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Research project - The Global Football Industry

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A study of the global football industry in changing times with a generic focus on football in the media age, industry leaders, recent trends, potential pitfalls, technology in football and the global …

A study of the global football industry in changing times with a generic focus on football in the media age, industry leaders, recent trends, potential pitfalls, technology in football and the global impact of the FIFA World Cup

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  • 1. This paper tries to analyze the footballindustry by looking at a few significant factors that define an industry
  • 2. RESEARCH PROJECTA Study of the Global Football Industry Submitted by: Siddharth Ravishankar Under the Guidance of: Prof Bhanu RanjanA Study of the Global Football Industry 2
  • 3. Table of Contents Introduction............................................................................................. 4 Literature Review ..................................................................................... 4 History..................................................................................................... 6 Demographics .......................................................................................... 8 Industry Leaders .................................................................................... 10 Industry Financials ................................................................................ 13 Technology and Football – Data Analytics............................................... 15 The impact of the FIFA World Cup ......................................................... 16 Football Brands ..................................................................................... 19 Recent Trends ........................................................................................ 21 Potential Pitfalls ..................................................................................... 23 Conclusion ............................................................................................ 25 References ............................................................................................. 26A Study of the Global Football Industry 3
  • 4. Introduction In todays economic climate, the sports industry is one of the fastestgrowing industries in the world. This is clearly evident by various countrieslooking at opportunities to tap this emerging market since they now realizethe potential of this industry. The football industry is a major industrywithin the sports industry and is one of the most multi faceted industriescutting across various countries; developed and under developed,established and emerging economies, small countries and super powers. Itis one of the major revenue generating industries in terms of a growingviewership, and a growing fan base that contributes not only to increasedsales from match and event attendance but also increased sales from sale ofmerchandise and other associated products.Literature Review A certain football fan once said, “Advertising with football media issimple math; for every penny you spend, you make twice that much!”Football in the New Media Age analyzes the impact of media on the footballindustry. Raymond Boyle and Richard Haynes first published this book in2004 and it virtually took the football industry and the media by storm. Thisbook talks about the growing relationship between football and the mediaand helps us to identify the extent of evolution of this relationship. Footballtoday is often seen as a cultural form, as an industry, as a business andmost importantly as a media product. Football in this new media age almostappears omnipresent. The book talks about the way the football industry is perceived by themedia industry. Every news related to the game, be it the weekly news, thehigh profile transfers, the misdemeanors involving young, wealthyprofessional football stars merged with their poor behavior on the pitchsomehow finds it way to the front page of the newspapers, social networkingwebsites and digital media forums. This book explains the highly volatilerelationship between football and some aspects of the media industry duringa time of change in both sectors.A Study of the Global Football Industry 4
  • 5. The opening chapter presents a historical overview of the relationshipbetween football and the television media in the United Kingdom. David Hill,BSkyB‟s then Head of Sport in1992 said, “Here [in Britain] it‟s football first,second and third.” Football has always been the number one game in theUnited Kingdom and the media has also had a significant role to play inkeeping the game at its number one status. Going from the pre-internet erain the early 1990s to the late 1990s and the early part of the newmillennium, the media industry has changed and in fact grown by leaps andbounds. The digital revolution brought about a whole new dimension to theway football was mapped. Television broadcasters now stood at the forefrontof what was the biggest revolution to come about in the United Kingdom.Football was being viewed like never before, both inside the United Kingdomand much more outside it. Match fixtures were now being scheduled notbased on the availability of players and convenience of the teams, but ratheron the viewership slots available on the television. This marked a crucialstage in the relationship between football and the broadcasting industrybecause it gave rise to the biggest factor in this new media age,Commercials. The easy accessibility of viewership and the increasing importance ofplayers image rights now turned around the very meaning of advertising andcommercials. Players with a certain star power and influence pretty muchdictated the trends in the digital environment. Football clubs were not farbehind and they took off from this queue and exploited the digital media toforay into newer markets and develop new business opportunities that thedigital media offered. Clubs began branding themselves around certainiconic players; in the way Liverpool Football Club and Manchester UnitedFootball Club entered the Asian market on the backs of the growingpopularity of their marquee players such as Steven Gerrard and DavidBeckham respectively (www.liverpoolfc.comand www.manutd.com). Clubsthe world over seem to have realized the advantage of cashing in on thecelebrity status of their star players. Football clubs have extended their control over the game by setting upA Study of the Global Football Industry 5
