Category Archives: Football Business

Finance and economics, Football Business, Liverpool, Player analysis

How Much Is Liverpool Forward Luis Suarez Worth Based on Form in 2014?

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Nine matches to go in the 2013/14 Premier League campaign, and Liverpool are still on course for a top-four finish, which would see them return to the Champions League next season—and still in with a shout for the league title outright.

None of this would be possible without the contributions of Luis Suarez, who, despite all the proclamations of the Reds being a dynamic and interchanging team these days, remains one of their most important players.

After 25 goals and 10 assists—making him the leader of both charts in the Premier League—in 24 matches and a contract signed in December, Suarez has once again proven himself as indispensable and invaluable to the Anfield club.

Perhaps even more so than in previous campaign.

Back in December, we embarked on a challenging but interesting attempt to calculate Suarez’s worth in the transfer market then.

In light of Liverpool’s recently released financial results for the 2012-2013 financial year, let’s revisit this subject and try to work out how much Luis Suarez is now worth based on his current form—without any kind of insider access to the boardroom.

 

Transfer Fee and Wage Estimates

To get us started off, let’s return to our estimates in December regarding Luis Suarez’s transfer fee.

Assuming a basic financial amortization of his initial £22.7 million transfer fee (per BBC Sport) over the course of five-and-a-half years, which was the initial length of his contract signed in 2011, we arrive at an approximate annual cost of £4.13 million.

For the purposes of simpler calculation, let’s consider Suarez has been at Liverpool for 3.2 years, which means the as yet “unpaid” total amortization cost would be updated to £4.13 multiplied by 2.3, or £9.5 million.

Onto his wages, which we will only discuss in the present and future tenses, after his December extension.

Our wage calculations following his new contract in December 2013 are based on this BBC Sport article that claims Suarez is earning £160,000 a week until the end of the current season, and then £200,000 a week for the next four years. Simple arithmetic gets us to a total of £43.06 million over the rest of his new contract.

Our baseline estimated value of Luis Suarez, from just his transfer fee and wages, is thus £9.5 million plus £43.06 million, which gives us £52.56 million.

 

Possible Champions League Qualification

As it stands, Liverpool are placed second in the Premier League, and they look in ominous form as they approach the final couple of months of the season.

Our key underlying assumption is that the Reds will indeed finish in the top four, qualifying for Champions League football next term, which should also be the assumption behind Luis Suarez staying at Anfield in the first place.

Champions League qualification is known to have a wide range of commercial benefits, and this is an area where we will take the roughest of estimates of player bonuses based on club performance in both the Premier League and the Champions League.

Our best benchmark in terms of Premier League end-of-season payouts, assuming a fourth-place finish by Liverpool this May, is Arsenal’s from the 2012/13 season. According to the official Premier League website, Arsenal’s league payout for finishing fourth last season was £57.1 million.

A further assumption that Liverpool, having secured Champions League qualification, will make it into the group stages of next year’s competition, will take us to calculate possible payouts from participating in the group stages.

According to SportsBusinessDaily.com, all participants who made it into the Champions League proper were entitled to a minimum of €8.6 million, which translates to about £7.2 million.

As we noted in our December calculations, a minimum total of £64.3 million will probably arrive in Liverpool’s coffers just for making the Champions League group stages.

 

Liverpool’s Business and Commercial Performance

Our December estimates only took into account the potential sum that would come with making the Champions League group stages, and used it as a base to calculate a 5 percent performance bonus for Luis Suarez, one of Liverpool’s most important players.

This time around, however, we’re going to be a bit more ambitious, especially since the Liverpool Echo have also released the 2013 accounts Liverpool submitted to Companies House.

The increase in revenue from all sources is impressive, but for the purposes of calculations in the “current” context, we will exclude media and matchday revenues, since the 2012-13 financial year featured Europa League football, which Liverpool haven’t even been involved with this season.

The growth in commercial revenue, however, was staggering, and with the announcement of new sponsorship deals in the past few months, will only continue. Commercial revenue for the year ended May 31, 2013, was £97.7 million, more than a 50 percent increase over the previous 10 months, which landed £63.9 million. Spread the 10-month average over a period of 12 months, and the increase can be adjusted to roughly 27 percent, still a significant growth factor.

Our final assumption is if Liverpool continue in their current attacking style of football, coupled with the increased exposure of Champions League football, they will generate more interest off the field, which will lead to benefits both in terms of commercial sponsorships, as well as merchandise and image rights-related sales and advertising revenue.

Applying the same 27 percent year-on-year growth factor onto our performance bonus of 5 percent, to ensure that all staff are adequately compensated for their role in helping grow the Liverpool brand, we get a 6.35 percent bonus from the previously calculated Champions League-related payouts.

This gives Suarez 6.35 percent of £64.3 million, which amounts to £4.08 million.

 

Conclusion: £56.64 Million

Adding this performance bonus to our transfer and wages baseline, we get a total valuation of £56.64 million, which, compared with our December estimate of £56.1 million, is perhaps disappointingly close.

However, considering that it’s only been three months since our previous calculation and that our estimate has already gone up by half a million pounds, this kind of growth rate could yet translate itself into bigger margins given another year or two.

It wasn’t so long ago—last summer, in fact—that Arsenal submitted a high-profile (and now widely mocked) £40-million-plus-£1 bid for Luis Suarez, which was derided at the time by Liverpool owner John W. Henry.

Back then, £40 million plus £1 was seen as a derisory amount for a player like Suarez. Three quarters of a season onward, perhaps £56.64 million will be considered shockingly low for such an important player to the Reds cause.

But of course, this is just a purely financial valuation of Luis Suarez, based on assumptions that might not ring true in the Liverpool boardroom.

Last time John W. Henry checked, football contracts “don’t seem to hold, and [Liverpool] took the position that [they’re] just not selling” (per the Guardian).

We have a sneaking suspicion that they will be holding this position for quite some time.

 

This article first appeared on Bleacher Report, where I contribute regularly on Liverpool and the Premier League.

Branding and marketing, Business strategy, Football Business, Grassroots development, Manchester City, Technology

Manchester City: Building a Global Football Empire from the Etihad Stadium

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The rise of Manchester City Football Club in recent years has been nothing short of astonishing, and since Sheikh Mansour and the current ownership team took over, they have gone from strength to strength, establishing themselves as a Premier League powerhouse.

Manuel Pellegrini’s impressive setup at the Etihad Stadium had—for a good few months—his City team the runaway top scorers in England, which are currently looking to secure a domestic double with the League Cup already in their hands.

From the outside, City seems like the archetypal sugar-daddy story: After all, didn’t Chelsea, Paris Saint-Germain and now AS Monaco go down the same path of sudden fame, fortune and success because of mega-rich owners?

That City’s newfound prestige—and that their starting XI boasts the likes of Vincent Kompany, Yaya Toure, David Silva and Sergio Aguero—is down to the money injected into the club by their Abu Dhabi owners is undeniable, and in some quarters perhaps spoken of negatively and cynically.

But a quick look at their off-field projects, initiatives and business developments suggests City aren’t just in this for the short term, and they’re not just around to pick up a few trophies.

Manchester City mean business, and they’re well on their way to building a global footballing empire.

Michael Regan/Getty Images

Building a City around their fans

From their well-known support of the club even during their lowly third-tier days to their fanatical celebration of a first-ever Premier League title after a 44-year drought, Manchester City fans have long been famous for their undying support.

So it was only right for any City management to focus on their fans—and to their credit, this is exactly what they’ve done.

As fan engagement started to go digital and social media started to take off, City were one of the first clubs to fully embrace these new channels, and as such became one of the pioneers in this arena among the football industry. (Michael da Silva of Alpha Magazine has more in this excellent write-up.)

Along the way, they’ve picked up their fair share of accolades, and for good reason.

Besides their long-admired Twitter channel, they have also become known for offering one of the most comprehensive YouTube librariesin all of football: Their “Inside City” and “Tunnel Cam” series are a rare breath of fresh air in an industry where much of the behind-the-scenes content remain proprietary and available only on paid subscriptions.

By putting their fans in the center of an all-inclusive, fun and interactive social media strategy, Manchester City have hit the jackpot—and their success has encouraged them to strike up innovative and interesting partnerships to take such marketing and fan engagement methods to the next level.

Take their collaboration with GoPro—known for their work with Red Bull Stratos and Felix Baumgartner’s record-breaking free fall from the edge of space—last year, for example.

Announced in August 2013, the GoPro tie-up was a groundbreaking look into “what it’s like to train and play like a professional footballer.” A slight exaggeration, perhaps, given that players wouldn’t have worn the cameras during competitive games—but their viewer numbers of more than two million to date have more than paid off.

Prior to that, their May 2013 partnership with Cisco and O2 turned the Etihad Stadium into the “Premier League’s most technologically fan-friendly stadium,” allowing fans to fully immerse themselves into the digital world while watching a live match unfold before them.

Shaun Botterill/Getty Images

Transforming the City of Manchester

The City of Manchester means a lot to the football club in two different ways.

The first is obvious: Their landmark deal in 2011 with Etihad Airways, which, according to Daniel Taylor of the Guardian, was worth awhopping £400 million, renamed the City of Manchester Stadium to the Etihad Stadium it is known as now.

It was also the largest sponsorship deal in sports at the time and showed the financial powerhouse that Manchester City Football Club were becoming—and the raw commercial potential they had in abundance.

