3 What makes up the business of football?
The STEEP model provides one way of looking at the environment that the football industry operates in. But what makes up this industry and what do we mean when we talk about the business of football? How are football clubs shaped and how do they make their money?
As Pete Winkelman, chairman of Milton Keynes (MK) Dons, said in 2014:
The MK Dons has lost about £1.5 million a year over the 10 years that I have been involved. In a bad year it can hit £3 million so it really is a very hard thing to keep going. ... Of course what football is, is a great emotional driver. It does drive our other businesses here at Stadium MK but most of all it drives a community, it’s about identity, it is about a place and it is about celebrating the place you are in. So clubs need income from much more than gate receipts for individual clubs to survive.
For the next activity we are very fortunate to have the insight of John Cove the Chief Executive of MK Dons Football Club Sport and Education Trust. John has worked in the football industry for many years and in many different roles.
Activity 4 Shape of a club
Watch the animation, accompanied by a short interview with John in which he explores some of the different ways in which clubs can be configured. As you listen, note down the differences he explores. Pause on the final image of 'the shape of a club', then see whether you can create a visual representation of the football club you support. This could be a drawing, a Powerpoint slide or something else.
MK Dons Director, John Cove talks about how the club is structured
Football’s a real complicated business, it’s notorious for losing money.
When we started this club we needed to do things in a different way so we had the club structured in 5 parts really. Firstly, of course, there’s the playing side and around 61 people are involved in that. For the stadium there’s around 173 people, mostly match days. In the club itself, the commercial side etc, there’s 36 people. In the trust, the charity that runs, we have 84 people, and then, bringing it up, the hotel and arena, is 193 people and is the part of the business that makes us sustainable overall.
Our playing side is, of course, the part of the business that’s visible to everybody, but what’s behind the playing side is a little bit more unknown to people. So, we have an academy that looks to bring the best of the young people in the area together to give us the most opportunity to grow our own players. We’ve got the club secretary, who here is called the Head of Football Operations, that makes arrangements behind the scenes, so, which hotel the team stays in when they travel, who is registered with us to be a player and making sure that contractual side is important. And then we have the medical and science team that are tasked with not only making sure the players are fit, but they stay as injury free as possible. And of course, the most crucial person behind the scenes, many people would argue, especially him, is the kitman - who makes sure that everybody has clean kit to play not only for the match day but for training as well.
So let’s go and look at the club, let’s start with the figurehead, the Executive Chairman, Pete Winkelman. He’s the owner of the club and in our model, has responsibility for all of the business. And of course, within the club we have a sales and marketing team that raise around 1.5 million pounds selling boards and selling shirt sponsorship. We have a shop that sells the shirts that supporters can buy as well as the other memorabilia. We have an administration department that includes finance. A media and PR dept that’s about making sure that the information is out there for everybody to understand what’s going on in the club.
Well let’s take a closer look at the stadium. There are stewards who have to make sure everybody’s safe on a matchday. There’s maintenance and groundskeeping that make sure the stadium is in tip top condition and the grass is eminently green and playable. But of course, we also make sure the stadium creates income, so we let it for community use and people to play on the pitch out of season. But we also have major events from concerts, the rugby world cup and the women’s FA Cup Final, all go to produce more income to make sure that we’re generating enough to support the overall object of the companies.
You might not know that every football club in the Football League has to have a Community Trust that’s a registered charity and here is no different. So we deliver in the field of health, where we look at things like children’s weight management. in education where we deal with numeracy, literacy and IT skills. In our social inclusion department we have 17 teams for people with a disability. In our sports department we run women’s football. And what we’re seeking to do is to use the power of the brand and of football in particular to try and generate more activity but also to generate more support for MK Dons.
You remember at the beginning we talked about how clubs make losses and each club has a strategy to minimise that loss. In our case we have a unique solution. We have a Hilton hotel and events business that actually generates the sort of income necessary to offset the losses across the group. And, of course, if you’re a supporter, you can stay in one of our rooms and wake up and see the sun rise over the stadium and the pitch first thing in the morning.
So when you pull all those 5 strands together what you see is the shape of the business of football in Milton Keynes.
Click 'Reveal discussion' to see the final image from the video again.