  • 6. their own media companies to exploit the rights they hold. Clubs likeChelsea, Barcelona, Real Madrid, Manchester United and many others, nowown their own media companies where they broadcast their live matchesamongst many other telecasts such as first team matches and juniorchampionships. Authors Boyle and Haynes, believe that at the core of thisprocess is the emerging relationship between traditional notions that haveseen football mediated primarily within a national broadcasting culture, andthe potentially global communicative system of the Internet as a means ofcreating a larger, more disparate footballing community and globalizing thelocal appeal of particular football clubs. The authors talk the growing globalization of the game and the roleInternet has to play in major events. With major global events like the WorldCup, the European Championships and the highly popular and widelybroadcasted UEFA Champions League in addition to the various nationalleagues being telecasted now, the role of the digital media is only bound togrow stronger. A closer examination reveals the role and impact ofinteractivity – one of the distinctive features of digital technology – onfootball fans. Today, with the advent of digital media, the fans have nowbecome the most impactful of all the factors affecting the success of a clubor for that matter a nation. Football in the New Media Age is a book that‟s true to its name. It talksabout how the modern game has changed from what it used to be and howthe media has helped it become the global sport it is today. The footballindustry has pretty much rode on the crucial findings of this book and usedthe digital media to the greatest possible use to leverage itself. The footballindustry has used the media to increase its reach and has now moved intothe world of social media as well. The book is a comprehensive guide on howfootball has changed with its changing environment.History It‟s difficult to imagine a world without football. And a major reasonbehind that is because football is today treated as more than just a mereA Study of the Global Football Industry 6
  • 7. sport, it is often treated as a religion cutting across all strata of society. Thefootball industry today has grown from what used to be a past time sport toone of the fastest growing industries in the world. Like a certain football fanstates, the fact that the churchIglesia Maradoniana was formed in the nameof Diego Armando Maradona, the legendary Argentinean striker, proves howimportant football is in this age. Although this sport is the most widely played and watched sport inthe world, its origins are not very clear. Some believe that the ancientGreeks and Romans played football in the era Before Christ (BC) whileothers believe that football found its origins in the Chinese military barracksduring the Han Dynasty in the 3rd century BC. A third section of societybelieves that the Japanese first played a game called kemari, which is playedin a manner that is very close to how football is played(http://www.fifa.com). However, the contemporary history of football spansmore than 100 years when the Football Association was formed in Englandin 1863. This is considered as the birth of the modern game. From itsconception in 1863, the British soldiers played the game in their variouscolonies all over the world and slowly introduced football to the world. The Fédération Internationale de Football Association (FIFA) wasfounded on 21st May 1904 in Paris to oversee the welfare of the game. Thegame changed for the good when in 1930 FIFA President Jules Rimetsdream was realized as Uruguay hosted the inaugural FIFA World Cup. Witha brief break for the World War II, football returned with such a force that itcreated a worldwide storm with an increasing number of countries nowjoining the FIFA to participate in various International events like the WorldCup, and the continental showdown events held every 4 years. By the end of2011, 208 national associations were members of FIFA.(http://www.fifa.com) The fact, that the United Nations has 193 membernations highlights how popular the game is.A Study of the Global Football Industry 7
  • 8. 1872 1904 1908 1st 1930 1982 1863 Fédération 1st 2012 Internatio First World 1992 FA was Internation successful FIFA now nal game World Cup FIFA founded ale de internatio boasts between Cup held expande Rankings in Football nal 209 England in d to inc published London Association competiti members and Uruguay 24 teams (FIFA) on Scotland Football, today is not only looked as a sport but more so as anindustry. FIFA organizes events and tournaments in different countriesacross the globe, which helps, revolutionize the national economy. AskSouth Korea how the World Cup in 2002 changed their outlook towardsinfrastructure and a better standard of living. The kind of income brought inby the sponsors, tourists and the very game itself is a major reason whycountries today plan their infrastructure and growth around these veryevents. Also, football has the muscle power in terms of the revenues itgenerates from ticket sales, merchandize sales, sponsorship deals, etc.Football has also extended its realms beyond just the game The future of the football industry definitely looks bright, and with theEuropean Championships to be contested in Ukraine and Poland in Junethis year, this could very well another milestone in the history of the footballindustry.Demographics The football industry sees a growing popularity among todaysgeneration. In fact, many legends of the game like Pele and Maradona havespoken about the growing popularity of the game as compared to what it iswas during their days. And one primary reason behind this is that footballA Study of the Global Football Industry 8