But while the sponsorship arrangement was momentous, arguably more important was what the owners and related stakeholders had in mind for the city of Manchester itself.

The £400 million partnership had significant funds earmarked for the continued development of the Etihad Campus, an area of land around the stadium including a fans’ village and other training facilities. When they put pen to paper on the landmark deal, the landscape and the immediate vicinity was instantly changed.

Two-and-a-half years since he announced the deal, Taylor revisited the topic and wrote more extensively on the “changing football landscape” in Manchester this February (via the Guardian).

With the Etihad Campus due to start its operations within six months and the redeveloped area to include “16 other pitches, accommodation for players, apartments for relatives, a medical center, a boardman, a media theater,” this is truly the beginning of an exciting new era at Manchester City. (The Telegraph have more on the training facility plans here.)

In conjunction with this is the vision at the boardroom level, where Mansour set out a model to incorporate a sustainable future in his plans for the club, which led him to the long-awaited appointment of Txiki Begiristain and Ferran Soriano, both instrumental to Barcelona’s dynasty under Pep Guardiola.

The Barcelona blueprint was instrumental and central to Manchester City’s own footballing approach, according to Sid Lowe of the Guardian, and has begun to work its magic. As reported by the Independent, Patrick Vieira, the ex-Arsenal legend, was chosen last summer to move from his position as football development executive to head up City’s new elite development squad, who have been flying high in the under-21 Premier League this season.

Ray Stubblebine/Associated Press

Cities abroad: A global empire

As Manchester City’s youth players go through a one-club development philosophy and prepare to graduate to first-team level, City’s groundwork has been laid at the local level. Prepare to arm Manuel Pellegrini with a squad that can compete at the top of the European game in the coming years.

Whenever it comes to empire building, the next logical step after sorting out the local setup is to look global.

And City first hit the headlines for their worldwide ambitions with their foray into the United States’ Major League Soccer, joining up with Major League Baseball team, the New York Yankees, to establish New York City FC as MLS’s 20th franchise, as confirmed via SI.com.

Besides forming a fresh new local rivalry with the New York Red Bulls, New York City FC will also be commissioning a brand new football-specific stadium in the Bronx area, according to the Guardian, while also boasting the highly rated American coach Jason Kreis as their first manager.

They weren’t content with moving to just one continent, either, and in January this year, City confirmed, via the Guardian, they would be dipping their feet into the Australian market with their acquisition of A-League side Melbourne Heart.

These two acquisitions and expansions have been branded as “strategic” investments in two of the fastest-growing football nations: City will have had one eye on their revenue streams and profit margins when they decided to move ahead with these bold ventures.

But just as they’ve done at home, City also have a one-of-a-kind opportunity waiting in front of them, the kind of opportunity that will only present itself to those with the resources and long-term vision to make it happen.

If Mansour and his management team continue their good work in the city of Manchester and decide to invest in boosting the footballing infrastructures in both New York and Melbourne, not only will they develop their new football clubs, but they might also have a defining say in the footballing growth of the US and Australia.

The potential and the possibilities of a Manchester City football empire are as tantalizing as they are awe-inspiring.

They’ve already gone back to their roots: In a classic fan-centric move, New York City FC have released two winning designs for their club badge and put them up for a public vote among their fans.

We can’t wait to see what’s next.

This article first appeared on Bleacher Report, where I contribute regularly on Liverpool and the Premier League, and occasionally on football business.

Finance and economics, Football Business, Politics, Stadiums and events, World Cup

State of Brazil 2014: Where Do Things Stand in World Cup Host Nation Right Now?

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During Brazil’s 5-0 hammering of South Africa in Johannesburg in an international friendly on Wednesday, more than just a footballing spectacle was on show.

Sure, Neymar’s hat-trick—the Barcelona star has hit 30 goals in just 47 caps—inspired the Selecao to a resounding victory over the hosts. And the Samba stars even hit the headlines after the match for all the right PR reasons when they elected to pose and celebrate a young pitch invader, as reported by the Daily Mail.

But this prestige friendly was also the meeting between the most recent World Cup host and the current incumbent, played at Soccer City, the venue of the 2010 final, where Spain beat the Netherlands to win their first-ever World Cup.

It was a passing of the baton—well, of sorts.

In an ideal world, from both FIFA’s perspective and surely the Brazilian Football Association’s, Brazil’s resounding victory would also have represented an analogous reflection of the upcoming World Cup in relation to 2010’s, with Brazilian excellence, preparation and execution not just limited to a five-star performance on the pitch.

In an ideal world, the joy and happiness we saw on the faces of the Brazilian team when they celebrated their victory (and the young pitch invader) would not only be repeated as they take to the stage to win their sixth World Cup on home soil in July, but for generations to come as they soak in the legacy of the “best World Cup ever.”

And in an ideal world, the sense of satisfaction in the Brazilian fans at Soccer City and watching on television at home would precede a sense of immense pride to be realized this summer while they watched a spectacle unfold at home, before they bid farewell to the hordes of tourists who will have created an economic boon for them to enjoy.

But where do things stand right now in the host nation? As we discuss below, things are not quite as rosy as they should be. Let’s look at how Brazil is faring, from different angles.

 

 

Gallo Images/Getty ImagesThe team: Ready to pounce

When it comes to matters on the pitch, the Brazil national team seem more than ready to take their chance on home soil this summer.

While a 5-0 drubbing of South Africa, their biggest ever loss at home, was an impressive achievement, and once again highlighted Neymar’s growing stature in world football and importance to his country’s footballing hopes, an arguably more symbolic result than took place last summer.

Brazil’s 3-0 defeat of World Cup champions Spain in the 2013 Confederations Cup final, itself a dress rehearsal for this summer’s World Cup, was courtesy of a match-winning performance by Neymar(and two goals from Fred), in an all-round spectacular performance. They inflicted upon Spain their first defeat in 29 competitive matches.

Luiz Felipe Scolari’s starting XI on Wednesday featured just two changes from his Confederations Cup final win last summer. WithNeymar having prospered since his move to Barcelona, the resurgence of Fernandinho at Manchester City and the impressive rise of Oscar at Chelsea, this is a Brazil side as workmanlike as it is flamboyant.

As Brazil prepare to welcome the visit of 31 other teams this summer, they will also revel in the fact that their opponents face a grueling match schedule, made all the more difficult because of the weather and traveling and exacerbated by the hot afternoon kickoff times.

This ESPNFC article lists all the obstacles that Brazil’s rivals will be up against: With the weather conditions of six cities classed as “stifling”—four of them “oppressive”—and high temperatures of over 31 degrees Celsius, the cross-country coverage will ensure startling differences between stadiums and locations.

The sheer largeness of the country means that some participating teams will face extremely tiring travel schedules. The USA team, for example, will travel a total of 8,800 miles for three of their group stage games, spending at least 35 hours commuting in total, while all matches will be played in “oppressive” conditions.

Of course, not all teams face such a demanding schedule, but it’s worth remembering that South American teams generally have a better record in World Cups hosted in the same region: All seven World Cups played in the Americas have crowned South American winners.

The only silver lining for other pretenders is that Brazil only finished as runners-up the last time they hosted a World Cup at home.

 

 

Friedemann Vogel/Getty ImagesThe logistics: Another last-minute dash

It seems as if World Cups, despite the spectacle they may be, always involve last-minute madness.

If we thought South Africa’s preparations in the final months leading up to their tournament weren’t a big enough alarm—as FIFA secretary general Jerome Valcke claimed in February 2010 (via Sky)—the situation this year is apparently even worse.

Just this January, FIFA President Sepp Blatter told the Telegraph:

Brazil just found out what [the scale of work] means and has started work much too late. No country has been so far behind in preparations since I had been at FIFA, even though it is the only nation which has had so much time—seven years—in which to prepare.

Not that his public criticism had had the desired effects. Valcke’s latest update in early March reflected the current state of chaos in Brazil’s preparations, as they “are working in conditions where the cement is not even dry,” and all IT and telecommunications systems hadn’t been installed, according to SportBusiness.com.

This was a long time coming.

A grand total of six stadiums, in Sao Paulo, Curitiba, Cuiaba, PortoAlegre, Natal and Manaus, had missed a deadline of Dec. 31, 2013 set by FIFA to allow a suitable preparation window ahead of the summer’s matches.

Since then, Curitiba has flirted with danger, coming close in February to being dropped for the tournament altogether, according to BBC Sport, only for local organizers to bring in hundreds of extra workers to meet building requirements and ultimately earn a FIFA reprieve.

Now Sao Paulo, which is set to host the opening game, might not be ready to hand its stadium over until May, a month before the tournament kicks off on June 12, according to BBC Sport.

Valcke, understandably, is unimpressed: According to theSportBusiness.com article above, he has had more harsh words regarding Brazil’s lax preparations:

I am not a World Cup specialist, but I will say this has not been easy for sure. We are almost at 100 days before the first game starts in a stadium in Sao Paulo which is still not ready and won’t be ready until May 15.

A glaring example of Brazil’s last-minute tendencies was the embarrassing fiasco over the preparation of the Maracana stadium for a high-profile friendly match between Brazil and England, supposedly to mark its grand reopening. Due to concerns over its structural readiness, and thus supporter safety, judicial order suspended the match a few days before it was schedule to take place, according to the Guardian.

