1 A business like no other
We started this course saying that football was a business like no other, but what is the ‘business of football’ and how does it differ from more conventional businesses? More fundamentally, is it a business at all?
To start to answer some of these questions you will now take a look at the business of football as it operates away from the pitch. The following video, voiced by Eleanor Oldroyd, gives you a fascinating insight into the football business by giving behind-the-scenes access to people working across the industry. As you are watching this video consider the statement outlined in the box below and ask yourself the question ‘how does football not only survive but thrive as a business?’
Whilst 2013/14 season was a boom year for the Premier League with it returning to pre-tax profit for the first time since 1999, outside the Premier League life remained challenging.
The wages to revenue ratio in the Championship was at 105%, the second consecutive season with a ratio of over 100%, Championship clubs’ aggregate net debt increased for the first time to over £1 billion. For many years the division has struggled financially. Championship clubs continue to spend much more than they generate, a clearly unsustainable position without owner benefaction.
Activity 1 Football and more ‘conventional’ businesses
As you watch the video, note down the ways in which you think that football may differ from businesses usually considered more conventional, such as supermarkets like Sainsbury's or Aldi.
The business of football
Click on 'Reveal discussion' to read some of our thoughts.
These are some of the differences we noticed between football and more conventional businesses:
- The nature of competition is different – football clubs compete with one another for customer and sponsorship income but also can’t survive without competition within their league. If you were running Sainsbury’s you would see the demise of another large supermarket chain as an opportunity – as a football club the demise of another club would be treated differently.
- Brand loyalty – football fans are probably the most loyal customer base a business can have – can you imagine feeling the same way about your local supermarket? This means that supermarkets and other businesses have to work much harder than football clubs to attract and keep their customers.
- Financial sustainability – if most clubs were conventional businesses they would go out of business – more conventional businesses such as supermarkets can’t afford to run themselves in this way.
- The emotional commitment to football that many owners have goes beyond what would be seen as a sensible financial decision in many other businesses.
- Much of the talk in the film is about money – we wonder if supermarket executives and staff were interviewed they would talk more about aspects such as products, the shopping experience and customers needs.