  • 9. has become more commercialized today thereby being able to attract a widerrange of „football fans‟ that was not existent previously. The football industry covers wide aspects of the game from the stadiaattendances, to purchase of national / club loyal merchandizing and alsosponsorship & advertising through football stars and teams. For example,Manchester United FC has signed a deal with Turkish Airlines as the officialairways of the first team and with DHL who are the Clubs Official LogisticsPartner (Manutd.com - The Offical Website). Many researches have beencarried out trying to identify the demographics of "football fans" and onesuch leading research has been conducted by Sportfive GmbH & Co withregard to the football fan‟s attitude to football, interest in certain events,stadium visits, media use and attitudes to sponsorship, brand purchases,etc. (SPORTFIVE GmbH & Co. KG, June 2009). Since, the purchasers offootballing merchandize and visitors to stadiums are primarily peopleinterested in football, we shall call them “football fans” from hereon. When we look at the basic demography of football fans we can simplylook at them as male fans & female fans. Why do men or women startwatching or playing football? Male fans love to play football. Football is alsoa bonding experience for fathers and sons. When male football fans wereyounger, they probably spent hours watching football games with their Demographics-father. From playing the game at a younger age, they start watching thegame, as they grow old. Many female fans on the other hand also love thegame, but most started watching football because a cute player caught theireye or probably became interested after watching a game with a boyfriend ortheir husband. (Brantley, 2006) Football-–-The-Sport- We can also look at football fans Passivefrom a non-sexist angle. We can call Fansthem casual fans; those who are Casual DieHard Fans Fansinterested in football but don‟t watchevery week, passive fans; those who Footballwatch an occasional match but are not FansA Study of the Global Football Industry Male-/- 9 Female- International- 18@28-yrs- Level--
  • 10. Passive Fans Casual DieHardreally that interested and then the die hard football fans. These are the Fans Fansmajor contributors to the economy of the game. These are the people whowatch the game regularly on TV or in the stadium, buy footballingmerchandize, collect footballing memorabilia and alsoFootball spend more tend to Fanson sports and in specific football accessories as compared to the generalpublic. There is also a stark distinctionbetween fans who watch football at the Male-/- Female- International-international level and those that watch 18@28-yrs- Level--the game at the club level. Those whoprefer club football to the internationalgame are far more likely to be male thanfemale and are most commonly aged 16- Male,-16@34-34, upscale socio-economically, better off Club-Level- yrs-financially, non-readers of newspapersand viewers of satellite TV. While thosewho prefer international football to club football, are as likely to be female asto be male, are younger, less affluent and lower-level viewers of satellite TVthan their club-fan counterparts, but are also upscale socio-economicallyand prefer broadsheet newspapers. This is quite evident during majortournaments such as Euro 2012 currently going on. (King, 2010)Industry Leaders There are many reasons behind the meteoric rise of the footballindustry. The teams, the players, the managers, the fans, the sponsors, thebroadcasters; all of the above have contributed immensely to get this gameto the pedestal and the popularity it enjoys today. However, if we had toconsider 3 leading factors behind this rise, we could narrow down to theplayers, the managers and the teams.A Study of the Global Football Industry 10
  • 11. When we speak about football teamsthat have led this whole revolution andprobably helped popularized the sport to thegreatest extent, the first name that comes tomind is the Brazilian national football team.Brazil and football go hand in hand, prettymuch like how Germany and Beer are related;they are synonymous of each other. Rightfrom the inception of the FIFA World Cup wayback in 1930, Brazil has played a dominantrole in world football giving us many greatplayers like Pele, Romario, Ronaldo, Zico and many others. The Brazilianfootball team almost always rises up to the occasion at major events andhas never dropped out of the Top 10 rankings in World Football. It has trulybeen a leader in every sense of the word and the fact that they have neverfailed to qualify for the Football World Cup or their 5 World Cup victories isstill an unmatched feat. (Confederação Brasileira de Futebol) One of the biggest and probablythe most influential reasons behindthe success and failure of teams arethe managers. The manager is themodern day coach, mentor, strategist,analyst and the master planner. Ashrewd manager most often makesthe right decisions in pressuresituations with regard to game plans,player transfers, player managementand team policies and Sir Alex Fergusson is probably one of the all timegreats. Sir Alex has been in charge of the most successful English FootballClub in Manchester United for over twenty-five years now and continues tobe heading for a few more years at the helm. He has won every trophy andevery championship that can be won at club level and has truly set a newA Study of the Global Football Industry 11