The match ultimately resumed and ended in a 2-2 draw, but the warning signs were already there.

 

 

Ronald Martinez/Getty ImagesThe politics: The biggest headache of them all

If FIFA have already suffered enough headaches because of the disorganization in Brazil’s preparations, they’re about to experience even more—and this time the Brazilian FA could feel the heat as well.

It would’ve been all well and good if the issues that were raised before the Brazil-England friendly preceded an ultimately grand spectacle in the Confederations Cup.

But while Brazil’s victory over Spain said plenty about their ambitions to lift their sixth World Cup this year, what happened off the pitch among the local supporters were almost inevitable—yet surprising in equal measure.

The BBC reported that protesters clashed with police during the final, as demonstrations sparked by transport fare rises snowballed into more and larger grievances about the imminent World Cup and the costs associated with the tournament.

Massive public investment in preparation for the World Cup has irked the Brazilian public, who has witnessed a slowdown in the Brazilian economy and prefers the public money to be channeled into other priorities like health care and education, according to the Telegraph.

The “FIFA Go Home” and “There Won’t Be a World Cup” banners on show last summer weren’t as damning as the massive drop in public support for the tournament. In November 2008, almost 80 percent of the public were reportedly in favor of the World Cup. In March 2013, it had fallen to just 50 percent.

And the public worries are legitimate.

There have long been debates on the actual merits and sustainable benefits to hosting international sporting events like the Olympics and the World Cup due to the financial burden they put on the host countries, and we only have to look at South Africa to see the repercussions and strain that football’s premier tournament can put on a country.

According to the Guardian, the government spent £687 million in new and refurbished stadiums (10 in total) for the World Cup. Since the tournament ended, several struggled for continuous use—much like Beijing’s Bird’s Nest Stadium after the 2008 Olympics—and required continuing subsidies from hard-pressed local authorities.

A South African government report has said that the month-long tournament cost the country more than £2 billion, while FIFA earned £2.2 billion and came away with a handsome £394 million profit. Several of their stadiums have since been branded white elephants, an accusation that has since been leveled at Brazil’s own construction efforts, according to another Guardian report.

So all this talk of a legacy off the pitch, as FIFA and organizing bodies often claim World Cups can leave, could very well be seen by the public as pure rhetoric and a lofty dream as they end up bearing the economic brunt.

Which will put an even bigger burden on the shoulders of the Selecaostars.

A record sixth World Cup success on home soil would bring joy to their legions of loyal fans, but in the end, might just serve to placate the growing unrest across the nation.

Now imagine if they didn’t win.

Luiz Felipe Scolari still has plenty of work to do yet.

 

This article first appeared on Bleacher Report, where I contribute regularly on Liverpool and the Premier League, and occasionally on football business.

Business strategy, Finance and economics, Football Business, Manchester City, Stadiums and events

Why Stadiums Are Increasingly Crucial to Football Clubs’ Commercial Strategies

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The Santiago Bernabeu revamp, the Etihad Stadium and the Anfield regeneration—it’s been a busy few weeks for high-profile stadium projects for high-profile football clubs.

From rebranding, modernization to capacity increases, stadium refurbishments and new stadium projects are becoming headline hitters for the amount of money they involve and the scale of commercial ambition they suggest.

The three examples above are some of the biggest news involving football stadia in recent weeks, but are by no means isolated cases: A big part of the discussions involving New York City FC and David Beckham’s fellow new Major League Soccer venture in Miami also revolve around the kind of venue and arena they select and subsequently develop.

It’s not just about Real Madrid, Manchester City and Liverpool: A look across the top clubs in Europe shows that besides stadium capacity and modern architecture, stadium experience also matters to fans and, increasingly, football clubs.

We’ve always known that the live experience of a football match inside a stadium is a defining part of being a football fan, and one of the key factors that continue to pull in match-day revenue despite rising ticket prices, especially in the Premier League.

But now we’re seeing that football stadia are increasingly crucial to the commercial strategies of football clubs for a variety of different reasons. Let’s explore some of them with a few brief case studies.

Matt Dunham/Associated PressCorporate Sponsorships: Arsenal’s Emirates Stadium

The first example that comes to mind is Arsenal’s move from Highbury to the Emirates Stadium in 2006.

Known as the “Home of Football” previously, Highbury was famous for its small pitch and the proximity of the pitch to the stands, and thus for its atmosphere.

While its peak capacity was in excess of 70,000, Highbury had to be reworked due to the Taylor report on the Hillsborough disaster in 1989, which recommended that football stadia in England become all-seaters. For the majority of the Premier League era, Highbury was known for being one of the most compact stadia for a top football club: They only seated around 38,000 fans every week.

Naturally, this posed problems for the Gunners, especially as they were building their fanbase and were looking to challenge Manchester United on the domestic front. While Arsenal were scraping by with gate receipts from 38,000 fans a week, Old Trafford had expanded to 55,000 seats by 1996, which meant a corresponding increase of matchday revenue for United.

With Arsenal’s decision to move into a new stadium at Ashburton Grove, so they leapt forward into the 21st century and fully embraced any corporate sponsorship and strategic partnerships as they came forward.

Not only did they start fully adopting a transfer policy of buying young and cheap and selling high to maximize financial return—helped by the astute Arsene Wenger, who holds a degree in economics—but they also explored commercial initiatives to alleviate a significant potential burden in financing their new stadium.

Granada Media took a 5 percent stake in the club by investing £47 million, as reported by the Guardian, while Nike signed a new shirt sponsorship deal with Arsenal for a reported £130 million, according to the BBC. (Puma have since replaced Nike as kit makers in a lucrative deal announced this January by the BBC.)

In 2004, Arsenal added to their coffers with a £100 million naming rights deal with Emirates Airlines, which at the time was reportedly “by far the biggest deal ever undertaken in English football,” according to the BBC.

Out of the total £390 million that the Emirates Stadium cost, three major sponsorships footed at least £277 million, and in January last year, Arsene Wenger publicly stated that Arsenal had finally finished paying off their loans for their new stadium and would be ready to finance big-name signings, as reported by the Daily Mail. He stayed true to his word by smashing the Gunners’ transfer record with the deadline-day signing of Mesut Ozil.

As seen from their stadium move, Arsenal transitioned into the corporate age of football and became a commercial giant in the process. With their existing deals set to end and new, lucrative partnerships about to kick in, the Gunners may finally realize their full potential on the pitch with their advances off the pitch. The Emirates Stadium provided a platform and opportunity for Arsenal to become a modern, commercial organization.

Jan Pitman/Getty ImagesTournaments and International Prestige: Bayern Munich’s Allianz Arena

This January, Bayern Munich revealed plans to increase its Allianz Arena home stadium from its current capacity of 71,137 to 75,000, as reported by ESPNFC.

The expansion plans will only boost Bayern up the stadium capacity ranks in Germany by one position, above Hertha Berlin’s Olympiastadium and behind Borussia Dortmund’s Signal Iduna Park, but Bayern’s ambitions, as we saw from their summer appointment of Pep Guardiola to take over from treble-winning Jupp Heynckes, aren’t limited to domestic triumph.

Consider the stadium’s use planned from the get-go: Since opening in 2005 with one of the most widely recognized exterior stadium designs in world football, it has been the home stadium of both of Munich’s professional football clubs, Bayern Munich and TSV 1860 Munchen, as well as a frequent host of the German national team.

Then there are the finances. In this 2013 article by the Economist, Bayern’s total revenue in 2012 was the fourth highest in the world, after Real Madrid, Barcelona and Manchester United. The nearest challenger from within Germany was Borussia Dortmund with €189.1 million, about half of Bayern’s €368.4 million.

Yes: The same Borussia Dortmund who finished second to Bayern in both the Champions League and the Bundesliga in 2013 had just half the total revenue of Bayern.

Having conquered home soil, Bayern are going after world domination, and with a new stadium, they can place themselves at the forefront of German football—if they weren’t there already.

They have 2020 in their sights. Named as Germany’s candidate city for the 2020 European Championships, which will be taking place across European cities, Munich will be bidding for “Package A,” which includes three group-stage matches and one last-16 or quarterfinal fixture, and “Package B,” which includes both semifinals and the final.

The problem at the moment is that UEFA’s requirements are that stadia must meet 70,000 seats to qualify to host matches in the tournament: As Allianz Arena’s capacity is reduced to 67,812 for international games and UEFA competitions, it currently falls just shy.

Of course, there’s no stadium expansion or corporate super-club that doesn’t have its fair share of commercial deals and strategic alliances: The Economist article quoted above has plenty of coverage of Bayern’s considerable financial might as a result of their sponsorship deals, all the while operating in the Bundesliga context that mandates not more than 49 percent of football clubs can be owned by corporations.

Denis Doyle/Getty ImagesThe Next Level: Real Madrid’s Santiago Bernabeu

For around just £60 million (lower than what Cristiano Ronaldo cost) less than what Arsenal’s Emirates Stadium cost to build, Real Madrid are redeveloping their iconic Santiago Bernabeu stadium for a whopping £328 million (€400 million).

According to the Guardian, Real Madrid president Florentino Perez didn’t mince any words in his proclamations for his club’s goals: “It’s time to face another challenge; we want to make the Santiago Bernabeu the best stadium in the world.”

Currently seating 81,044, the Bernabeu is already one of the biggest in world football, but with the planned redevelopments, according to Marca, it will become the third-largest five-star stadium in the world with 93,000 seats, behind Barcelona’s Camp Nou and the Azteca Stadium.

