Tag Archives: Football business

The Business of World Cup Branding and Sponsorship

After the 32 participating nations announced their World Cup squads and most domestic football leagues around the world wrapped up their seasons, the attention has turned firmly to the action that has now begun in stadia across Brazil this summer.

Cue the spectacular advertising campaigns put on by brands and companies the world over, in a bid to cash in on the World Cup. Traditional sportswear powerhouses like Nike and Adidas have gone head to head in the production of high-budget commercials and promotional projects featuring footballing superstars, while companies that by nature don’t have anything to do with football—take Pepsi and Samsung, for example—have built a roster of star players to feature in their campaigns.

From official “FIFA Partners” to “National Supporters,” from “FIFA World Cup Sponsors” to unrelated companies targeting the football-fan demographic, the World Cup this summer features a multitude of brands competing for their ideal target market—FIFA has even designed and implemented a three-tier sponsorship structure to amplify and increase the profitability of the marketing frenzy in their flagship tournament.

Even the footballing action is and will be dominated by sponsors: the flashing billboards adorning each stadium, the official live broadcast coverage partners, the athletic gear worn by the players—given the frenetic advertising environment, perhaps international football should receive some credit for not yet caving into the lucrative practice of featuring official sponsors of national team kits.

The nature of the World Cup, and the reverence with which its fans and participants treat its ultimate prize, mean that football will be the main star in Brazil this summer. But that hasn’t stopped—and won’t stop—the considerable momentum that the branding and sponsorship activities have built over the years in their evolution into a prominent sideshow to the tournament.

How It All Began

It wasn’t always this way. There was a time when the World Cup—even professional football altogether—was just about the sport. But the phenomenon of television changed things forever.

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

While the first live World Cup games, broadcast in Europe for the 1954 tournament held in Switzerland, reached only a handful of audiences due to the low number of matches shown, the potential of television and TV advertising was already apparent. In 1974, new FIFA president Joao Havelange turned his organization into a modern international NGO upon taking office, as he put in place the infrastructure, people and income-drive of a corporation to conquer the world of football and reap the ensuing economic benefits.

After the rapid expansion of the World Cup tournaments under Havelange’s watch—he added eight participant slots to the tournament, while also introducing other versions of the World Cup, including the U-17 and U-20 iterations, as well as the Confederations Cup—came the idea of corporate sponsorship to help bear the costs of hosting a global tournament in one country.

Thus came money-spinning deals with Adidas and other big-name corporations like Coca-Cola to finance the tournament, while television advertising, which had grown to become a huge cash cow with the boom of TV, led to increased premiums for marketers to get their spots and campaigns onto World Cup TV screens.

The Golden Era of World Cup Sponsorship

The sponsorship boom that began under Havelange has been taken to unprecedented new levels during the tenure of current FIFA president Sepp Blatter. According to a UPenn study, the stellar lineup of corporate FIFA sponsors (otherwise known as their “partners”) for the 2010 World Cup in South Africa 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 involved in partner-level sponsorship of the 2010 tournament was a commitment of a minimum of between 100 and 200 million euros through 2014, while “FIFA World Cup Sponsors” would collectively invest around 50 million euros through 2014.

As a result, FIFA’s revenues from the South Africa tournament reached a staggering $1.022 billion, and FIFA was to provide $420 million to all participating national teams and the football league teams providing players to those national teams. $30 million would go to the World Cup-winning team (Spain), while first-round teams automatically qualified for $8 million each. $1 million in preparation costs were provided to each participating football association.

So, yes, it’s a sporting achievement and an indication of a country’s footballing proficiency to qualify for a World Cup—but it’s also a great way for national football associations to make money. Football—and the World Cup—can no longer be considered as its own entity, separate from the clutches of money. After a period of explosive growth and the influence of a few key players, the World Cup and money have become intimately intertwined.

FIFA has ridden on this wave to further corporatise and globalise itself. Since introducing the World Cup in the United States in 1994, a move that proved to be a stunning success (USA 1994 still holds the total attendance record and average all-time attendance record), the World Cup has since traveled to Asia (2002), Africa (2010), and will go to Russia in 2018 and the Middle East in 2022. According to the Telegraph, Blatter has even entertained the idea of hosting the 2022 tournament across several countries in the Gulf region, which would multiply the brand and advertising exposure for FIFA’s partners across geographies.

To Sponsor or Not to Sponsor?

It’s not only the football that wins, however—after all, there has to be an inherent attraction to becoming a World Cup sponsor in the first place. Otherwise, brands wouldn’t be tripping over themselves to secure eye-watering contracts with national teams, players and the tournament itself.

So grand is the World Cup stage, that even smaller brands and smaller teams involve big sums of sponsorship money. Spain’s Joma sponsored Honduras in 2010 for $2 million a year, while China’s Hongxing Erke Group paid $7 million a year for the North Korean team.

But the battle is always at its most intense at the top of the footballing hierarchy, simply because a brand’s association with a team’s success will do wonders for its own brand performance, not least in terms of direct revenues. The UPenn study cites forecasts that the Adidas’ sales in the domestic Spanish market would grow by 8% if Spain won the World Cup in 2010 (they did), which would mean an overall 50% increase in Adidas’ sales from previous forecasts for 2010.

A continued association with success is also the driving force behind Nike’s contract with high-profile teams like Brazil, Portgual and the Netherlands, which guarantees a high level of visibility for the million-strong World Cup audiences around the globe. As the apparel hits stores worldwide ahead of, during and after the tournament, money will flow into the coffers of these high-profile brands, and even more so if their sponsored national teams perform well.

This explains the recent trend of new national team kit designs almost once a year: Brazil, England, Germany, Spain, Argentina and France are all examples of world-famous teams who have launched high-profile events and flashy marketing campaigns in conjunction with big-name sportswear companies and top international stars. And there are still those companies outside the sports arena that have allocated major funds and expensive campaigns to up their branding and advertising ante with the World Cup on the horizon.