  • 12. benchmark for future managers. “His hunger is an example for every youngmanager”, is what Arsene Wenger, manager of the current Arsenal FC had tosay about Sir Alex and his hunger for success. (Premier League, 2012)History will remember him not just as Britains finest football manager, butsurely the best the world has ever seen (Wilson, 2011) Finally, the most important factor to have affected the success andpopularity of the modern game is the player. And no player has quite set thestage on fire like a certain David Beckham. David Beckham has redefinedthe modern day sports professional. He has single handedly manage topopularize the game like none of his predecessors (Milligan, 2004).Even though he might not be as gifted as Zenedine Zidane, Lionel Messi orA Study of the Global Football Industry 12
  • 13. Cristiano Ronaldo, he has taken the game to newer pastures such as SouthEast Asia and the Americas. He is by far the most marketable face in theentire sports industry and makes millions of dollars every year only by thesponsorship and advertising deals he signs. He has also paved the way forfuture sports professionals to build a successful career in the modelingindustry as well. As the face of Adidas AG, he has created new means forsports companies to market themselves. “The brand is exceptional and thepotential is enormous. No other sportsman or woman has the brand placing orpersonality of Beckham.”(Williamson, 2002) True leaders leave a mark, and all three of the above sure have donethat. They have set new benchmarks for their successors who will need tostrive that much extra to achieve what they have.Industry Financials The football industry worldwide generates billions of dollars inrevenue. The FIFA World Cup, EURO Championships, UEFA Championsleague, English Premier League, Spanish League and Italian football leagueare huge money earners for world football industry. Broadcasting rights,player transfer fees, endorsements, footballers‟ earnings and productmanufacturers‟ earnings add to total turnover of global football industry. When we talk about the footballindustry there is one organizationthat stands out from the rest, theorganization that runs the game onthis planet; Fédération Internationalede Football Association or what wealso know as FIFA. FIFA is the worldgoverning body for football and is responsible for every aspect related tofootball in this world today, be it the major championships like the WorldCups, improving footballing infrastructure in the developing and the under –developed countries or the various social activities such as child welfare andA Study of the Global Football Industry 13
  • 14. education that it supports. When we talk about the financial solidity of FIFA, it comes across asan organization standing on rock solid foundations. Year on year FIFA hasalways generated revenues in excess of the previous year. Since, they spendon an average approximately 75% of the revenue they generate back into thegame in terms of investment, profits vary. In spite of the turbulent financialmarkets and the global financial crisis, FIFA generated revenue of $1,070million in the year 2011. This comprised majorly of revenue attributable tothe sale of television rights, marketing rights, hospitality rights and licensingrights. The various components of their income are as below. Income Breakup Television Rights 3% 2% 3% 5% Marketing Rights Hospitality & Quality Rights Licensing & Brand Rights 51% 36% Foreign Currency Gains Others When we look at their expenses, what is very evident is the amountthe amount they spend on event related activities which forms a major partof their expenses along with development related activities. The variouscomponents of their expenses are as below.A Study of the Global Football Industry 14
  • 15. Expenses Breakup 3% Football Governance 5% Event related expenses 17% Development related expenses Other Operating 18% Expenses 57% Exploitation of rights & Financial ExpensesOther than these major financial figures, the other important figure is theamount of reserves that FIFA maintains. The figure stood at an impressive $1,293 million. Joseph S Blatter, the current President of FIFA once said,“Football is an industry that will always have money because it is the oneindustry where people pay money and go back contented always wanting tocome back and spend more!”Technology and Football – Data Analytics The Moneyball philosophy is the first official instance where dataanalytics was used in sports. With data analysis we can find ways to makesense of data and transforming this into actionable insights and knowledge.Oakland Athletics general manager Billy Beane used a set ofunderestimated statistics that he then used to find undervalued baseballplayers in the transfer market. The football equivalent to Moneyball is calledSoccernomics and the philosophy of using Soccernomics is the analysis of asimilar set of numbers used to give football teams a competitive edge. Although data analysis has been used extensively in American sportsleagues such as the Major League Baseball (MLB) and the NationalBasketball Association (NBA) for a long time now, the concept has started tocatch on to modern day football managers and the likes. Soon those daysA Study of the Global Football Industry 15
