The business of football: Picking the right strategy

Football: a financial monster

Football, the most popular sport on earth. Millions and millions of people are watching it every week. Whether they buy a ticket and cheer for their club in stadiums, or they just watch it on television, they all make sure that the business behind football is growing every day. By buying a special football channel or buying a ticket to the stadium, they support the business and by that the huge transfer fees, the giant bonuses, and the enormous debts the clubs get their selves in. This is all part of the financial crisis football is in right now. The English clubs got the most debts of all the competitions all over the world.

Out of all the football competitions all over the world, the most debts are to be found in the English Premier League. This might have to do something with the fact that the Premier League is the world’s best football competition, but how do these clubs get in such great debts?

There are a lot of reasons given why the Premier League clubs are in so much debts.

Football: a killer tactic

Some people, including me believe that the huge debts and the extremely high transfer fees kind of kill the game. Watching the Champions League, or well… any other football competition is not as spectacular as it used to be. Ajax at home versus De Graafschap, will it be 6-0? 5-0? More? No. It was 1-0. Ajax A terrible game in which Ajax scored a quick and lucky goal, and just passed the ball around for 80 minutes. The audience, 50.000, saw with sore eyes how their club wanted to win with 1-0, when in the past they weren’t satisfied with 4-0. This was because Ajax had to play in Europe three days later. It was money that prevented Ajax from a monster score. The European match was worth almost 500.000 euros, if they would defeat Spartak Mocow twice. They did not and now the only thing they hope to win is the national cup. Financially unattractive but still it is a nice way to tell your fans you won something and therefore it was a great season, which is of course a complete lie.

PSV was unbeatable a few years ago. Because of their defensive play they ended up first a few times in a row in the Dutch competition and booked European result too. The defeated Olympique Lyon and Monaco because of their defensive stability. They had to ply defensive because all the other teams were just better, and if you want to defeat a better team you have to just kill the game. Playing a boring match can win you a lot of money so, unfortunately, lots and lots of clubs have the ‘not concede a goal’ tactic.

Ajax: living in the past

The times of Johan Cruijf or Marco van Basten at Ajax are over. When a Dutch team does have talented players that might just be the new Marco van Basten some foreign rich club will buy that player at an early age. We might not even know, but maybe the new Johan Cruijf is playing at Chelsea right now!

Arsenal, Liverpool, Chelsea, Manchester United, Newcastle United, they all have football schools in the Netherlands. Not only here but everywhere in the world, from Japan till Peru. The people will never get to enjoy the super talented players because they will never reach the first team. The Dutch football clubs are going to have to do it with the same game the rich clubs play, scouting in countries with a lot of talent. Brazil, Argentina, Serbia, Japan and more. Just hope the big clubs haven’t seen the talented players yet so the Dutch clubs can buy them. The only difference is that the big clubs buy hundreds of players they think are potentially someone who just might make it to the first team. Dutch clubs can only buy two or three. They have to be quick and that doesn’t work out a lot. Now the Eredivisie is filled with foreign players. They aren’t all terrible, but most of them are. Expensive, and making sure the youth isn’t able to grow, only to hope there’s a new Suarez or Honda whom will give you some financial air.  Ajax had to pay salary to 60 football players and they only needed 16 every week. This can only lead to debts, a lot of unhappy players and all that is just one bad commercial for Ajax.

Manchester United: The Asian market

Of course the big clubs need an income besides the sponsorship, ticket sales and merchandising for your local fans.

The market in Asia is huge because all of the Asian countries are developing their football competitions and try to improve their national players. Every countries dream is to win the world cup, and why can’t big countries like China, India or Japan win them in ten years if all of the competition gets better and if football the number one sport, like it is in Europe and South-America. This is far from happening of course, but Japan, China and South-Korea are working on improving the national competition to make it more attractive for the people out there. But still the ‘big players’ are rare in Europe. Ji-Sung Park is probably the most popular Asian player. Therefore Manchester United has lots and lots of stores and merchandising in Asia. They all are fan of Manchester United now, because Park plays there.