But it’s not purely about capacity expansion: A quick look at the mockups shown by the Mirror shows the sheer scale of Los Blancos’ ambitions. They will be building an entirely new exterior and adding a retractable roof, in addition to expanding the lucrative VIP areas and corporate box offerings like those at the new Wembley, which Marcasay generate at least €10 million a year alone.

As ever with football stadia these days, the Mirror claim that Real Madrid are looking to negotiate a lucrative naming rights partnership, with Microsoft and Coca-Cola as strong contenders to land a potentially record-breaking deal.

In a league where Real Madrid and Barcelona dominate television revenues due to a lopsided arrangement that earn them about 6.5 times the smallest team in La Liga, according to Bloomberg, despite an impending law that is expected to reduce this inequity, the dominance of Madrid will continue to hold when their redeveloped stadium opens for use.

The politics and implications of reducing the financial duopoly of theel Clasico teams are best left for another article to dissect, but while Madrid may not be able to recoup their eye-watering TV revenues in the short to medium term, their new stadium may provide a very comfortable cushion.

Not that Barcelona will be left behind, though. They’ve already put their own stadium expansion proposal to a vote this April: The upgraded Camp Nou would seat 105,000 fans, surpassing the Azteca Stadium’s capacity and becoming the biggest football stadium in the world. It would cost a whopping €600 million, according to ESPNFC.

The duopoly goes on.

Sharon Latham/Associated PressA Footballing Empire: Manchester City’s Etihad Stadium

Football clubs don’t seem to be content on just winning on the pitch anymore. Our last case study will be on Manchester City, who have caught the eye not just with their achievements in the Premier League and their star-studded squad, but also with their remarkable expansions across the globe.

Their entry into Major League Soccer with New York City FC has already been well-publicized and much anticipated, and just this January they extended their already considerable footballing might into Australia with their acquisition of the A-League’s Melbourne Heart, as reported by the Guardian.

With their tentacles spreading across the globe, City are well and truly building a footballing empire, and right at the middle of this are a few architectural projects back in Manchester.

If Arsenal, Bayern Munich and Real Madrid have all capitalized on their existing fanbases and historical success and catapulted into the 21st-century super-club, Manchester City have broken emphatically into that category in just a few years.

According to the Manchester Evening News, City’s commercial deals in 2012 helped them to increase revenue by 51 percent to become the seventh highest-earning club in the world, behind Arsenal, Chelsea and the aforementioned big three.

Besides City’s well-regarded social media campaigns and money-spinning world tours, they are also going ahead with plans to increase the capacity of their Etihad Stadium from 48,000 to 62,000, which would make it the second-largest stadium in the English top flight and take them into the realm of the European footballing elite.

And just like Florentino Perez of Real Madrid, City’s power brokers have been vocal in their ambitions for their team: Chief operating officer Tom Glick claimed that Manchester would have two of the top-five clubs in terms of worldwide revenues by the end of 2014.

If, as reported by the BBC, the Etihad expansion will be completed by the 2015-2016 season, then City will have with them a mighty financial arsenal in just a couple of seasons’ time. A far cry from its initial capacity of 38,000, and a development fit for an empire.

By that time, however, they might have a new competitor to deal with: Liverpool, who have continued to be a fixture in the top 10 of Deloitte’s Money League for the past few years, despite being the only club there without Champions League football, look ready to return to the European big time.

And, according to the Telegraph, they are planning to submit their own redevelopment proposals for Anfield by the end of the 2013/14 season.

 

This article first appeared on Bleacher Report, where I contribute regularly on Liverpool and the Premier League.

Business strategy, Elsewhere, Finance and economics, Football Business, Politics, Stadiums and events, TV and broadcasting, World Cup

The World Cup: Evolution from Celebration of Football to Money-Making Exercise

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“No decision will be taken before the upcoming 2014 FIFA World Cup Brazil, as agreed by the FIFA executive committee.”

Source? An official FIFA statement, via the Guardian. Topic? Whether the 2022 World Cup in Qatar will be held in the summer or winter, of course; it’s only been the topic that’s consumed most international football fans and FIFA observers in the past few months.

The timing though? Immediately after Jerome Valcke, the FIFA secretary general, suggested to a French radio station that the World Cup might be moved to November 2022 after all.

Confused? You’re not the only one. But what’s been made apparent from the Qatar World Cup 2022 debacle, is that besides all the confusion and suspicions, the focus has firmly been taken away from what the World Cup is supposed to celebrate: football, the game itself.

Sure, the talk has revolved around Qatar’s temperatures in the summer, which would make for harsh conditions for players and fans alike, but surely that would’ve been a factor in the decision-making process leading up to awarding Qatar the host rights, instead of a topic to be discussed afterwards.

That Sepp Blatter and FIFA want to bring the World Cup to the Middle East is not a secret: Back in November, he even entertained the idea of hosting the tournament across several countries in the Gulf region, according to the Telegraph. So the globalization of football and the expansion of FIFA are two key items on the agenda, and both politics and money are equally prominent at the heart of all this, as we studied in an earlier article on the World Cup controversies.

But how exactly did the World Cup get to this current state? To answer that question, let’s go back and trace the evolution of the world’s most prestigious tournament from celebration of football to money-making exercise.

Laurence Griffiths/Getty Images

The Olympics: Eternal Rival and…Founding Father?

To understand the World Cup’s evolution and growth, we must first consider the history of the Olympic Games, eternally seen as the World Cup’s rival tournament in terms of global reach and prestige.

The distinction is always made that the Olympics celebrate not just one sport, but sport as man’s pastime, while the World Cup is only the gathering of footballing nations in the world—and before the United States’ entry and strong showing, not even encompassing the entire world. The World Cup’s proponents point to the final as the premier spectacle in world sport, with no single sporting match able to match its global appeal.

In reality, while they might be rivals now and trying to outdo each other every two years, it didn’t start out that way. In fact, the World Cup has the Olympics to thank for its current iteration and success, because it was the Olympics that gave birth to the World Cup as we know it.

When FIFA was founded in 1904, international football—indeed, professional football—was a phenomenon only affordable for a few countries, and when football was inducted into the Olympic Games in the summer of 1908, only amateurs were represented. Any attempt at organizing a truly international football tournament was undermined by the lack of professional setups in most countries around the world.

But when Uruguay won both the Olympic football tournaments in 1924 and 1928, FIFA, with then president Jules Rimet as a visionary driving force, stood up, took notice, and most importantly, set about realizing his dream. The first FIFA World Cup was to be staged in 1930 in Uruguay, with politics—what else?—at the heart of the host location decision: It was to be the 100th anniversary of Uruguay’s independence, and it was to be made not a great celebration of the game itself, but a spectacular political statement.

How else to explain it, given that the Uruguay national football association was willing to cover all travel and accommodation costs incurred by participating teams? As even FIFA.com concedes, that possible profits would be shared with participants and deficits taken on by the host country won Uruguay the first ever World Cup hosting rights.

The 1934 competition was held in fascist Italy under the dictatorship of Benito Mussolini, and Rimet, according to this excellent Independent feature on his life, was already criticized for politicizing football.

Before the advent of television and the phenomenon of globalization, the World Cup had surrounded itself with politics and money.

(A footnote to add, though, is that Jules Rimet’s vision and dream of uniting the world through sport and creation of the World Cup earned him a Nobel Peace Prize nomination in 1956. Perhaps, hopefully, the World Cup at its heart was actually more than a celebration of the beautiful game, but a triumph of humanity.)

Carlos Alvarez/Getty Images

The Context: Globalization and Technology

But just as we can’t give the Olympics all the credit for introducing the concept of a FIFA World Cup, so Rimet and FIFA can’t claim all the glory for growing the tournament from a small competition featuring just a few countries in Montevideo, Uruguay, to the global spectacle that was the 2010 World Cup in South Africa.

As ever, context is key, and the explosion of global business and trade, just as it’s played a huge role in the history of the 1900s, is an integral part of the World Cup’s continued evolution. Before the business side of things took over, though, first came the phenomenon of television.

According to this TIME feature, the impact of television on the World Cup’s boom cannot be understated: From 1954 to 1986, the number of TV sets worldwide “increased more than twentyfold, from a little more than 30 million to more than 650 million.” This laid the foundations for a truly groundbreaking moment in football history.

The first live World Cup games were broadcast in Europe in the 1954 tournament, which reached only a handful of audiences due to the low volume of matches shown, but the potential of television and TV advertising was already apparent. (Not that the Olympics were to be beaten, of course: The 1936 Summer Olympics were the first to be broadcast on TV to local audiences. International broadcasts came in 1956.)

Fast forward a decade and a half. Spying an opportunity to conquer the world of football and reap the ensuing economic benefits in 1974, was new FIFA president Joao Havelange, who upon taking office turned his organization into a modern international NGO, putting in place the infrastructure, people and income-centered mindset of a corporation.

The only thing left to do for the World Cup, which previously featured 16 national teams, was to expand. And expand Havelange did, opening the doors to developing countries with eight additional slots (which have since been further increased to a total of 32 participants since France 1998), as discussed by Tim Vickery for The World Game. The Havelange era also saw the introduction of the FIFA U-17 World Cup, FIFA U-20 World Cup, FIFA Confederations Cup and FIFA Women’s World Cup.