Without doubt, the growth in sponsorship opportunities have provided many an ambitious brand to take advantage of World Cup to reach out to bigger audiences and rake in the ensuing benefits. But this path must be treaded properly.

The danger is that new kit launch events and over-the-top advertising campaigns have become hype machines that serve no purpose, and the risk is that the ever-expensive replica kits—one of the many inevitable products of the evolution of branding and sponsorship into World Cup sideshows—have become out of reach financially for that most important demographic when it comes to the most famous football tournament on earth.

For what is the World Cup without the common football fan?

 

This article first appeared on Outlook India, as “The Branding Business: How branding and sponsorship have evolved into a prominent sideshow to the World Cup.”

How Brazil Hopes to Get Rich off the 2014 World Cup

With less than two weeks left before the World Cup kicks off this summer in Brazil, all the attention has understandably been on the football side of things, with all participants playing warm-up friendlies to ready their squad for the tournament.

For the Brazilian government and footballing authorities, who have attracted criticism for repeatedly missing construction deadlines for the World Cup stadiums, perhaps the recent attention to the friendlies makes for a welcome respite.

After all, most of the coverage in the past year or so (this is an example from The Washington Post) has focused on the state of the host nation. (I wrote an article on that only a few months ago.)

But the public protests in Brazil have not gone unnoticed. In fact, the demonstrations that started during last year’s Confederations Cup have provided a controversial backdrop to the upcoming World Cup: How will officials be held accountable for the massive overspending they have committed in their preparations for the tournament?

It is imperative that there is an answer to how Brazil and its citizens stand to benefit from hosting a glamour tournament like a World Cup—not just from glory and hype alone.

Let’s take a look at how the 2014 host nation hopes to make money off the latest installment of the World Cup—but as we see, not all the hopes and proclamations may ring true.

 

Jobs and the Local Economy

 

Eraldo Peres/Associated Press

 

Brazil’s tourism minister, Vinicius Lages, told AFP, via Yahoo: “The Cup is not an economic panacea but a catalyst for Brazilian development. It was a key factor behind Brazil finally overhauling its infrastructure.”

The World Cup, he predicted, would add about $13.6 billion to the Brazilian economy—already the world’s seventh largest—in 2014 alone.

It doesn’t stop there.

report by Ernst & Young Terco on the social and economic impacts of the 2014 World Cup concluded that the tournament “should generate 3.63 million jobs/year and R$63.48 billion income for the population in the period 2010-2014, besides an additional R$18.13 billion in tax collections.”

EY’s projected impact on the national production of goods and services stood at R$112.79 billion, while the sectors most benefiting from the event—defined as economic activities with major increased output—were civil construction, food and beverage, business services, utilities, information services, and tourism and hospitality.

All of which sounds glamorous and sexy, but there have been contrasting reports on the actual long-term gains as a result of hosting the World Cup—and they aren’t quite as pretty.

Moody’s report on the impact of the tournament on different industry sectors concluded that “the 32-day event will provide short-lived sales increases that are unlikely to materially affect earnings and disruptions associated with traffic, crowding and lost work days will take a toll on business.”

Then there is the very real possibility that the “World Cup effect”—defined by IBTimes.com as the phenomenon of countries being more harmed economically from hosting the event, as seen from South Africa 2010—may take hold in Brazil.

Four years on, the same uncertain material benefits from a World Cup are still yet to be transparent. As cited in the IBTimes.com article,University of Maryland professor Dennis Coates noted that even the 1994 World Cup in the U.S.—claimed as one of the most successful and transformational ever—ended in an income reduction of $712 million for the average host city relative to predictions.

 

The Tourism Industry

 

Eraldo Peres/Associated Press

 

Vinicius Lummertz, Brazil’s national secretary of public policies, toldThe Rio Times last November of his optimism that Brazil’s tourism industry would stand to gain enormously from the World Cup:

We hope tourism in Brazil rises to a new level after the World Cup. With infrastructure improvements that increase the competitiveness of Brazil as a tourist destination, and the high exposure of the country abroad, I expect to see a significant increase in foreign tourists—but mainly more Brazilians traveling through Brazil.

The Tourism Ministry predicted that tourists home and abroad would spend R$25 billion during the tournament, when 600,000 foreign and three million Brazilian travelers are estimated to visit the country.

The massive spending on infrastructure by the Brazilian government in recent years in preparation for the World Cup has likely been to maximize the revenue the country can make during the tournament—and with an eye on the future as well.

The EY study quoted above addressed such needs for investment in order for tourism income to be realized:

Once the actions that are required to enable the country to capitalize on the opportunities generated by the World Cup are completed, the event may result in an increase of up to 79% in the international tourist inflow to Brazil in 2014, with even possibly higher impacts in subsequent years. In the period 2010-2014, that figure should be as high as 2.98 million additional visitors.

The tourist inflow directly and indirectly induced by the World Cup is expected to account for additional income up to R$5.94 billion for Brazilian companies.

Yet before Brazil can throw a metaphorical carnival to celebrate their upcoming economic benefits, a few sobering updates on the tourism front may dampen the mood.

According to Claire Rive of The Rio Times, “The tourism sector in Brazil has had to adjust their inflated estimates concerning the expected influx of tourists…leading to big discounts on local and international flights and accommodation during the tournament.”

The reduction in projected tourist numbers has led to discounts on airfare prices and package tours, while demand for accommodation has “substantially decreased and prices have decreased.”

 

And, of Course, Corruption

 

Eraldo Peres/Associated Press

 

That a World Cup involves staggering amounts of money and an opportunity for businessmen and government officials to make a quick buck is no surprise—and Christopher Gaffney, professor at Rio de Janeiro’s Federal University, agrees strongly.