  • 16. where scouts used to identify upcoming talent for clubs to sign will bereplaced with more data analysis owing to increasing player wages andtransfer signings. Damien Comolli, during his time at Arsenal with Arsêne Wenger firstexperienced the effects of Soccernomics. He successfully managed toimplement Soccernomics during his stint as Liverpools Director of Football,when he used data analytics to sign the Spanish left back José Enriquewhen he lost out on Gaël Clichy. Enrique proved to be a shrewd buy; he hadone of the highest pass completions and entries into the final third andcould also be credited with initiating many attacks from Newcastle United‟sleft flank. Bolton Football Club‟s style is the most rudimentary example ofSoccernomics on a football pitch. Sam Allardyce was an expert on analyticsand used them effectively at Bolton to sign players well past their prime butwho still proved to be highly effective on the field. Very few of the players hesigned failed to have an impact at Bolton. (Stavins, 2012) With websites andonline tools, fans and fantasy league participants can evaluate the trend andpattern of their favorite teams and players. (Burke, Donovan, OBrien,Simmons, & Van Gundy, 2009)The impact of the FIFA World Cup Pick your favorite cliché: Brazilianflair, Argentine indiscipline; Germanefficiency, Portuguese petulance; Italiancynicism, English grit, Dutch technique,Spanish gusto, Cameroonian naivety oreven North Korean inscrutability. TheWorld Cup is where all these nations andmany others fight it out for the grandestprize in sporting history, the FIFA WorldCup. (Euromonitor International, 2010)Football in many ways is like aninternational language in itself. I‟ve hadA Study of the Global Football Industry 16
  • 17. many conversations with Europeans and Asians alike that begin and endwith football. Football fans often joke that they would sell their kidney to see theirside win, well research has shown that this joke may not be funny after all,rather it may very well be the truth. A survey conducted by financialservices group ING in Portugal found that the average consumer wouldwillingly contribute US$450 in exchange for victory. (EuromonitorInternational, 2010) While this may sound weird the fact remains that theFIFA World Cup is the biggest sporting spectacle in the world and one thatdrives consumer spending like no other event. The World Cup boosts theeconomies of all the countries participating in the event especially the hostnation or nations, as is it recent trend. The Centre for Economics andBusiness Research estimated that the 2006 FIFA World Cup in Germanyresulted in a global economic uplift of some $35 billion. (EuromonitorInternational, 2006) Major consumer product sectors that benefit from the World Cup are:tourism, hotels, restaurants and catering (also called horeca), beer, wine,soft drinks, snacks, football shirts, flags, flat screen TVs, mobile phoneusage, novelties and gambling. (Euromonitor International, 2010)The WorldCup also generates employment, which further helps boost the nationalincome. The tourists who visit the FIFA World Cup far outnumber those thatvisit the Olympic Games by a ratio of 2:1. Tourist spending is also a majordriving force of economic growth. Further studies have also confirmed thatmajor sporting events such as the World Cup boosts the profile andreputation of the host nation ensuring a resurgence of consumer spending.While the host nation does benefit from the improved standard of livingowing to better infrastructure and a boost in economy, major industriessuch as mobile, beverages, tourism, retail and apparel gambling etc receivea major boost in the wake of the World Cup not only in the host nation butin the participating and viewing nations as well. The mobile industry gains with an increased number of subscribersthat get connected to mobile TV services especially during the event,A Study of the Global Football Industry 17
  • 18. irrespective of the nation they are in. Probably the major FMCG beneficiary of the World Cup is beer. With ausually high number of beer drinking nations in the final 32, sales of beeralways increase during the World Cup. Beer is the de facto drink of choice ofthe largely male audience. The tourism industry is generally the most massively affected industryamongst all others during major sporting spectacles such as the World Cup.Increased hotel rooms, restaurant sales, consumer spending all contributeto a boost to the tourism industry. Events such as the world cup are the apotheosis of sports branding.(Euromonitor International, 2006) The major sports apparel brands in theworld be it Nike, Adidas, Pume, Umbro all benefit from increased sales ofnational team merchandize. The longer the national team stays in thetournament, the greater the sales. Puma benefited greatly from the WorldCup 2006, which Italy won. Puma being the principal manufacturer of Italy‟snational team jersey gained much more after Italy won the tournament thanduring it. The dark side of the FIFA World Cups is gambling. Gambling alwaysraises its ugly head during these events and it is practically impossible todrive it out. Hundreds of millions of dollars are wagered on everything fromwho will win to who scores the first goal and how many yellow cards therewill be in a game (Euromonitor International, 2006) Football is without a doubt the most popular sport in the world andeven in countries where it is not the number one sport it is gaining inpopularity with every passing day. Countries such as India are termed as„World Cup virgins‟ by marketers who see this as a great opportunity toestablish football‟s category leadership with the current generation. While the FIFA World Cup has phenomenal economic gains there arealso substantial economic losses due to absenteeism. (EuromonitorInternational, 2006) The difference in time zones between the host nationsand those where football is followed and viewed results in odd viewinghours. Absenteeism results in an economic hit to the corporates, whichA Study of the Global Football Industry 18