The costs of hosting such an immense global tournament in one country were too much to bear for one host country and FIFA, and thus came the idea of corporate sponsorship of the World Cup. Havelange struck deals with Horst Dassler, heir to the Adidas fortune, for the German sportswear company and other big-name corporations like Coca-Cola to fund the tournament, paving the way for the commercialization of international football.

So while the advent of television advertising led to increased premiums for marketers to get their spots onto World Cup TV screens, behind the scenes within FIFA itself was a concerted movement to pump money into the World Cup—with political and economic influence once again the main motivation behind all these changes.

(The name Joao Havelange may be familiar. He was the same FIFA ex-president that resigned in April 2013 after a FIFA ethics report ruled that he had taken bribes, as reported by BBC Sport. The culprit in question? International Sport and Leisure [ISL], founded by Horst Dassler. Politics and money, indeed.)

Getty Images/Getty Images

The 1990s and Onwards: Spiraling Out of Control

If ever there was a curious decision in the history of world sport, the idea to host the 1994 World Cup in the US was clearly one, at the time. In hindsight, however, it was just another calculated plan from Havelange to bring the game to North American shores, which had yet to be consumed by football fever.

The legacy was stunning: To this date, USA 1994 still holds the total attendance record (over 3.5 million) and the average attendance record (68,991), according to USSoccer.com. The US’s advancement to the round of 16 for the first time since 1930 contributed to soaring TV ratings.

(Leading up to its hosting of the World Cup, the US also put in place their first ever professional soccer league. It’s no surprise that Major League Soccer was founded in 1993, a year before the 1994 World Cup. We explore the growth of soccer in the US in another article.)

The introduction of the World Cup in practically uncharted territory in 1994 was met with enormous financial successes, and since its foray into the world leader of commercialized sport and corporate sponsorship, FIFA have never looked back. The World Cup has since traveled to Asia (2002) and Africa (2010), goes to Russia in 2018, and brings us to the Middle East in 2022.

According to this Economist article, the World Cup broadcasting rights for France ’98 were sold by FIFA in 1987, before the stunning 1994 American success, for $344 million. An indication of how far the World Cup and FIFA have gone: In 1998, at the time of the article, ISL—which would later collapse, of course—had agreed to pay $2.2 billion to show the games outside America.

The groundwork for corporate sponsorship was laid by Havelange, but was taken to new levels under the leadership of current president Sepp Blatter. Let’s consider the 2010 World Cup, for example: According to a UPenn study, FIFA’s revenues related to the South Africa tournament amounted to a staggering $1.022 billion, of which $650 million belonged to broadcasting rights.

Participating national teams are in on the act too: FIFA was to provide $420 million to all participants and the football league teams providing players to the national teams, $30 million of which would go to the World Cup-winning team (Spain). First-round teams qualified automatically for $8 million each, while $1 million in preparation costs were provided to each participating football association.

This was brought about by the stellar line-up of corporate FIFA sponsors, known as “partners,” which included Adidas, Coca-Cola, Emirates Airlines, Hyundai-Kia Motors, Sony and Visa, who were “guaranteed exposure in the tournament stadium” and would receive “direct advertising and promotional opportunities and preferential access to TV advertising.”

The cost? A minimum of between 100 and million euros through to 2014. By which time, of course, the next World Cup cash cow will be held this summer, this time in Brazil.

Clive Mason/Getty Images

Conclusion: It’ll Only Get More Expensive From Here

Is it damning or merely inevitable that corporate sponsorship and incessant marketing efforts are now part and parcel of any World Cup?

In the build-up to this summer’s tournament, the allegations of corruption have been brushed aside after Havelange’s resignation in 2013, while all the talk of political and commercial interests have been directed towards the distant 2022 World Cup in Qatar, still eight years away.

It’s no longer news—rather, it’s an accepted fact—that the World Cup is now considered an extremely lucrative opportunity for brands and nations alike; this Fox article on Nike and Adidas’ brand battle pre-World Cup is now just part of the fabric. In fact, any sports company—or indeed any business entity at all—would be condemned for not taking advantage of a World Cup year to promote its business.

And so it’s only going to get more expensive from here. The spending and rights associated with the premier world football tournament have skyrocketed in the past decade or so, with the help and under the influence of a few key players, but the brand-new stadiums that are to be constructed in host countries are just the tip of the iceberg when it comes to World Cup spending.

But it’s the World Cup. Just as FIFA continue to rake in the cash, we football fans will continue to ignore the commercial influences and political battles and focus on the spectacle that will unfold before our eyes when the first whistle is blown on June 12 at the Arena de Sao Paulo.

An event of this magnitude only comes once every four years, after all. When the winning team hoists the Jules Rimet trophy on July 13, for once the celebrations will be directed entirely towards the football that they have played, not the money they will make.

This article first appeared on Bleacher Report, where I contribute regularly on Liverpool and the Premier League, and at times on the business of football.

Finance and economics, Football Business, Liverpool, Player analysis

How Much Is Liverpool’s Luis Suarez Worth in the Current Transfer Market?

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The breaking news this Friday is that on the back of some truly incredible performances in the Premier League this season, Luis Suarez has put pen to paper on a new long-term deal at Liverpool, the club announced today.

There’s no disputing that Luis Suarez is one of the most feared and in-form players in all of world football. Having scored 17 goals and assisted four for the Anfield club in just 11 Premier League games, he has put himself firmly into the bracket of the world’s very best players.

Following the furore over Gareth Bale’s transfer to Real Madrid—which some outlets, like BBC Sport, have reported as the world record transfer fee, and others, like NESN, have claimed to still be No. 2 to Cristiano Ronaldo’s—football fans are naturally up in arms regarding player valuations.

Just a few months ago in the summer of 2013, Arsenal had a high-profile bid for Suarez rejected. Their £40 million plus £1 bid, based on a rumored clause in his contract, attracted nothing but scorn from the Liverpool hierarchy, who claimed that he wouldn’t be available even for £55 million, the going rate of Uruguayan strike partner Edinson Cavani, according to The Guardian.

So how does one go about valuating players’ transfer value? Are values arbitrarily assigned, or do they have some factual basis underlying all the public proclamations from managers and chairmen?

Without insider access to the boardroom and to the private financial accounts of most Premier League football clubs, here is a guide to working out how much Luis Suarez is actually worth in the current transfer market.

Paul Gilham/Getty Images

Transfer Fee

Let’s start first with the most visible element: the transfer fee.
In what will surely be known as one of the landmark bargains of this decade, Luis Suarez signed for Liverpool from Ajax Amsterdam on January 31, 2011, the last day of the 2011 winter transfer window. His transfer fee, according to BBC Sport, was around £22.7 million.

From a financial perspective, regardless of what percentage of the transfer fee was paid up front to Ajax, Suarez’s transfer fee will be amortized over the course of his contract, which was initially five and a half years. (It has since been extended in the summer of 2012.)

Simple arithmetic gives us an approximate annual cost for Suarez, excluding his wages (which we’ll get to below), of £4.13 million.

To date, he has been at Anfield for around two years and 10 months, but for the purposes of simpler calculation, let’s consider Suarez as having been at the club for three years.

By January 31, 2014, he will have completed three years of his initial contract with two and a half years left, which would mean that the as yet “unpaid” total amortization cost would come to around £4.13 million multiplied by 2.5, or £10.3 million.

Previous Wages

With a base reference cost of around £10.3 million, let’s consider the second aspect: wages.

While Suarez’s starting wages in his first contract at Liverpool were about £40,000 a week, according to the Mirror, the new and improved contract he signed in the summer of 2012 tripled his weekly compensation to about £120,000.

Assuming the standard of 52 weeks in a year, this comes to a yearly total of around £6.24 million a year, just in wages.

Having signed his most recent contract at the beginning of August 2012, Suarez would be approximately a year and a half into his improved deal by the end of January 2014, keeping with the same benchmark time frame we suggested above.

By then, there would still be two and a half years into his contract left to run, which would come to a total of £15.6 million.

At this point in our calculations, Suarez’s base value thus far is £10.3 million plus £15.6 million, which comes to about a total of £29 million.

Alex Livesey/Getty Images

New Wages

Now it’s time to consider the rumored new package that Liverpool have supposedly offered him. And this is where the less concrete part of our analysis starts.

While Liverpool’s official announcement yet again cites ”long-term” contract, this BBC Sport article claims that Suarez will be earning £160,000 a week until the end of this season (another half year), and then £200,000 a week for the next four years, in a deal that runs until 2018 and makes him the highest-paid player in the club’s history.

Based on these numbers, his entire new contract is worth a total of £42.6 million, which brings his whole valuation into a new light and onto a new level.

Let’s return to the base reference cost of £10.3 million. If we add this new £42.6 million wage value onto the reference cost, then a new total of about £52.9 million emerges.

Alex Livesey/Getty Images

Club Performance 

Of course, we also have to take into account Liverpool’s performances and financial rewards as a result of their on-pitch displays.

Notice that the underlying assumption behind Luis Suarez staying at Anfield would be that Brendan Rodgers is able to lead his team to the Champions League next season: After all, a player of Suarez’s caliber deserves to be plying his trade at the top level of club football.

With this in mind, let’s venture into the world of Premier League finances and attempt to very roughly estimate how Suarez could potentially have his value further enhanced by his club’s performances.