“There’s collusion of the Brazilian governmental elite with the business elite, and the game is rigged in their favor,” Gaffney said(via Yahoo). “This was an opportunity to make a lot of money and that’s what’s happened.”

But adding to the depressing reality that corruption will form a huge proportion of Brazil’s money made from the World Cup is the astonishingly public manner in which the embezzlement has been carried out.

See the case of the lead builder of Brasilia’s Mane Garrincha Stadium, already the world’s second-most expensive football stadium.

The Associated Press ran a story this May alleging that Andrade Gutierrez, a construction conglomerate, and Via Engenharia, an engineering firm, made up a construction consortium that billed the government $1.5 million for the transportation of prefabricated grandstands for the Brasilia stadium—a fee that was initially thought to cost just $4,700.

Auditors pointed out that “wasteful cutting practices or poor planning added $28 million in costs,” while “$16 million was lost when Brasilia’s government inexplicably failed to enforce a fine against Andrade Gutierrez for a five-month delay in completion of the main portion of the stadium.”

According to Al Jazeera, the same firm made political contributions totaling $37.1 million after confirmation of which cities would be hosting tournament matches, and after it was awarded stakes in contracts totaling “nearly one-fourth of the World Cup’s total price tag,” four years after it contributed a measly $73,180 in municipal elections, a 500-fold increase.

Moreover, auditors found $275 million in alleged price gouging with just three-fourths of the $900 million Mane Garrincha Stadium project.

The most damning part?

“Funding for Brasilia’s stadium relies solely on financing from the federal district’s coffers, meaning every cent comes from taxpayers.”

What comes around, goes around.

 

This article first appeared on Bleacher Report.

Anfield Redevelopment Underlines Liverpool’s Financial Rejuvenation Under FSG

Ahead of a crucial Premier League title decider against Chelsea this Sunday, Liverpool this week announced their expansion plans for Anfield, while managing director Ian Ayre today credited, via the Telegraph, the role of current owners John W. Henry and Fenway Sports Group in their financial rejuvenation.

Both the Anfield redevelopment announcement and the revelations behind the dire financial situation at Liverpool have not only boosted the feel-good factor around the club, who are five points clear in the Premier League and poised to win their first league title in 24 years, but also highlighted just how important FSG have been in their resurrection.

The Reds now seem a stark contrast to what they were just a few years ago, when Tom Hicks and George Gillett were in constant internal battles with then-manager Rafael Benitez and released plans for a new stadium in Stanley Park that got nowhere, a symbol of their failed reign that disillusioned supporters.

John W. Henry led FSG’s takeover in 2010, which saved the club from administration and that has subsequently transformed Liverpool’s fortunes on and off the pitch.

As Ayre claims that “the club is in a fantastically sustainable position now,” let’s look at just how Liverpool have been rejuvenated financially under the reign of Henry and FSG—and whether this can be sustained going forward.

 

 

Chris Brunskill/Getty ImagesCorporatization of Liverpool as a Global Business

It’s easy to say we were 10 years into a stadium move and it’s about time we are back in the Champions League, but if you think about where we were financially, just because you’re Liverpool it does not mean you have a right to get back up there. There are plenty of teams who could have slipped and slipped, despite new owners, so it’s an unbelievable achievement to get back where we are today. That is testament to the people who invested in it and worked on getting us back there.

Ian Ayre’s proud proclamations of the FSG-led transformation, dipped in bitter memories of the Hicks and Gillett reign, will reverberate around Anfield as a resounding endorsement of the way John W. Henry has run his sports empire.

Joshua Green of Bloomberg.com has encapsulated Henry’s reign at Major League Baseball club Boston Red Sox in a wonderfully revealing article on their baseball dynasty, and similar principles from Henry’s financial and business background have been applied to Liverpool.

The inevitable truth in the sports world these days is that it is becoming more and more of a global business, and Liverpool have, in many aspects, finally caught on.

When looking at models for sustainable growth in world football, perhaps Arsenal is always the go-to club given the building of their new Emirates Stadium and the well-known financial management of Arsene Wenger, but it’s no surprise that Ian Herbert’s column for the Independent draws comparisons with “the kind of machine that the Glazer family have developed at Old Trafford.”

That Manchester United have set up offices around the globe to push their marketing and sponsorship efforts is indicative of their aggressive expansion as a corporation; Herbert writes that their “far-sighted establishment of regional and global corporate sponsorship deals began well over a decade ago.”

This has only recently surfaced at Anfield—though, of course, it is a case of better late than never—with all kinds of backroom appointments boasting titles we would otherwise associate with financial organizations and the business world in general.

Liverpool, who have for years been in the top 10 of Deloitte’s Money League rankings despite missing out on the Champions League, have finally gotten in the sponsorship act and have begun raking in the millions as a result of the commercial push. Their announcement this week of a partnership with US restaurant chain Subway, per the Liverpool Echo, is only the latest chapter in their fast-growing business empire.

 

 

Liverpool FC/Getty ImagesAnfield Redevelopment: Finally Done Right?

When looking to expand the financial income of football clubs, the issue of stadiums will always come into the equation.

After all, gate receipts was the reason behind Arsenal’s decision to move from Highbury to a new stadium, and Manchester United, having expanded Old Trafford over the years, have been raking in a minimum of £3 million every home match since its capacity has come close to 76,000, per ESPNFC.

So it’s no surprise that much has been made over Liverpool’s next step in terms of their stadium: The question was always whether to develop the iconic Anfield, which would have a capacity ceiling due to construction constraints, or to move into their neighboring Stanley Park, which would require massive payments that might hamper their other financial activity, much as Arsene Wenger has experienced.

This Mirror Football article, in light of the new stadium redevelopment announcements, revisited the failed and widely mocked plans for a 60,000-capacity stadium in Stanley Park, which were first suggested in 2002 and then revisited in the Hicks and Gillett reign. They promised a “spade in the ground” within 60 days of their 2007 acquisition of Liverpool, but proved unable to finance the construction project.