  • 19. eventually affects the national income as well.Football BrandsFootballers today transcend boundaries beyond the pitch, and into the realworld to become some of the most reliable brand names. Gone are the dayswhen footballers were superstars on the pitch and could lead their privatelives off it. Today, footballers are ever seen as much off the pitch as on thepitch.Three of the largest brands in world football today are Brand Beckham,Brand Ronaldo and Brand Messi. Footballers now represent much morethan just their club or their nations. The war of brands has escalated fromthe boardroom to the football pitch. With each footballer now being able toinfluence much more than just the results of the game, companies haveentered into a race to sign the biggest brands.FootballerBrands David Cristiano Lionel Beckham Ronaldo MessiForbes ListRanking – The 8 9 11World‟s HighestPaid AthletesNet Worth $ 180M $ 120M $ 90MEarnings $46M $42.5M $39MSalary/Winnings: $9M $ 20.5M $ 20MEndorsements: $37M $ 22M $ 19MAge 37 27 25Residence Beverly Hills, Castelldefels, Madrid, Spain CA SpainCountry of United Portugal ArgentinaCitizenship KingdomA Study of the Global Football Industry 19
  • 20. Agent Simon Fuller Luis Correia Guillermo MarinAgency XIX Gestifute - Entertainment InternationalSource: Forbes 2011When we talk about brands in football,there are none bigger than BrandBeckham. Who ever thought the littlekid from Leytonstone, London would goon to redefine football. David Beckham,a British national has had a glamorouscareer playing for two of the biggestclubs in world football in ManchesterUnited and Real Madrid before signing amulti million deal with the Los AngelesGalaxy of Major League Soccer and is today worth a whopping $180 million.(Bornrich, 2012)The list of brands that Beckham endorses is a long one.With the likes of Adidas, Gillette, Vodafone, Pepsi, Emporio Armani and therecent additions of Burger King, Sainsburys and Samsung Beckham rakesin more than $37 million a year through endorsements.(Forbes, 2012)Beckham also launched his own clothing collection called „Bodywear‟ in2012 with H&M as a partner.If Beckham is the king of footballingbrands, then Cristiano Ronaldo is definitelyheir to his throne. Born in Santo António,Madeira, Portugal in a very modest familyRonaldo was destined for greatness.Ronaldo today commands one of thehighest salaries in football at about $20.5million annually, including bonuses. Whilethis may seem staggering for some, theicing on the cake is the fact that he earnsA Study of the Global Football Industry 20
  • 21. even more off the pitch, thanks to deals with Nike, Castrol, Coca Cola,Konami and others. He is regarded as the most popular sporting face in theworld; with over 52 million Facebook fans; thats more than any otherathlete in the world. He once said, “"Maybe they hate me because I‟m toogood”, and it is probably this confidence of his that has garnered him somany endorsements.Lionel Messi is often regarded by manyas one of the greatest players to havegraced the sport. Although Argentinianby birth he is often consideredCatalunyan by heart as is his greatestachievements have come in the blue andgold of Barcelona. Messi has graduatedfrom Barcelona‟s famous youthacademy, La Masia to one of the mostmarketable faces in the world. Withrecord-breaking seasons year after yearhe has gone to to endorse some of the biggest brands around. A three-timeFIFA Player of the Year, his biggest endorsement deal is with Adidas, butMessi also has pacts with PepsiCo, Herbalife, EA Sports, Cherry, AudemarsPiguet, Dolce & Gabanna and many others. Messi is currently behindRonaldo in the race as the biggest footballing brands in the world but stilltakes home a cool $39 million a year with about $19 million fromendorsements.Recent Trends The football industry has grown by leaps and bounds since itsinception way back in the nineteenth century. The game has single handedlychanged the sporting outlook of this planet, since it is the most popularsport in the world played in more than 200 countries. That is more than thenumber of countries that are a part of the United Nations. In recent times,however the football industry has changed at a much faster rate thanA Study of the Global Football Industry 21
  • 22. before. Leading organizations such as Plunkett Research, Ltd. have carriedout research surveys to analyze the industry trends and industry statisticsin the football industry. The latest and biggest trend to emerge in sports isthe merging of sports and entertainment. Sports today are looked at morelike the entertainment industry than a sport itself (Plunkett Research®,Ltd.). With large and diverse companies entering the fray as owners of clubs,sponsors of competitions, clubs and nations there is a new trend of pre-season tournaments being held. For example, Venky‟s Chicken, an Indianpoultry giant took over Blackburn Rovers Football Club in 2011 and came toIndia to play against local sides during their pre-season tours. (VenkysGroup) Such activities increase the visibility and support base for clubs allover the world and add to their revenue through merchandize sales over thelonger run. Another major trend is the globalization of football finally being put tobetter use. There was never a doubt on football being the most popular sportin the world. However, with the successful hosting of the FIFA World Cup inSouth Africa in 2010 and recent announcement of the scheduling of theFIFA World Cup in 2018 in Russia and 2022 in Qatar, there has been asurge in the footballing infrastructures in this part of the world. Newerstadia are being built and grass root level infrastructure is now beinginvested in. People are now looking at football, as a possible career optionand there could soon be a shift of power in football from Europe and SouthAmerica to Africa and Asia. (Fédération Internationale de FootballAssociation (FIFA) - FIFA.com ) A rather dominant trend seen nowadays is the impact of celebrityathletes on the popularity of football. Names like David Beckham andCristiano Ronaldo have become synonymous with the sport and have helpedopen up newer markets for football in terms of revenues and popularity.Manchester United penetrated into the Asian market on the back of DavidBeckham‟s growing female fan base and helped Manchester United becomethe most popular football club in Asia. Players towards the end of theirA Study of the Global Football Industry 22
