interconnections between fans are explored. A chairman of a Premiership club might view the globalisation of football broadcasting differently from a chairman of a Championship club due to the way broadcasting revenues are distributed.

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Transcript: The business of football

The business of football

Pete Winkelman, Owner and chairman, MK Dons

I think football is so different from any other kind of business, because I suppose fundamentally it‘s not a business. You don’t look at income and expenditure sheets in quite the same way. But of course what football is, it’s a great emotional driver. It does drive our other businesses here at stadium MK. But most importantly it drives a community. It’s about identity. It’s about a place and about celebrating the place that you’re in.

Eleanor Oldroyd, Voiceover

Is running a football club part of the entertainment business, a rich man’s hobby, a community asset or all three? And what difference does it make if you’re a club outside the Premier League? Here club chairmen, fans and other executives talk about the unusual nature of the football business, seen through the eyes of both a traditional club, Chesterfield and a newer one, MK Dons. How does it compare to other businesses, such as supermarkets, and what does the future look like for the business of football?

Andrew Cullen, Director, MK Dons

Well it’s very different because actually you’re dealing with people’s emotions and passions. It’s not a product that you can take or leave. We can have a fantastic day and people love us but equally we can have a very very disappointing day, we can lose 3 or 4 games on the trot, but people still stand by us. They come back and want to come and watch us, whereas perhaps with a supermarket brand, if they were disappointed 3 or 4 times with the same product they’d go somewhere else and choose a different brand or a different product. You don’t do that with football. You actually keep coming back and keep supporting and following the club as much as you can.

Eleanor Oldroyd, Voiceover

Loyal fans provide a constant revenue stream through ticket sales, but clubs are also looking to create income from other commercial activity, such as their stadiums, sponsorship, retail outlets and even hotels. However one of the main sources of revenue – particularly for smaller clubs – has all but disappeared.

Chris Turner, Chief Executive, Chesterfield FC

Years gone by there used to be called a transfer market where clubs from higher up used to come down, look at clubs like ourselves, look at our players, take them up to a higher level, pay a transfer fee. Those days are very far and few between because now as we all know the Premiership and higher league clubs go abroad and bring foreign players in, etcetera etcetera, so players at our level very rarely get transferred to the higher level. So that transfer stream has virtually dried up.

Pete Winkelman

The MK Dons has lost about on average about one and a half million pounds a year in the 10 years I’ve been involved. In a bad year it can hit 3 million pounds so it really is a very hard thing to keep going. Of course some of the very much bigger clubs, they can have some very rich owners that that isn’t a problem for them doing.

Eleanor Oldroyd, Voiceover

Fans are a vital source of revenue to football clubs. In the 2012-2013 season, across the three divisions of the Football League, aggregate attendances remained above 15 million for the 10th consecutive season demonstrating the passion and loyalty of fans throughout the game. But in reality, how much influence do they have over the business decisions that their club makes?

Pete Whiteley, Chesterfield fan

I think when it comes to decisions about football matters a club can’t really take any notice of the fans. Fans will have their favourites when it comes to players and their favourites when it comes to formations but there’s no place for sentimentality in football.

Margaret Faiers, MK Dons fan

Ticket prices, we know we need a lot of younger fans and I think we can influence the club in say if you want them then price the tickets to the price they can afford.

Pete Whiteley

I think off the pitch, if decisions are being made – whether that is how we sell tickets, ticket prices, you would hope then the club would have regard to its customers and I think at a football club, talking to those customers, albeit that they are a single captive audience I think does make a difference when it comes to keeping them on board.

Eleanor Oldroyd, Voiceover

When there are a number of clubs in close proximity they are each fiercely competing for people who love watching football live in a stadium. In a conventional market, one geographical area or city would struggle to sustain multiple businesses offering almost identical products and often with very similar names. And the football business is no different.

Chris Turner

We’re on outskirts of Sheffield 10 miles away from Bramall Lane and probably 15 miles away from Hillsborough and in the opposite direction we’ve got Derby and Forest, not too far away from us. But we’re a town of about 80 to 90 thousand people and some do go to watch those particular other clubs on a Saturday afternoon, we know that. We have to fight for our 5 or 6 thousand people every week that support Chesterfield.

Eleanor Oldroyd, Voiceover

Winning promotion, especially to the Premier League, is now the Holy Grail of football. But success can cost a fortune, especially as players’ wages continue to rise, even in the lower leagues. For example in the 2011 to 2012 season, League 1’s clubs, on average, spent 93% of their revenue on players’ wages. One increasingly valuable source of income is money from television rights, the impact of which is seen both on and off the pitch.

Chris Turner

The wages have absolutely rocketed due to the revenue coming in from broadcasting. The standard of football in the Premier League has risen beyond anything that’s been seen in the past. Throughout football it’s not been as great for clubs like ourselves in League 2 currently, we get around three hundred thousand pounds a year from it.

Andrew Cullen

A Premiership football club will this season pick up nearly 105 million pounds in broadcasting revenues. We will pick up about three hundred and fifty thousand pounds, in League 1 from broadcasting revenues. That’s the difference.

Eleanor Oldroyd, Voiceover

Niall Sloane was editor of BBC’s Match of the Day for many years and now runs ITV Sport. He has no doubt about what the future holds.

Niall Sloane, Director of Sport, ITV

I can only see the rights going up and up and up. BT and Sky will still be in position. Who know with the Googles etc, You Tube whatever will get their act together and they’ll start bidding. I cannot see anything other than the continuation of this because we thought 2 deals ago it can’t get any higher and it just has. So, it’s an extraordinary thing you know but it keeps going.

Eleanor Oldroyd, Voiceover

But with the development of digital technology, will social media platforms have the confidence – and deep enough pockets – to enter the marketplace?

Niall Sloane

I know people have been looking at a kind of facebook for football where you would view your premier league match in that context so the man in Soweto could talk to the man in Stockholm, the man in Stockholm could talk to the man in Sydney and it’s a global conversation going on in that space.

Andrew Cullen

A few years ago we wouldn’t have been able to watch a live football match on our telephones, mobile phones, we can now and we can consume it on tablets. And I think that’s going to be something which maybe clubs not at the top tier will look to see how they can actually develop their product and monetarise that to try and generate extra revenue.

Eleanor Oldroyd, Voiceover

Football has become a global network with English football watched all around the world which, in time, may also generate some benefits for clubs like MK Dons and Chesterfield. But has the globalisation of the football business reached saturation point?

Niall Sloane

I don’t think it has because if you look at the number of territories, the number of key territories around the world, it hasn’t quite cracked it. Has it worked in India? Not yet. Is it working in China? To a small degree. North America and the United States? Maybe. But until you get college kids desperate to have a career in ‘soccer’, I don’t think you’ve reached global saturation.

End transcript: The business of football

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The business of football

Now listen to a professor’s perspective [Tip: hold Ctrl and click a link to open it in a new tab. (Hide tip)] . Susan Segal Hall (former Professor of International Strategy with The Open University Business School) explores the arguments for and against globalisation being a good thing for business generally. As you are listening consider which of the points she raises would be relevant to the owner of a Championship club.

Is then the globalisation of football a good thing for the football industry? It’s now time to do your own research on this.

Figure 4 A moving tribute is held on stage during the FIFA 2014 World Cup Draw to Nelson Mandela, who believed ‘Sport has the power to change the world’.

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A photograph of a tribute to Nelson Mandela with a photo of him holding the world cup.

Figure 4 A moving tribute is held on stage during the FIFA 2014 World Cup Draw to Nelson Mandela, who believed ‘Sport has the power to ...