By contrast, the £150 million redevelopment currently mooted will cost less than a third of the Stanley Park plans, and will likely eventually take the total seating capacity to 58,000 after expanding two main stands, according to Chris Bascombe of the Telegraph.

Surrounding all the recent fanfare has been the club’s shady policy of “buying up houses around the stadium and leaving them empty, driving the local area into dreadful decline” since the 1990s, which David Conn has uncovered in his revealing Guardian column.

The club apparently “used an agency to approach some residents, while some houses were bought by third parties then sold on quickly to the club. That left residents with the belief…that Liverpool were buying up houses by stealth, to keep prices low,” a tactic that has not gone down well with local residents.

But as Ayre and the club have published their plans publicly and also apparently been in dialogue with the local councils and residents with their Anfield redevelopment plans, the chance is there for FSG and the current hierarchy to redeem errors made in years past and commit to a bright future for the local area and the local community.

The public consultation of fans’ opinions on the Anfield redevelopment, through a public online survey on their official website, is a good start. The right opportunity has finally arrived for FSG to leave a positive legacy in the city of Liverpool, far beyond just bringing the football club back in the green.

 

 

Christopher Furlong/Getty ImagesLooking Ahead to a Promising Future

This week’s announcement of the Subway partnership is the latest sponsorship arrangement Liverpool Football Club have landed in 2014 alone: The likes of Vauxhall and Dunkin’ Donuts all joined the Liverpool corporate partner list this calendar year.

Following the money-spinning and multi-year deals with Standard Chartered Bank and Garuda Indonesia, an airline, Liverpool may even solicit financing for the expansion of the Main Stand via a “lucrative naming rights deal with a major sponsor,” according to James Pearce of the Liverpool Echo. Following Macron’s naming-rights announcement with Championship club Bolton Wanderers, announced this week as well via BBC Sport, naming rights may well and truly have entered the English football mainstream—Arsenal’s Emirates Stadium and Manchester City’s Etihad Stadium are but two famous examples.

For Liverpool, it’s been a story of financial rejuvenation, underlined by Ayre’s comments regarding the long and difficult journey of infrastructure-building at the club since FSG’s takeover:

When I came here seven or eight years ago, there were all these stories of the club shop being closed the day after the [2005] Champions League final [win over AC Milan in Istanbul], and only having a couple of sponsors. Over a long period of time, we have been trying to lay the foundations and build the infrastructure that services a great club like Liverpool.

As the club look to cash in on their successes in the Premier League this season—they confirmed, with their win over Norwich City last Sunday, a lucrative return to the Champions League next season—and continue to bear the fruits of their commercial exploits, their highest-ever annual turnover of £206.1 million this past year will surely be eclipsed considerably in a year’s time.

Add to that the image of the club as a young and energetic force, spearheaded by a visionary young manager in Brendan Rodgers and featuring a host of young stars in the team, as well as the rejuvenated Anfield stadium and surrounding area—confirmed to go through this time—and you have, for the first time in many a season, a healthy outlook for Liverpool Football Club for years to come.

To think that the Reds were “seconds from disaster” before John W. Henry and Fenway Sports Group swooped in for their rescue act.

What a roller coaster it’s been—and long may it continue.

 

This article first appeared on Bleacher Report.

How Manchester United’s Global Brand Is Affected by Missing the Champions League

An underwhelming season for Manchester United has been capped by the news this week that the Old Trafford club had dismissed beleaguered manager David Moyes, who succeeded Sir Alex Ferguson last July.

As rumors have surfaced aplenty across various media outlets speculating the causes of Moyes’ downfall and what exactly went wrong in his tenure at United, the club have appointed Ryan Giggs as their interim manager as they strive to look forward to the future.

Their underwhelming performances this campaign have led to a disappointing failure to qualify for the Champions League next season, as they are now well and truly mathematically out of reach of the Premier League top four, for the first time in 19 years, which has led to some concern about the direction of the 20-time title winners.

For a club of United’s size and stature, how costly would missing out on the Champions League be for their future and their brand image? How will they pick themselves up from the wake of their recent managerial departures—first Ferguson and now Moyes?

Let’s explore how Manchester United’s brand will be affected by missing the Champions League across three rough timescales: The short, medium and long terms.

 

 

CHRISTOF STACHEShort Term: A Harsh Economic Hit

The immediate future of Manchester United as a preeminent footballing superpower is murky at least: The notion that they are not a “sacking club” has been dispelled after Moyes’ dismissal, even though his results perhaps made his position untenable.
To fall from the lofty achievement of winning the Premier League title last May to a current seventh place with no hope of making the top four this season will rightly be considered a disaster from the club’s point of view, given Sir Alex Ferguson’s longevity and record of success, which helped built an image of the club as a perennial contender and a winning institution over the years of his legendary reign.

So to fall from conquering England less than 12 months ago—and conquering Europe six years ago—to the prospect of regular Europa League football, or even no European action at all, will be a massive reputational dent: How can United keep up their global reputation if they’re not even continental?

In the wake of David Moyes’ sacking, Manchester United will miss out on a reported £50 million due to a failure to qualify for Europe’s elite club competition alone, according to Simon Goodley of the Guardian, who suggests that the same riches that are available to competing clubs will serve as a double whammy on top of United’s losses, considering their debts.

Goodley’s comparisons of United’s current situation with Bayern Munich’s in 2007—that they would need to spend massively to improve their squad without European football in a bid to catch up with their competitors—led him to estimate a potential £100 million summer outlay in transfer fees alone.

Which doesn’t include the wage expenditures for their high-earning star players and the considerable compensation that Moyes and his staff will no doubt fight for.

Make no mistake: As United count the costs of missing out on the Champions League, it’s not just to their reputation in the short term as a global sporting brand, but also a blow to their already shaky financial situation.