According to the official Premier League website, the end-of-season payout based on league performance for Liverpool in the 2012/13 season came to a total of around £54.8 million.

However, given that the Reds finished in seventh place and considering our top-four assumptions to keep Suarez, let’s take Arsenal as a reference: The Gunners, who finished fourth under Arsene Wenger last season, raked in a total of £57.1 million, which we will use as a rough guide for a minimum league payout.

With Champions League qualification and assuming that Liverpool progress into the group stages of next year’s competition, we can refer to UEFA’s minimum group stage payout according to their official website: UEFA states that “each of the 32 teams involved in the group stage will collect a base fee of €8.6m,” which translates to about £7.2 million.

As a result, a minimum total of £64.3 million will probably arrive in Liverpool’s coffers just for playing in the Champions League group stages.

The Deloitte Money League, published every year, is a fascinating insight into the finances of the top European football clubs. Its 2013 installment reveals that Liverpool’s total revenues for the 2011/12 season were £188.7 million, comprising of £45.2 million from matchday revenue, £63.3 million from broadcasting and £80.2 million from general commercial activity, including sponsorships and partnerships.

As with any corporation, Premier League clubs will have bonus schemes in place, and Liverpool will be no exception. For the purposes of this basic calculation, we will purely take into account the revenue that comes with Champions League qualification, and not Liverpool’s overall income.

A wholly generous assumption is that the 20 players registered as Premier League players for Liverpool will divide the £64.3 million that comes with a group stage venture, and Suarez will get five percent of that, netting £3.2 million in addition to the previous base.

(This estimate, when considering his contributions to Liverpool’s 2013/14 season—he has been involved in 21 goals, 54 percent of Liverpool’s total haul of 39 thus far this campaign—and a logical bell-curve bonus distribution according to performance, may in reality not be too far.)

Paul Gilham/Getty Images

Conclusion: £56.1 million

So what do we end up with?

Take the £52.9 million we estimated based on amortization of Suarez’s transfer fee and a projection of his future bumper contract and add the estimated performance-based bonuses of £3.2 million, and we arrive at the princely sum of £56.1 million, which, coincidentally (or not), was the almost the same rate the aforementioned Cavani left Napoli for.

If we go back to the Express article, we find that Suarez’s previous deal was reported to also include image rights in his weekly wages, so all inclusive, the figure of £56.1 million may be an accurate reflection.

Turns out this benchmark might have been chosen on purpose by the Liverpool hierarchy back in the summer.

But that’s only if we were to stick with a purely financial valuation of Luis Suarez, who, if he stays on at Liverpool, will surely go down as one of the club’s greatest-ever players in time.

Taking that into consideration, and the message that Liverpool would be selling its talisman and most important player of the current period, Brendan Rodgers may well consider Luis Suarez to be worth much more than £56.1 million.

Add that to Suarez’s current form at the club and his apparent turnaround in his commitment to Liverpool, and he might just be priceless in the eyes of all Liverpool fans.

Football is an emotional game, after all.

This article first appeared on Bleacher Report, where I contribute regularly on Liverpool and the Premier League.

Branding and marketing, Business strategy, Football Business, TV and broadcasting

The Football Business Column: MLS Expansions, Premier League Interest and the Rise of Football in the US

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The latest installment in the never-ending story surrounding Major League Soccer and its expansion plans arrived last week, as Orlando City Soccer Club was officially announced as the league’s 21st franchise, to join New York City Football Club as new entrants in 2015.

The story of football’s expansion and rise in the US is impressive, especially given the context of its domestic league’s relative young age, but a look at the FIFA World Rankings shows that at 14th place (as of the time of writing), the US is here to stay.

To explore just how football has developed in America though, we have to first look back across the pond and to the Premier League, whose increasingly globalized product is at the heart of it all.

 

NBC Sports deliver polished Premier League product to US audiences

The new PL carrier in England, BT Sport, recently struck a groundbreaking deal to carry the Champions League from 2015-2018, as reported by BBC Sport.

But they’re arguably not even the biggest newcomer to have caused waves through the football television industry. That accolade goes to America’s NBC Sports, who have well and truly taken football coverage in the US up several notches, especially in comparison with the likes of FOX Soccer and ESPN.

NBC’s coverage is a curiously familiar one, especially to those already well versed in typical English broadcasts. There’s little to interfere with normal play, and the analysis shows before and after the matches—as well as during half-time—all feature English commentators and pundits.

Essentially, NBC have stuck to the basics and not delivered any coverage that might come across as patronizing towards the American viewer; they’ve assumed that their audience is familiar with football and have promoted intelligent discussion with this as the basic assumption.

Add in the aggressive marketing campaigns that NBC have embarked on—especially in New York City in the buildup to the 2013/14 season—and the conclusion thus far is that the English Premier League has been an unequivocal success. Keeping with the core English base but adding some of that famous American marketing and broadcasting technique on top? Sounds like a winner.

Tom Pennington/Getty ImagesFootball’s rise in America

For avid fans of the Premier League—and no doubt for its executive team—the fact that NBC’s coverage has been a success in America bodes well for the future of what is surely now the world’s most popular and exported professional sports league, so much so that the PL is now seen in some circles as NBC’s flagship product.

But those worried about any possible decrease in interest in the US’ own Major League Soccer because of the widespread coverage of the Premier League need not fret: According to this New York Times report, since PL coverage began on NBCSN, viewership of the eight MLS games on NBC has increased by 60 percent, while the number of unique visitors to NBC-streamed MLS games has jumped 322 percent.

There was never any worry about Americans’ interest in their own national teams in World Cup years—whether it be the men’s or the women’s tournament. Neither was there ever any worry, especially in recent years, about support of their local MLS teams, who have boasted stadium attendance numbers to rival and surpass those of both the NBA and NHL, according to this Forbes article. Nor was there any worry about American football fans paying attention to their overseas-based stars, such as Tim Howard, Landon Donovan and Clint Dempsey (the latter two have, of course, returned to the US).

So the fact that TV viewership of MLS is rising—and alongside the Premier League—is massively encouraging for the sport and its growth prospects in the world’s most sports-consumption-heavy country.

USA TODAY SportsMLS expansion, aggression and inevitable evolution

Given the Americans’ propensity and expertise at marketing, commercialization and business expansion—and especially given the increase in the number of American owners of European football clubs—was it any wonder that interest, both foreign and American, would eventually return to US shores?

Setting aside the increasing trend of relatively big names in Europe spending their final footballing years in MLS, the incident that really indicated the prospect of a “soccer boom” in the US was Manchester City’s investment in their joint venture, New York City FC, due to join MLS in 2015.

Sheikh Mansour interested in American growth and influence? A partnership with one of Europe’s newest big boys? Almost seems too good to be true.

If that wasn’t enough indication of a new era beckoning in American football (ahem), what about the recent announcement of the Orlando City SC franchise expansion—and the imminent possibility of a Miami-based MLS venture backed by David Beckham?

That both of these developments have hit the airwaves is not surprising: MLS have shown textbook aggression by aiming to capitalize on a rising wave of interest in football, by proclaiming that the Orlando-Miami rivalry will be one to look forward to, according to the Miami Herald. The bullish pronouncements of Orlando City’s owners, reported here by BBC Sport, regarding the possible signing of Brazilian star and AC Milan legend Kaka merely add to the hype.

And if even that wasn’t enough, surely the recent revelation that MLS franchises have increased 175 percent in value over the past five years (c/o SportBusiness.com) will do it. The current average valuation is $103 million, with seven teams—Seattle Sounders, LA Galaxy, Portland Timbers, Houston Dynamo, Toronto FC, New York Red Bulls and Sporting Kansas City—already surpassing it. (Don’t be surprised if NYCFC and OCSC join them at the top by 2016.)

Harry How/Getty ImagesThe growth will only continue. The beautiful thing about the beautiful game is that once interest starts to grow, it snowballs. And the beginnings of a real football revolution are starting to take place in America.

Which, inevitably, leaves club owners and the league with big decisions to make over the coming years, regarding the direction that they want to take the sport in. Murmurs of instituting the promotion and relegation system, so ubiquitous in the European leagues but almost nonexistent in the US, are growing in noise level, and with MLS expanding to a grand total of 21 teams by 2015 (22 if Miami is awarded a franchise by then), that leaves MLS wanting to join the world’s collection of elite first-division football leagues with the most number of teams in it.

The rest of the infrastructure—league-paid transfer fees, league-owned players, salary caps and Designed Player systems—is currently still a universe away from what the top professionals in Europe are familiar with, and there will need to be an inevitable coming together of practices and policies if MLS are to break into that top bracket of leagues.

While that’s being pondered by Don Garber, the MLS Commissioner, and his executive team, they’ll continue to see the steady growth of the beautiful game in the US.

Perhaps one day, it’ll be they who look forward to exporting their product overseas.

 

This piece originally appeared on Bleacher Report and is also part of my Football Business Column for SWOL.co, in which I discuss some of the latest news, trends and developments on the business side of football—everything including marketing, strategy, technology and finance.

Business strategy, Data and analytics, Football Business, Technology, TV and broadcasting

The Proliferation of Data-Driven Analysis in Football (Part Four: The Fans)

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So here we are at Part Four, the final episode to this four-part series covering big data in football.