The market in Asia proved to be really big and therefore Manchester United developed an Asia plan. They created a Chinese and a Japanese website and started to play friendly matches in Asia. Manchester United versus the national team of Hong-Kong only was watched by 55.000 people in the stadium. South-Korea, and Japan were even more excited. Both of the countries had filled their entire Olympic stadium for the fans to finally see their heroes face a national team.

Manchester United: the huge ambition

 the great ambition was now more alive than ever. Manchester United , one of the biggest clubs of the world was now extremely popular in Asia. This was just the start of a genius plan.

The website launches were just the first step. Digital sells and opening more and more Man United shops in Asia lead to an income that made it possible to buy and, more importantly, keep Rooney, Giggs. Sir Alex Ferguson is a smart man. He knew it would be foolish to buy lots of great and expensive football players. He knew it would be smarter to buy talented young players. Rooney (18) and Ronaldo (17)  are now one of the best football players.  Football is not just buying the right players, its about buying and keeping the right players. With the new income Man united was capable of keeping their new players that turned out to be big stars of football.

Now Asia can online buy the Man united stuff they want and because its in their language they can read the Manchester United news , including latest team news, exclusive player interviews, match statistics, scores & match schedules, team and player profiles, as well as membership information for the Official United membership club "One United" for Greater China football fans. Interactive features include chartrooms, and downloads like wallpapers and team pictures.

This was all of course to keep ‘the new fans’ satisfied and to make sure they wouldn’t fancy another European football club.

United from England to Japan

United had to book results now their ‘new fans’ where watching. They won the Premier league in the same year they launched the websites in Asia.

The number of Asian fans was growing even more. According to Wikipedia the united fans in China has almost reached up to 20.000.000. This is more than the Dutch teams have fans worldwide together.

United players Dimitar Berbatov and Wayne Rooney chatted through the Asian internet sites with the fans over there. Because the staff of Manchester United knew those fans could add like 25 per cent on their income every year. The Chinese market turned out to be the most important market of all the markets Manchester participated in.

A business partner in China.com was found. China.com had  link to the Chinese Manchester Unites site. Also, a new idea was made reality. An official fan club for the Chinese fans was founded.  The next step the board of Manchester United took was spending a lot of money in commercials in Asia. Manchester commercials on the radio, on the television and on internet sites made it more and more popular.  Man United even financed some Asian companies  for their commercials to make their name better known in Asia.

Now, Manchester United is even more popular in Asia than most of the Asian football clubs. China, Japan and South-Korea all invited the reds to visit them in the summer, knowing they could fill their Olympic stadiums completely. Man United was growing. Japanese and Chinese businesses now made commercials on the advertisement panels. I don’t know what it says, because its in Chinese or in Japanese, but still…KACHING.

Manchester United: the money machine

Manchester United is now a money making machine.

But the income of merchandising, ticket sales, sponsorships, football result incomes and the Asian plan did only cut a small amount of the huge debt the club was in.

An American investor by the name of Malcom Glazer bought the club, he became the ‘owner’ of the reds.  He wanted to make United debt-free.

So he had to improve and expand the Asian plan. Indonesia was the new market now. After a friendly match in Jakarta United was settled in almost every country in South-East Asia.

The English clubs mostly spend their ‘holiday training’ in the United
States because the people out there do not recognize the European star players. For example: the Chelsea players can shop or just look around in the city’s without people asking for an autograph. It’s almost like a normal vacation.

The Manchester United have not been in the United States for the past five years, of course because of the market in Asia. Man United calls it ‘the big five’. They play in five big cities in Asia to make a whole lot of money for the club.  But now, owned by an American and sponsored by an American company, this ‘big five’ tour could be in danger. But the struggle of introducing football in the United States have proved that United does not belong there. It belongs in Asia where the big money is. The ‘big five’ remained untouched by the Glazer family.

Manchester United: expanding their horizon

The United players where a bit disappointed because they had to go to Asia, while Chelsea, Arsenal and all the other top teams could really go on a vacation in the United States. Asia is further away, but of course the team just loved the full packed stadiums and the raging Asian crowd.

The sponsor deals in Asia where  now larger than ever. Some Asian company by the name of AON has financed the reds with 80 million pounds. And some of the American sponsors Glazer brought to the club now went to Asia too.