 

 

Jon SuperMedium Term: The Rebuilding Must Be Done Right

Considering the massive financial commitment that the club will need to make to steady the ship and turn it around, the short-term hit will only be compensated by an ambitious and focused rebuilding job done at all levels of Manchester United.
This involves many aspects across the front and back of the club, not least including a revisiting of the overall backroom structure in place at Old Trafford, which Gabriele Marcotti of ESPNFC suggests should include a Director of Football to alleviate the workload of the modern football manager, and a thorough review system to ensure that players are not signed for inflated fees (see Marouane Fellaini) or rewarded with bumper contracts despite being clearly surplus to requirements (see Nani).

That United have splashed £64.6 million on just two signings will not be lost on any observers: If anything, it will serve as an “eyes light up” moment to the agents of United targets and a major obstacle for the club to overcome. A quick glance at Liverpool’s eye-watering spending in the summer of 2011 will make for a horrifying prospect for many a Red Devil fan.

But besides the playing staff that have been the public face of United, both on and off the field for better or worse over the years, the figurehead that leads them to silverware and sustained success will need to be appointed as well.

The bullish nature and at-times extraordinary proclamations of Sir Alex Ferguson all added to the Manchester United aura and myth, which were almost instantly shattered by the defeatist and pessimistic utterances of David Moyes, who also oversaw the transformation of Old Trafford from a home fortress into a cauldron of fear.

They messed up a managerial appointment once; they can’t afford to do it again.

 

 

Handout/Getty ImagesLong Term: The Structure Is in Place for a Resurgence

As a football club, Manchester United have led the way in England and in Europe for many years, both on the football pitch and off it in the commercial realm. United were perhaps the first club to have built any global brand of note and formulated a wining commercial strategy that was based around silverware won on the pitch and the superstars that brought United that distinct success.
News that the club’s share price on the New York Stock Exchange has rebounded to a pre-Moyes, according to the Mirror, is both cruel on the newly deposed manager and reflective of the club’s standing in the global financial game, while Alex Duff’s commentary on Bloomberg.com considers the club’s power in terms of attracting lucrative commercial sponsorships and strategic partnerships.

Any new manager arriving at Old Trafford would be walking in a dressing room, while needing the injection of some much-needed fresh blood, still featuring some world-class stars, and operating within a commercial giant that is peerless in world football with a brand name that still resonates around the globe. Any comparisons with Liverpool’s dramatic downfall are as a result premature and naive, as the Anfield club have only recently caught up on the commercial side of things, whereas United were pioneers at building a commercial enterprise.

But while United fans shouldn’t panic at the current state of their club, even if the Champions League anthem won’t be playing at Old Trafford next year, they will realize that the club will only be able to bounce back—and the club officials will realize its brand power will only be fully realized—if they overcome a potentially significant short-term hit and approach their rebuilding job correctly.

Because if they don’t do it right, the Manchester United brand, which has been built so strongly over the years because they have become synonymous with success, will wither as a result of their on-field disappointments.

It’s imperative that they get it right this time, before it becomes a vicious, self-defeating cycle.

 

This article first appeared on Bleacher Report.

Is a European Super League an Inevitable Next Step in World Football?

The past couple of weeks in European football have thrown up some interesting scenarios, perhaps unthinkable just a few years ago, which have thrown into question the competitiveness and balance even in the leading domestic leagues around Europe.

When Chelsea loaned Thibaut Courtois, then one of the hottest goalkeeping talents in the world, almost three years ago to Atletico Madrid, surely they didn’t expect to have to waive a contract clause at the prospect of facing their loanee in the Champions League semifinal.

When Borussia Dortmund won the Bundesliga and upset the status quo just a few years ago, surely they didn’t expect that a comprehensive 3-0 win over Bayern Munich in the league would mean as little as it just did, given that Pep Guardiola’s side had just become the quickest team ever to win the German championship.

These are but two incidents that have reflected the reality of European football these days (and there are many more—think Bayern’s ruthless snapping up of Mario Gotze and Robert Lewandowski from Dortmund, supposedly their closest rivals).

And the reality is that, while the top-tier leagues, especially in England with the Premier League, have started to break away from their lesser domestic competitions, those cream-of-the-crop clubs at the top of the European game have begun to form a mini exclusive club of their own.

Perhaps it’s time to consider not whether a European Super League would be a fun and interesting side project for club owners to think about, but whether it is actually an inevitable next step in world football.

 

Kerstin Joensson

 

Booming broadcast and television revenues

It’s hard to point a finger at a definitive starting point for this spiraling breakaway of the European elite, but BT Sport’s staggering £897 million three-year exclusive deal to broadcast live Champions League and Europa League games starting from 2015, announced last November via BBC Sport, is a good start.

Given the amount of money involved in the European game, it’s no surprise that the likes of Arsenal and Liverpool have made qualifying for the Champions League essentially a barometer of their season-to-season success in the Premier League.

Of course, it’s a cyclical game—perhaps even a snowball effect—in which money drives commercialization and encourages clubs and league administrators to package the sport as a “consumer product,” which focuses on entertainment value in the form of stadiums, overall team play and individual superstars, which boosts widespread interest and thus potential income, and so on.

But it’s not as if those involved in the beautiful game at the top level are trying their level best to keep the game devoid of any adverse effects from the money involved. Far from it.

Just this January, the Telegraph reported that the Premier League wanted to bring forth the next “auction” of football broadcasting rights by six months, which sources allegedly claimed was a show of “opportunism” from the league in “attempting to exploit the fierce competition between BSkyB and BT, and the resulting increase in the value of sports rights.”

As the game of football evolves at the top level and clubs become ever more like global corporations, even the ordinary football fan has evolved into being a consumer from their clubs’ point of view.