  • 23. playing careers, shift bases to United States and Asia because clubs in thesemarkets offer them huge wage packets which, in turn help the club sell theshirts that help them make their revenues. Another critical trend is the influx of expatriate players (defined as "afootballer playing outside of the country in which he grew up and fromwhich he departed following recruitment by a foreign club") (Jeremy, 2011)Although it would seem that with the globalization of the game, there wouldbe an increase in the percentage in this number, contrary to our belief, thisnumber is actually decreasing. And the reason behind this is the growinginfrastructures in the countries where football is not fully developed as inEurope or America. Asian and African players are now looking at playingfootball professionally in their home nations as the feasibility and viability ofa footballing career now exists back home.Potential Pitfalls For being the most popular sport played on this planet it is rathersurprising that there are many pitfalls in the football industry. However,what is rather not surprising is that a majority of these pitfalls are a resultof recent changes in the way the sport is being conducted, played andmanaged. The biggest challenge to football is for it to remain just a sport.However, today the football industry is seen as one of the fastest growingindustries and as a result is being looked as a business rather than a sport.Christian Nerlinger, the current Bayen Munich sporting director and afamed former Bayern footballer of the early 90s is still unable to tell whethermoney runs football or is the other way around (Saxena, 2012). The growingglobalization of the game and the way it is being perceived is ratherdangerous to the game and the industry as a whole. Football is not onlyabout money; there is whole lot of other elements that go into building agreat football team. Someone needs to tell that to Roman Abromovich theowner of Chelsea Football Club and Sheikh Mansour bin Zayed bin SultanAl Nahyan the owner of Manchester City Football Club.A Study of the Global Football Industry 23
  • 24. A major pitfall for the sport is that although football keeps gettingricher, it is the fans that ultimately pay for it. Football used to be great andcheap to watch. Danny Kelly, a writer and broadcaster on TalkSport feelsthat in the entire history of human commerce, no more efficient system forsiphoning cash from the pockets of the many straight into the man-bags ofthe few has ever been invented (Kelly, 2012). Due to the mind shatteringsponsorship and broadcasting deals that happen these days, the fans haveto cough up huge sums of money to watch their favorite teams in action.This money is primarily used to pay astronomical wages to the footballersthat seem to be more priceless than diamonds. I‟m sure De Beers could usethem in their advertisements. It is very difficult in todays‟ times to run asuccessful football club wherein almost 80% of the clubs revenues are spentin player wages. As a result football is soon becoming more inaccessiblefrom its very fans and supporters that made it the number 1 sport in theworld. David Roberts, Corporate Partner at the international law firmOlswang has conducted an in-depth research into the pitfalls in the footballindustry titled The Changing Football series. In his series he talks in depthabout the corporate aspects of football. A very critical issue brought out isthe sustainability of the football industry looking at themes such as funding,the challenges of club ownership as well as existing regulatory rules.(Roberts, The Changing Football series (2) - Football in the UK: Anunsustainable industry? , 2012) With a great amount of the revenues offootball clubs, close to 80% in some cases being spent on player wages it isbecoming increasingly difficult for clubs to stay afloat (Roberts, TheChanging Football series - The UK football industry: A parallel universe,2012). A larger number of clubs are showing signs of distress and and goinginto „administration‟. Innovative business ideas such as ground sharing,academy programs, salary caps and community ownership models shouldbe brought into the game take care of the increasing financial difficulties.(Roberts, The Changing Football series - Groundshare: A Football Heresy?,2012)A Study of the Global Football Industry 24
  • 25. Another potential pitfall being seen is that the gulf in class betweenthe so-called richer teams and the teams that are built on a traditionalcommunity based model. With an increasing amount of money beingpumped into the game, the smaller nations and clubs find themselvesconstantly fighting more against the system, in terms the infrastructure andambitions of their predicament rather than against the opposing teams.Also, football needs to be regulated by the governments to promote the sportin the right spirit and bring the community closer together rather thanincrease the bridge between teams and thereby between supporters. Themore connected the entire football fraternity remains, and that includes thefans, the more the industry will grow in terms of increased revenues andsales. (Roberts, The Changing Football series – Promotion / Relegation: ABridge Too Far?, 2012) A major pitfall the entire football industry is currently facing is thedevelopment of the game. While increasing amount of money is being spenton player wages and player management, not enough is being spent intodeveloping the game in the under developed nations around the world. Therehave been instances in India in recent times, where players have died on thefootball field because there was no medical assistance available. The basicinfrastructure in such countries is still lacking while in other countries theentire industry is rolling in money. Even though there have been significantdevelopments in the African nations, more needs to be done in terms ofdeveloping the game in other countries.Conclusion The football industry is without a doubt one of the fastest growingindustries and inspite of its potential pitfalls it is an industry that will onlygrow with time.. The industry is reaching the remote corners of the worldand more and more people are playing football today than ever before. Whowould have ever thought that we would one be watching a World Cup inQatar and Football is growing in stature in countries like India andAustralia where other sports take precedence over football and the day isA Study of the Global Football Industry 25