So far, we’ve looked at three key players in the burgeoning industry of football analytics and statistics: the scouts, the coaches and the scientists. We’ve seen the ways that data-driven analyses have revolutionized and modernized the beautiful game, and we’ve discussed the ways that clubs, managers and players all stand to benefit.

But undoubtedly, the most important player in all of this—and the player that will get the most enjoyment out of this new big data revolution in football—is the fan.

Because after all, it’s because of the fans that football as a profession (extending to all associated occupations) exists. It’s because of the fans (and the money and consumption power that come with them) that leagues strive to design the best and most marketable product possible, and clubs in turn do all they can to boost performance, win silverware and attract even more fans.

It’s all a beautiful cycle that—overlooking the cynicism surrounding money in modern football—will only spin faster, and the components will only get more closely knit together.

Not only will fans benefit from the better competition on the field of play, but they have also been at the forefront of the analytics movement: They’ve driven some of the newest innovations themselves with their own interests in statistics, and as such there have been whole industries created and extended to include football in their reach.

To best gauge where the big data movement in football currently is and predict how it’s going to further develop, we turn to the fans to best see what we’ll experience next.


A sample of Opta’s offerings, courtesy of optasports.com

Data Providers

It’s hard to really trace football analytics back to one founder, but Charles Reep, a former wing commander, is probably a good person to start with, in the early 1950s.

Reep went about collecting football statistics by himself to suggest that “the key to scoring goals and winning games was to transfer the ball as quickly as possible from back to front,” thereby indirectly starting the long-ball movement in English football. This must-read Forbes article details his monumental role in both football analytics and as such the stereotypical English footballing style.

Over the years, football statistics have evolved into a profession in itself. As we have covered in previous installments of this series, there are now professional statistical analysis firms like ProZone and Opta, who provide data to football clubs, coaches and leagues, who pay for such services to ensure they can remain in control of their performances and results as much as possible, by monitoring their players and opponents.

And through fan interest, more and more statistics and related analyses are being made available to fans for casual enjoyment, either to back up a viewpoint in a friendly bar conversation, or to challenge a friend’s opinion.

At the center of this, again, is Opta. With the expertise and reach that they provide—not to mention their reputation—Opta now supply the data at the heart of many a football statistics website and app (we’ll cover more of those later). As we can see in their official About page, Opta pride themselves on a “consistent and reliable approach across [their] global data collection operation.”

Behind many high-profile platforms, such as Sky’s innovative touchscreen app used by their football analysts on live TV, lie Opta and their statistical work. (Of course, they’re not limited to football either; their rugby coverage has also been met with critical acclaim.) A large number of websites also make use of Opta’s statistics to produce critical analyses and come up with insights and scoring patterns of their own.

This blog entry from AnalysisMarketing has a good selection and review of popular football sites that use Opta as their statistical backbone. Two of them, EPLIndex.com and WhoScored.com, are frequently quoted for their statistics-heavy commentaries and opinion pieces; indeed, their tweets are popular during football matches, though not as iconic as Opta’s own tweets, which have been the subject of case studies and awards.


The Sky Sports touchscreen technology, courtesy of thedrum.com

Fantasy Football and the Future

At the intersection of the Internet, the sports world and a growing fascination with numbers is the phenomenon that is fantasy sports.

For years, American sports in particular have been a huge hit with their fantasy leagues and games that are contested among fans—the March Madness bracket of college basketball has found its way to national prominence, with President Barack Obama a keen fan and follower, and it’s often more difficult to find a young college student without a bracket than another with a set of constantly changing predictions.

While fantasy American football is exploding and becoming a hugely lucrative and exciting industry, so fantasy football has been expanding in its own right, largely and not surprisingly coinciding with the increase in interest in the numbers and statistics behind football.

Fans of fantasy football will know well the three big versions of the game offered by the FA Premier League, ESPN and Yahoo!, and the differences in how they tabulate and score points for each position and each contribution towards the game show emphases on different aspects of the game, and has naturally prompted discussion on the merits of each fantasy league.

When we look at the burgeoning interest in fantasy football as it is, it’s hard not to ponder the potential that the game has for fans, for number-crunchers and for statistics lovers. (Before we do that, let’s also take a moment and pay tribute to Football Manager, the original statistics-loving football fan’s wonderland, still more powerful in 2013.)

Current protocol has it that defenders and goalkeepers score points for clean sheets while forwards do not, that they score more points per goals scored than midfielders and forwards—generally that each position is awarded points based on the player doing what essentially is in his job description on the pitch.

But how tantalizing is the thought—and we wouldn’t be surprised if this movement were already starting—that, with so much data being made available to fans, they would be able to design leagues by themselves among like-minded friends who wanted to focus more on niche attributes?

Would midfielders who tried more defence-splitting passes and completed more key passes per game score more than those who are simply their clubs’ designated penalty-takers? Would defensive midfielders who allowed fewer dribbles past them and achieved a higher tackling success rate be as valuable in the fantasy football world as forwards who scored goals? Would defenders who ventured forward more and played a larger proportion of their passes on the ground be more highly prized than those who simply got points by staying back, defending and keeping a clean sheet?

How these combinations and permutations would be constructed and conceptualized is entirely down to the imaginations of fans—and in the future we could see fans not just asking whether you’re playing the official EPL fantasy league, but whether you’re in the tiki-taka school or the long-ball-merchant hall.

How’s that for a communalization of football statistics?

 

Apps, Casual Analyses and More?

But we’re not done yet.

The natural extension of award-winning statistics-based websites is the mobile app, and we can start our discussion here with the Telegraph’s compilation of “essential” football apps.

One of the most high-profile football data apps is probably FourFourTwo’s award-winning Stats Zone app, which is driven by data from Opta and covers a wide range of leagues across the globe. Its unique selling point, for those who don’t already have it on their phones, is that it allows fans to pinpoint their own areas of interest and can share their analyses over social media and email.

Unsurprisingly, this innovative approach and user-centric design has led to a quick expansion of the Stats Zone app, which has been met with considerable joy from fans all over the world. (That last part was based on pure conjecture, but we suspect that it’s mostly true, even without data to back us up.)

Another product that has seen a remarkable rise within a year is Squawka, which styles itself as a second-screen app, riding on the unmistakable wave of second-screen technology currently taking over mobile devices.

It’s this provision of data visualization and easy-to-manage statistics and graphs that have propelled Squawka to their unique position as a favorite tool both for fans and for advertisers, who see unparalleled screen time due to its continued, undistracted presence on a tablet screen for a viewer. No surprise, then, that Squawka has quickly added commentary pieces and news articles to its burgeoning collection of football information throughout the past year—it launched in June 2012—and no surprise that it’s received significant interest from outside the football industry and from investors excited at a new business frontier.

And it doesn’t stop there. Squawka also looks at trends beyond what’s happening on the pitch. A groundbreaking project with DataSift allowed Squawka to track social media activity on Twitter during Chelsea’s home defeat to Manchester United on October 28, 2012 (less than five months after its official launch). The relative spikes in activity in correlation with key moments in the match provided insight into fan behaviors, and there’s more to come.

The quotes from Squawka cofounder and CEO Sanjit Atwal towards the end of the Guardian piece hint at future potential of data visualization and tracking beyond football: “Does a bit of ultimately unnecessary skill boost online reaction more than a simple yet effective pass? Do foreign players get more abuse for diving than their English counterparts?”

More than just helping stimulate reactions towards 22 players kicking a ball around a stadium, these analytics companies are trekking into unchartered territory: human behavior, social psychology and anthropology.

Ladies and gentlemen: Football, the beautiful game.

This piece first appeared on BusinessofSoccer.com, where I cover business and marketing strategy, globalization and technology in football.

Data and analytics, Football Business, Liverpool, Technology

The Proliferation of Data-Driven Analysis in Football (Part Three: The Scientists)

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In this four-part series, we’re covering the burgeoning field of data science in football, with each part looking at one specific player in this ever-expanding market.

We’ve looked at the scout and the coach in previous segments, so let’s dive straight into part three and give the football scientist his due.

We can start with this summary of Arsene Wenger’s time in England and how he’s played a major part in bringing English football up to speed and into the 21st century, and also recall the coverage we’ve paid to both Manchester City and Bolton Wanderers (who, if you’ve followed the series, have shared a few common principles and key figures along the way).

In doing so, we can reflect that football science and its contributions towards a football club are intricately tied in to the big data revolution in football, and came into the sport together with all the statistical and data-driven analyses that we’ve heard about (hence their inclusion in this series).

In Part Three we’ll change focus and give ample coverage to AC Milan and Liverpool and how they’ve incorporated science to help players not only in terms of tactical knowledge and pre-game preparations, but also to maximize their physical potential—and how this is also a way for the clubs themselves to mitigate any unnecessary risks.

milanlab2

Medical Tests

Let’s start with the famous and ubiquitous (during transfer season) medical.

We can turn to renowned resource PhysioRoom.com for a brief explanation of a pre-signing medical, but more insightful is this outstanding piece of football journalism from the Daily Mail’s Matt Fortune, who went through the process of an actual footballer’s medical and wrote a fascinating insider’s tale about it.

We’ll leave it to the experts to tell us what actually goes into a medical, what club doctors actually look for and what kinds of problems they’re keen to avoid—and they vary from club to club—but what’s become increasingly clear over the past few seasons is that the medical has become arguably the most important part of the signing process of a player.