And how do businesses engage with their consumers? By providing high-quality goods (in this case, high-quality performances with a dose of superstardom, delivered at every broadcast opportunity across every possible channel).

A further case illustrating the financial explosion of the modern game once again focuses on the aggressive increase of Premier League prize money: A Telegraph report in May 2013 mentioned that Manchester United’s £60.8 million in TV money, a record sum for a Premier League champion, would be eclipsed the following season by the club that finishes bottom of the league because of new broadcasting deals.

 

Gonzalo Arroyo Moreno/Getty Images

 

Exponential inflation of player valuations

The sheer amount of money involved in top-level football highlights the indispensability of the sport to TV networks and channels, which in turn drives up their bids to carry these matches.

But from both the clubs’ and the fans’ points of view, this is merely a reflection of an ever-increasing and ever-vociferous demand for the sport—especially as clubs and leagues are becoming more business-savvy and expanding into markets never previously thought lucrative or even possible.

Which means that top-level footballers and top-level coaches, who turn top-level footballers into top-level teams on the pitch, gradually become a premium commodity to be traded to those willing to shell out a fortune in anticipation of the potential upsides.

And so we have eye-watering deals like Gareth Bale’s world record transfer from Tottenham Hotspur to Real Madrid, who themselves set the previous record by signing Cristiano Ronaldo from Manchester United. And vastly inflated contracts like Wayne Rooney’s new extension at Old Trafford, which reportedly will land him a mammoth £300,000 a week, per BBC Sport.

Suddenly, the prevalence of money in the modern game has made it an essential part of both player decisions and transfer strategies. Players appoint ruthless agents to extract the best deal for themselves and their clients, while clubs head towards the murky waters of outbidding each other for star names.

The supply line has just shot up in value.

And those organizations who can afford to shell out the big bucks to procure such mercurial and overpriced talent—some through the generosity of a well-off benefactor—become the most important players in the financial game of football.

It’s no surprise, then, that Simon Kuper and Stefan Szymanski put forth in Soccernomics that football clubs in capital cities are best positioned to dominate the European game in the future: Take the financial “capital” in the cities and you instantly have the most powerful hybrids of money, geography and power across football clubs in Europe.

 

Marc Mueller

 

A whole new, exclusive playing field

Where does this bring us?

On the one hand, the growing demand of top-level football means that there will only ever be greater sums of money spent by fans and reflected in megadeals between leagues, clubs and broadcasters.

On the other hand, the explosion of player valuations means that agents will continue to grow in prominence and importance, while player power will entrench itself as an institutional concept in modern football—and only a handful of football clubs are even equipped to handle such major deals.

Which essentially means that the footballing world is their oyster.

As players vie to get into those clubs as a sign of their ability and ambition and as clubs strive to either maintain their place in that elite group or try their utmost to break into the oligarchy, a whole new, exclusive playing field has taken form for the big boys up top.

La Liga has traditionally been the easiest and most glaring example of a “top two” league, with Barcelona and Real Madrid maintaining a hegemony on proceedings in Spain until Atletico burst onto the scene this season, while recently Bayern Munich has become a textbook example of just how far a first-placed team can pull away from its closest challenger.

Sooner or later, as egos, ambitions and competitiveness are wont to trump all in sport, these big players will yearn for a platform where they can pit their wits against each other on a regular basis, to claim a title that will truly prove their dynasties.

The concept of a European Super League suddenly doesn’t sound so far-fetched after all. In fact, it almost sounds as if it’s going to be the next big evolution in world football.

And just as TV networks have continued to scramble for big broadcasting deals just to get a slice of the ever-growing pie, football clubs not yet in the “Super League” category will fight tooth and nail, and spend an arm and a leg to try to get there.

There will be plenty of new entertainment for football fans—and plenty of inadvertent and unfortunate financial casualties as well.

 

This article first appeared on Bleacher Report.

The Business of Football Kits: Sponsorships, Technology, Branding and Beyond

As we enter the final few months leading up to this summer’s World Cup in Brazil, the national teams taking part in the tournament have been unveiling their new kits to ride on the wave of growing interest in international football.

Brazil, England, Germany, Spain, Argentina and France have all released new kit designs for the summer, with various big-name sportswear companies and top international stars at the helm of high-profile launch events and flashy marketing campaigns. (The Mirror has a collection of some newly released kits here.)

As with most commercial activity in football, however, not all the recent kit launches have been met with universal acclaim: Ben Curtis’ article on the Mirror is a cynical rant at the hype machines that these events have become, while Lizzie Parry’s on the Daily Mail highlights just how expensive replica kits, launched over increasingly short time periods, have become.

In February, we explored the importance of stadiums in the overall commercial strategies of football clubs. As top-level football increasingly becomes big business and a huge revenue generator, let’s take a look at another money-spinning side to the sport: football kits.

 

Vincent Yu

 

Sponsorships

One of the first things that comes to mind when football kits are mentioned these days is the staggering amount of money they can generate for football clubs, both from the merchandising side and from the corporate sponsorship side.

While club merchandise is generally dependent on the popularity and on-pitch success of the clubs themselves—and the annual Deloitte Money League results generally attest to that—the larger context is the money that sportswear companies actually pay to be the official kit providers of football clubs.

In recent years, just in the Premier League, we’ve seen many instances of eye-watering commercial deals involving kit suppliers. Liverpool’s 2012 deal with Warrior Sports, the latter’s first foray into football, would, according to Andy Hunter of the Guardian, net the club at least £25 million a year.

Just this January, Arsenal announced they would be changing their kit maker from Nike to Puma, in a five-year deal reportedly worth more than £30 million a year, per the BBC. And, as ever when it comes to business deals, Manchester United shocked the world this March with their world-record 10-year deal with Nike, which, according to Simon Mullock of the Mirror, will see the Old Trafford club earn more than £60 million a year.