With the money of AON United was kind of forced to keep going to Asia, because if they would go somewhere else that AON company would cut the mayor financial push.

After Japan, Indonesia, China, India  South-Korea now Vietnam wanted to let the national team play against United.

United is still expanding and after accepted the invitation to Vietnam Australia wanted three games against United. Of course not the national team of Australia which is really good, but three clubs of the highest football division in Australia had to try to beat the reds and give the fans a nice game.

It was now too late for Chelsea or Liverpool or any other club to try to conquer Asia, United was way too popular for that. The new money wasn’t spent on new expensive players, no. It was spend to cover the debts, well….a small part.

Of course new players arrived at Man United, but these where ‘cheap’ and young talented players from all over the world. Of course United tried to have some Asian players to make it to the first team, all for the merchandising, but that did not happen. The Asian people seem to care more about United than their national football competition as their stadiums aren’t filled with half their capacity.

Genius and in debt

The Manchester United plan was genius, but still they were in debt. A large debt. Why? Because Rooney makes over 100.000 pounds each game! And that is just one of the 25 players.

The huge transfer fees are one reason so many clubs are in debts. But the salary is probably the main reason. Rich investors, like the Dubai group that bought Manchester City, now are popular or something to buy a club and make it some kind of Hollywood team and win, win, win! Luckily, except for Chelsea this hasn’t really worked out yet. Salaries of more than 100.000 pounds per game is not even weird anymore. Unfortunately the salaries are still going up and in ten years or something it is going to be ‘normal’ for a top football player to make like 500.000 per game. How do these clubs get that money? By borrowing it from banks, and not pay it back. That might be a funny idea for  movie but in real life that’s got to stop someday. The Uefa and the European Clubs Association want a rule about the salaries of players.

Different strategies

Unfortunately, not all of the football clubs strategies are as good as the Asian plan of Manchester United. Like Portsmouth, not the biggest club in England but still a very well known, old-fashioned, beautiful football club.

The owner of Portsmouth three years ago did not want to do it anymore, he wanted to quit leading Portsmouth. He wanted to sell the club but on top of the market value of Portsmouth he added 28 million pounds to get a bit of his investment back. This did not happen and because the only thing he did was not buying any players and sell half of the team. Of course they relegated that season and they haven’t shown themselves in the Premier League since then.

What about the fans? I mean half of the team was sold and they lost like everything since, but still those fans sung for their club, all of them. Beautiful, A full packed stadium that is rocking when the home team is 0-3 behind. Those people are the soul of that club right? But no, debts and owners who only have dollar signs in their eyes own football now. They are killing it slowly.

Instead of cheering for your club you have to check the financial status of your club before you can celebrate a win. Fans have to realize that they are cheering for a company, not a football club. The fans favorite: the local boy who was once between the audience, is now playing for the club. A beautiful story but it won’t happen a lot anymore, the fans can’t decide anything anymore. Only the (foreign)manager and his assigned trainer.

The who forget the finances, will be forgotten

Many clubs have been ‘forgotten’ because of bad strategies to make more money. Hull City knew they would be the underdog in the Premier League a few years ago, after they promoted for the first time to the highest division in England. So, they started buying players with the new money they got because of that promotion. They could spend the money, or they could invest it in talented players or find another way to make more money with a smart plan. Relegate after one season in the premier league would mean less money, so they spent every pound they had to try to not relegate. If they relegated they would be close to going bankrupt, because of the extremely expensive player salaries. If they would not relegate, then they would be financially stable for a few years. A giant risk was taken and they bought the expensive players, relegated, and now they play in the second division with a debt they might just never be able to repay.

Football: a world of debts

Leeds United used to be an financially football club, until the board wanted the club to grow, to become the biggest football club in England.  The board of Leeds had a plan, one that kills lots and lots of football clubs. Buying players to get better and pay them a salary they can’t afford. Just getting into debt and, when the results are there, repay everything and everyone the owe money to.

But, the results weren’t there, and the club relegated. Huge debts, a bad reputation and playing in the second division.  Of course now they had to sell all of the players for less they bought them for, which leads to more debts. After one season in the second division they relegated to the third, and Leeds United, according to all of the newspapers, died. Now, after six years there alive again and playing in the second division with a financial plan that works.