There can be lots of work going into the scouting of a player (as we discussed in Part Two), his strengths and weaknesses, and his potential as a player for a specific football club, but it is the medical department that has to give the final green light before a coach can even start working with the player in a full-time capacity.

It’s in this context that we bring Italian powerhouse AC Milan into the discussion. Their Milan Lab project, which has attracted lots of attention and was a high-profile feature in Simon Kuper and Stefan Szymanski’s Soccernomics, was one of the major players and pioneers in European football in terms of its meticulous approach towards football science.

With a state-of-the-art research headquarters at the Milanello sports center, Milan Lab served both the first team and the youth setup, and was in charge of assessing players in all capacities, whether it be in the pre-signing stage, over the course of the season, or in case of injury problems. Its success in applying scientific research and unique methods allowed veterans like Paolo Maldini and Alessandro Costacurta to play into their forties.

Milan Lab also told David Beckham, upon his first loan move from the LA Galaxy in 2009, that he’d be able to play under he was 38, according to this feature in FourFourTwo. Evidently Beckham had taken that advice fully on board: He retired at the end of the 2012/13 season, aged 38.

You may have noticed that we’ve talked about Milan Lab in the past tense. Sadly, this pioneering venture was closed in 2010 after presiding over a period of unprecedented medical success at AC Milan (yes, we’re asking the same question you are). But fans of English football, fear not: As of February 2013, Milan Lab founder Jean-Pierre Meersseman has been involved with the Premier League and its clubs in a consultancy role to advise on football science.

Let’s turn our attentions to Liverpool, who in recent years have leapt into the modern era with their advents in data analysis and sports science. Incidentally, they have also been the subject of an “Inside Liverpool” series on Bleacher Report, and their first feature was with Chris Morgan, the Reds’ head of physiotherapy.

Throughout the interview Morgan sheds light on his role and involvement at the club, and his working relationship with the coaching staff. In the context of this discussion, what stands out interestingly is his summary of the two main aims of physiotherapists: “to ensure that the player is rehabilitated as quickly and safely as possible,” and “to learn from the injury.”

Nutrition and Diets

Science’s involvement in football naturally extends beyond physiotherapy and medicine. Before we continue with Liverpool, let’s hear again from Arsene Wenger.

He speaks here on the importance of how the players themselves prepare for matches and view their own careers, with eating and sleeping patterns factoring into this “non-visible,” “outside of training” part. Naturally, diet control has been a hallmark of Wenger’s regime at the Gunners, and it’s a trend that has spread throughout football.

Back to Liverpool. Dr. James Morton speaks in a feature on nutrition in Bleacher Report’s “Inside Liverpool” series, where he reveals the role he plays as a consultant for the club’s nutrition program.

This involves planning both team menus and individualized dietary plans, as well as education programs to staff and players on the importance of nutrition and how it affects their performances and preparation. Players “asking for advice on what to put in their shopping trolley” is a far cry from those days where they would go out for a pint at the local bar after a Saturday match. Sometimes the modern game does away with time-honored traditions for the sake of improvement. Or maybe it’s just the game improving and becoming more professional.

Another football club that has embraced sports science and nutrition is Manchester City, which we’ve already covered at length in previous segments. It turns out that City also employ a nutrition specialist to look at dietary habits and design appropriate nutritional and recovery strategies.

In this BBC Sport report on City’s industry-leading work in the football science sector, we see the benefits of a well-planned diet and also recall the importance of meticulous fitness planning and assessment.

Football Science and Conferences

There are a host of other high-profile football clubs to look at in this discussion, but let’s bring Part Three to a close by considering the possibilities of sports science and its potential to keep expanding its influence in football and look at the resources that are now available to clubs and sports scientists.

In other areas of sports and football, there are high-profile conferences such as the world-renowned MIT Sloan Sports Analytics Conference and football’s own Soccerex Global Convention. Football science is increasingly getting its own due and coverage, with the Science and Football Conference and the World Conference on Science and Soccer, which are attracting high-profile participants both as speakers and as attendees.

And slowly but surely, academia is getting involved as well. The University of Liverpool offers a Football Industries MBA, while institutions like the Sports Business Institute of Barcelona and the Johan Cruyff Institute of Amsterdam provide a selection of football-specific courses and degrees to obtain.

The most interesting (and relevant to the topic at hand) of all, though, has to be the Bachelor of Science degree in Science and Football at Liverpool John Moores University (incidentally a key partner for Liverpool Football Club), which covers physiology, psychology, performance analysis, applied science and nutrition.

As we see more and more examples of football science (and opportunities for people interested in these areas), so we witness the continued growth and evolution of the beautiful game itself into a more data-driven business and sophisticated, learned industry.

But the driving force behind all these changes isn’t club management or any industry regulator; it’s the fans. It’s because of the fans that football has become the high-profile sport that it is, and will probably become the highest-earning sport in the world in the future.

So while the coach, the scout and the scientist are all inevitable components of the proliferation of data-driven analysis in football, we’ll return to that key player at the heart of it all in our fourth and final part in this series: the fan.

Stay tuned.

This piece first appeared on BusinessofSoccer.com, where I cover business and marketing strategy, globalization and technology in football.

Branding and marketing, Business strategy, Elsewhere, Football Business, Liverpool

The Football Business Column: A Latest Update on Globalization in Football

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Germany continues its rise 

At this point, we’re all well-versed in the global financial and marketing power boasted by the English Premier League, otherwise known as the Barclays Premier League: the long-term partnership with Barclays Bank has given England’s top flight plenty of commercial exposure and opportunities. Manchester United have led the way with the corporatization of English football, and are one of the only professional sports clubs (never mind in football) to have an international office.

But German powerhouses Bayern Munich are about to join them. It’s recently been confirmed that they’re about to start a New York office, with Pep Guardiola taking his squad to the US for friendlies and training camps next summer, with plans for an office in China to come. This comes on the heels of Bayern’s rapid ascension towards the “super-club” class in European football, as they vie to win the Champions League in two consecutive seasons.

Does this herald the arrival of the Bundesliga (or at least of the German football club) in the global footballing elite? Bayern are storming into that select category of storied, successful and rich football clubs, and with their recent announcements seem to be aiming for world domination. With the Bundesliga receiving plenty of positive coverage in the past few years on their financial sustainability, profitability, and most importantly the coexistence of commercial successes with the strong development of the German national team, Bayern are riding the waves.

And it’s not going to stop anytime soon. For all the plaudits that NBC have taken for their coverage of the Premier League this season, the higher-ups at the US broadcaster need to beware: Fox have agreed a multi-year deal with the Bundesliga to deliver coverage across North and South America, Europe and Asia. If this is the start of an exciting rivalry between the Premier League and the Bundesliga, then football fans only stand to benefit.

 

Liverpool break into the emerging markets

For all of the contrasting criticism and praise that John Henry and his Fenway Sports Group have had to endure in their stewardship of Liverpool, one unanimous agreement among all observers has to be that they’ve expanded aggressively on the commercial side of things. And the latest developments at Anfield show that not only do they have ambition to return to the top playing field in football, but they also have the financial and reputational clout that only the biggest clubs enjoy.

We’re talking of course about Liverpool’s recent academy ventures in both India and China, two of the world’s highest-profile emerging markets with fierce interest in football and populations to sustain growth and development. The phrase of choice is “market-leading development center for young players,” but the story for both the Indian and the Chinese academies is the same: It’s a chance to reach out to the young generation, improve football education and potentially unearth Liverpool’s first ever Asian superstar.

As ever in their coaching ventures, Liverpool will be working with local coaches and also adding a considerable portion of social education in the programs to develop youngsters as both human beings and footballers, but the underlying commercial opportunities scream out loud: a chance to secure a generation of kids as Liverpool fans, and the drooling prospect of shirt sales and marketing expansion with an Asian first-team player at Anfield.

With the success of Manchester City’s football school in Abu Dhabi, it seems that elite English clubs will continue their global expansion efforts, and Liverpool’s recent activities capture both the imagination of any football business fan and a fast-growing consumer base.

 

What happens when you put football with football?

By now, you’ve probably heard about the annual NFL games at Wembley, and Manchester City’s plan for MLS dominance with New York City FC. Put the US and two of the most popular and financially successful leagues in the world together, and you have a marketing bonanza, and that’s exactly what the Americans and the English have collaborated on and produced.

Except that it’s about to be taken to another level. Not only has new Fulham owner Shahid Khan considered playing an NFL game at Craven Cottage featuring the Jacksonville Jaguars (also under his ownership) in the future, but the NFL could even be exploring the possibility of opening a franchise in London. Which means that a London-based team could be competing in a league across the pond.

Even more interesting are the stadium plans associated with this global expansion of the NFL. Tottenham Hotspur, who have already been featured in a brilliant skit mocking football fans in America and American football this summer as part of NBC’s promotions for their Premier League coverage in the US, are reported to be interested in cohabiting a new stadium with said London NFL franchise.

This would mean that White Hart Lane Mark II (let’s call it that for now) would not only host two high-profile teams in two of the highest-profile sports in the world, but that it would immediately challenge Wembley’s status as the preeminent (only) American football stadium in London. Following the New York Yankees’ involvement with New York City FC and Manchester City, this latest reversal plan seems just to be the beginning of an intriguing soap opera.

 

This piece was part of my new biweekly column for SWOL.co, in which I discuss some of the latest news, trends and developments on the business side of football—everything including marketing, strategy, technology and finance.