Besides contracts with sportswear makers, the other big player in the football kit boom is the corporate sponsorship deals that have taken center stage in recent years. This 2013 J.J. Colao article in Forbes listed Manchester United, Barcelona, FC Bayern Munich, Liverpool and Real Madrid as the biggest shirt sponsorship deals in the world.

Another interesting marketing tactic has been employed by Tottenham Hotspur this season, as they featured different sponsors on their shirts in different competitions, with Hewlett Packard their Premier League front and AIA their cup shirt partner. According to Kevin Palmer of ESPNFC, however, even Tottenham will revert to the traditional “principal partner” model at other big clubs, having agreed a lucrative £20 million-a-year deal with AIA for the next five years.

 

Richard Heathcote/Getty Images

 

Technology

But with all the money that goes into the kits, and their burgeoning price tags, do those who get to wear them actually benefit?

Specifically, do the footballers themselves get anything out of the constant kit changes, or are they just excuses to step in front of a camera for yet another photo shoot?

Just ask the Italian national team stars. According to the BBC, the high-tech football shirts they will be wearing at the World Cup this summer will be able to deliver massages during the game. The shirts contain a special tape that provides “micro-massages” for their wearers and “maximise muscle power” by allowing the body to recover from exertion more quickly.

Away from the luxury options provided to footballers these days, far more important is the shirts’ ability to keep their wearers warm in extreme cold temperatures. This article from PRNewswire.com lists a few examples of temperature-regulating technologies that are present in football shirts on the market.

Different sportswear manufacturers—the same who enter into the lucrative long-term contracts with football clubs and will rely on such technology to win such bids—integrate different functions into their shirts, but the underlying principles are the same: adding layers onto shirts that keep players comfortable, dry, warm or cool depending on the surrounding weather conditions.

With the digital space increasingly at the center of the football fan experience, besides featuring on shirts themselves, technology has also crept into the marketing side of football shirts and kit launches, so much so that organizing such events can be considered an industry in itself.

See, for example, this analysis on Liverpool’s new kit launch in 2012 on Dan McLaren’s TheUKSportsNetwork.com. Liverpool’s multichannel marketing and promotion strategy, across different social media platforms, was all about putting out a united front for the kit launch, which also had to match the club’s corporate branding.

But, as they’ve tended to do so in social media in general, Manchester City will take home the technology and marketing hybrid approach for football kits as well.

They’ve since switched to Nike as their main shirt sponsor, but City’s launch of their Umbro kits for the 2012/13 season, as covered here by SoccerBible.com, took fan engagement to a new level when they invited fans to decide how the new kit would be officially launched.

 

Ray Stubblebine

 

Branding

Using a new innovative campaign to bridge the marketing and technology worlds with branding in football was yet another Manchester City-affiliated project, New York City FC.

Since their official announcement in 2013, New York City FC have caught the attention with their cutting-edge digital-marketing campaigns despite the MLS outfit not yet officially competing in the U.S.’s highest-tier domestic football league.

NYCFC put their fans truly at the center of their business and branding strategy by inviting them to submit ideas for an official club crest, which was met with widespread acclaim and culminated in a win-win scenario where the club also got their hands on an excellent winner, shown here on the MLS official website.

An example of how the football kit itself has become more than just one of the components of a football club’s identity; it’s evolved into an integral part of the football club’s business strategy on the whole.

So eager have clubs and affiliated sponsors wanted to tap into their fanbase for merchandising dollars that they have begun creating hype cycles out of kit launches to boost profits and increase circulation among their followers—at the risk of straying into grey areas and stirring controversies.

In tandem with the ongoing, controversial narrative that football is becoming more and more middle- and upper-class and moving away from the traditional working-class fanbase that gave the sport its following and popularity, clubs and corporations have rushed into a branding frenzy and become eager to associate themselves as “premium” titles.

A major recent example was that of Adidas, who, according to Anna White of the Telegraph, may refuse to supply Sports Direct, one of the biggest sports retailers in the UK, with a variety of World Cup football kits due to concerns over its stores and customer service.

Said Adidas, “Like all manufacturers, we regularly review, season by season, where our products are distributed. We determine distribution channels for all products based on criteria such as in-store environment and customer service levels.”

In other words, sportswear manufacturers are eager for their football kits to be treated as premium consumer goods—indeed, the mooted £140 price tag for the new England kits by Nike almost automatically price themselves into that category—and they’re not afraid to incur the wrath of fans and middlemen retailers to achieve their commercial goals.

Charlie Crowhurst/Getty Images

 

Prior to the World Cup row, Adidas also landed themselves in hot water with Sports Direct over their treatment of Chelsea’s official club kit. In light of the public spat, Matt Scott of InsideWorldFootball.com put together an excellent and in-depth analysis of the changing role of the football kit itself.

Linking the state and rationale of Chelsea’s commercial and branding activities with the area’s wealthy and exclusive reputation, Scott consolidates a list of the London club’s highest-profile official sponsors, who all pride themselves on their elite stature within their respective industries.

The ever-changing face of the football kit, then, is not just an evolution of modern shirt design and an extension of clothing technology into sport, but is a reflection of a shift in the status of merchandise and football itself in the eyes of football clubs, manufacturers and sponsors.

And with seemingly unstoppable momentum behind money-spinning sponsorship deals, it seems that football kits will continue to be at the center of football’s paradigm shift. One only hopes that it doesn’t one day become only limited-edition items due to their exclusivity.

 

This article first appeared on Bleacher Report.

The True Financial Cost of Manchester United Missing out on the Champions League

The gulf in class on the Old Trafford pitch was evident on Tuesday night as Manchester United succumbed to another 3-0 home defeat to a major rival, but David Moyes added more insult to injury as he claimed that Manchester City’s standard and level were something to “aspire” to, per Sky Sports.