  • 26. not far when we have football players like Sunil Chetri and clubs like MohanBagan competing with the likes of Lionel Messi and Manchester United.ReferencesRalph G. Nichols, L. A. (1999). Harvard Business Review on Effective Communication. Harvard Business Press.A Study of the Global Football Industry 26
  • 27. Jay, A. (1999). Harvard Business Review on Effective Communication. Harvard Business Press.Kahwajy, J. L., Eisenhardt, K. M., & Bourgeois, L. (1999). Harvard Business Review on Effective Communication. Harvard Business Press.Stevens, L. A. (1999). Harvard Business Review on Effective Communication. Harvard Business Press.Ceo, M. (2012 йил 11-January). The History of Media - From Caveman to Current Man. From http://onmediatheory.blogspot.sg/2012/01/history-of-media-from- caveman-to.html.Fourie, P. J. (2008). Media Studies: Media History, Media and Society. Juta and Company.Kaplan, A. M., & Haenlein, M. (2010). Users of the world, unite! The challenges and opportunities of Social Media. Business Horizons , 59– 68.Wikipedia. (2012 йил July). Wikipedia - Radio. Retrieved 2012 from Wikipedia: http://en.wikipedia.org/wiki/Social_mediaMack, P. E. (2005). Invention of Radio. Clemson Education.Sopher, C. (2008). Evaluation of Younger America and the future of news media and civic life. University of North Carolina .PricewateCooper. (2012). Media Industry: Market Research Reports, Statistics and Analysis. ReportLinker.PricewaterCooper. (2012). ReportLinker. From ReportLinker: http://www.reportlinker.com/ci02088/Media.htmlDisney. (2012). Disney Companies. From Disney Companies: http://thewaltdisneycompany.com/disney-companiesSPORTFIVE GmbH & Co. KG. (June 2009). Details European Football Study. SPORTFIVE GmbH & Co. KG.Brantley, A. (2006, November 10). The Differences Between Male and Female Football Fans. From Yahoo! Voices: http://voices.yahoo.com/the- differences-between-male-female-football-fans-110210.htmlKing, M. (2010). Football Business - UK - November 2010. London: Mintel Group Ltd.A Study of the Global Football Industry 27
  • 28. Confederação Brasileira de Futebol. (n.d.). From Confederação Brasileira de Futebol: http://www.cbf.com.brPremier League. (2012, May 15). Ferguson wins 20 Seasons Best Manager. From The Official Website of the Barclays Premier League: http://www.premierleague.com/en-gb/news/news/ferguson-wins-20- seasons-best-manager.htmlWilson, J. (2011, Novmeber 3). The Telegraph. From http://blogs.telegraph.co.uk: http://blogs.telegraph.co.uk/sport/jeremywilson/100021175/why- mancheser-uniteds-sir-alex-ferguson-deserves-to-be-recognised-as- footballs-greatest-ever-manager/Milligan, A. (2004). Brand it Like Beckham: The story of how Brand Beckham was built. Cyan Books.Williamson, J. (2002). The David Beckham Brand. From http://www.icmrindia.org: http://www.icmrindia.org/casestudies/catalogue/Marketing/The%20D avid%20Beckham%20Brand.htmPlunkett Research®, Ltd. (n.d.). From Introduction to the Sports Industry : http://www.plunkettresearch.com/sports-recreation-leisure-market- research/industry-trendsVenkys Group. (n.d.). From http://www.venkys.com: http://www.venkys.com/general/blackburn-announce-completion-of- venkys-takeover/Fédération Internationale de Football Association (FIFA) - FIFA.com . (n.d.). Fédération Internationale de Football Association (FIFA) - FIFA.com . From FIFA.com : http://www.fifa.comJeremy, W. (2011, January 26). The Guardian. From Footballing trends in Europe: the long and short of it: http://www.guardian.co.uk/football/blog/2011/jan/26/european- football-surveySaxena, S. (2012, January 12). The Times of India. From Footballs not business, says Bayern sporting director: http://timesofindia.indiatimes.com/sports/football/interviews/Footba. ..ss-says-Bayern-sporting-director/articleshow/11454983A Study of the Global Football Industry 28
  • 29. Kelly, D. (2012, June 17). The Guardian, the Observer. From Football keeps getting richer, but its the fans who pay for it: http://www.guardian.co.uk/football/2012/jun/17/sky-premier- league-danny-kellyRoberts, D. (2012). The Changing Football series (2) - Football in the UK: An unsustainable industry? . UK.Roberts, D. (2012). The Changing Football series - The UK football industry: A parallel universe. UK. From http://www.olswang.com/articles/2012/02/dave-roberts-football- video1Roberts, D. (2012). The Changing Football series - Groundshare: A Football Heresy? UK.Roberts, D. (2012). The Changing Football series – Promotion / Relegation: A Bridge Too Far? UK.Stavins, R. (2012). Winning Strategies for Ticket Pricing: What Secondary Market Data Does and Doesn‟t Tell You . MIT Sloan Sports Conference .Burke, B., Donovan, M., OBrien, S., Simmons, B., & Van Gundy, J. (2009). sloansportsconference.com. From MIT Sloan Sports Analytics Conference: http://www.sloansportsconference.com/?p=748Euromonitor International. (2010). World Cup fever: How the World Cup is influencing consumers . Euromonitor International.Euromonitor International. (2006). The World Cup – The biggest consumer spending bonanza in history . Euromonitor International.(n.d.). From http://www.fifa.com: http://www.fifa.com/classicfootball/history/game/historygame1.html(n.d.). From Manutd.com - The Offical Website: http://www.manutd.comA Study of the Global Football Industry 29

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