For Red Devils fans, who had been used to seeing years of Premier League dominance and a true winning dynasty under Sir Alex Ferguson, this statement—that United were now, suddenly, looking up to their “noisy neighbours”—will have irked, much more than their overall lethargic play has already this season.

It hurts, not just because it was United’s sixth home defeat in the league this season—their most ever in the Premier League—but also because a glance away from the scoreboard and at the league table shows just how far they’ve fallen from their supreme title-winning season last year.

As we approach the final weeks of the 2013-14 Premier League season, Manchester United are left staring up rather than down, contemplating what exactly a failure to qualify for next year’s Champions League—and they are on the brink—would mean to the future of the club.

But what exactly would it mean? Here’s a brief study on the true financial cost of Manchester United missing out on the Champions League—and it doesn’t look too rosy.

 

Alex Livesey/Getty ImagesPremier League Payouts

Qualifying for the Champions League requires a minimum of a fourth-placed finish in the Premier League, so let’s go from there.

It’s a well-known fact that the Premier League provides payments to its competing clubs at the end of every season—and it’s because of the league’s astonishing financial successes that those in England’s top tier receive huge amounts of revenue from television rights and so on.

While we won’t know the exact payouts each club receives for the season until late May, after the season will have officially finished, our benchmark will be from last season, where the fourth- and fifth-placed clubs were Arsenal and Tottenham Hotspur respectively.

For their efforts last season, Arsenal received a total end-of-season payment of £57.1 million, £12.8 million of which were “merit payments” from the Premier League based on position, according to the league’s official announcement. Spurs, on the other hand, received £55.9 million and £12.1 million in merit payments.

It’s easy to calculate the difference just in merit payments as a reflection on the gap between the fourth- and fifth-placed Premier League clubs, but the other components of the payout—the “facility fees,” given each time a club’s matches are shown on TV in the UK, and “overseas TV” costs—are also tied intricately into their performances in the league and in European competition.

So the difference in overall payments is likely a more reliable indicator on the gap. In this case, it’s £1.2 million.

Not too significant as a lump sum, but when it comes to Manchester United, the fact that they were so successful in the league last season means that the hurt will be inevitable—and more considerable.

United finished the season as runaway champions, netting a league-high £60.8 million in payouts, which is a full £4.9 million difference from Tottenham’s eventual payout. And it doesn’t stop there: United’s current seventh place was where arch-rivals Liverpoolfinished last year, and the Merseysiders received £54.8 million.

If the Red Devils drop from first place and finish seventh come May, they will have missed out on at least £6 million just in league payouts—and we haven’t even adjusted for the inevitable league-wide increase yet.

 

Laurence Griffiths/Getty ImagesChampions League Payouts

Then there are the official payouts from the Champions League, which, if United do miss out on the competition itself, they will naturally not be entitled to next season.

For all their domestic woes this season, United’s run to the quarter-finals this season has by and large been smooth, barring a first-leg shock against Olympiakos in the round of 16. Their easy win of Group A was secured on the back of four wins, two draws and no losses—but this is also why an exit from Europe’s elite cup competition will hurt all the more.

According to the official UEFA website, the Champions League paid a minimum base fee of €8.6 million to each participant in the group stage last season.

An additional €1 million was awarded for each win and €500,000 for each draw, meaning that on their group stage form this season, United netted at least €13.6 million just from the group stage alone.

All clubs competing in the round of 16 received a €3.5 million payout, whereas each quarter-finalist received €3.9 million each.

Added on to the group stage payments, that’s at least a €21 million total that they will earn from this season’s Champions League run—and, again, that’s not adjusted for the inevitable competition-wide increase yet.

And who knows—if David Moyes manages to mastermind a famous victory over two legs against the fearsome and record-breaking Bayern Munich of Pep Guardiola, there could be further payments yet.

Translated into pound sterling, the Champions League prize money from this season is at least £17.5 million (and counting), which puts the total opportunity cost at £23.5 million.

Just exactly the amount Marouane Fellaini would’ve cost last summer—if Moyes submitted his bid before the Belgian’s release clause expired on July 31, 2013, according to BBC Sport.

 

Paul Gilham/Getty ImagesThe Intangibles

If only the cost of missing out on the Champions League was just £23.5 million.

Just ask Liverpool, perennial arch-rivals to Manchester United, who slipped into several years of mediocrity—including a couple through financial difficulty—after finishing seventh in what turned out to be Rafael Benitez’s last season at Anfield.

Whether it was down to the personal draw of the managers that succeeded Benitez, or due to the lack of top-quality competition that Liverpool were to be involved in, we may never know, but the truth remains that Liverpool’s signings since that exhilarating title challenge in the 2008-09 season had dropped down several notches—and only resurfaced in the past year or so.

In many ways, Manchester United’s current situation and Liverpool’s back then are similar, especially since both clubs are two of the most prestigious in England (and the world), two of the most historically successful and two built on pride and tradition more so than pure financial muscle.

To lose out on what has traditionally been a key part of the United brand—namely their winning tradition and stature in Europe—would be a huge blow to Manchester United’s appeal to prospective players.

David Moyes stressed in January that “the amount of big players wanting to join United is incredible. It’s because of the club and what it stands for in world terms. Players are not looking at the share price. They are looking at the football club,” per ESPN FC.

A Manchester United without the Champions League simply does not provide the same attraction and a scan at Liverpool’s reported missed signings over the years is testament to that.

Far more than the £23.5 million base loss, which less than half a season under the terms of their kit deal extension with Nike can already recuperate, via the Mirror, this might well be the true cost to Manchester United missing out on the Champions League.

Unless, of course, they change tack and throw their financial weight in to compensate for the lack of European competition, in which case the likes of Chelsea, Manchester City, Real Madrid and Paris Saint-Germain become their main competitors.

And they’ve all got Champions League football.

 

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

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

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.

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

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.

Why Stadiums Are Increasingly Crucial to Football Clubs’ Commercial Strategies

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.