The COVID-19 pandemic has hit the world hard, and football is not an exception. Some lower league football Clubs are in financial crisis and they are struggling to survive due to the loss of major revenue from match tickets without spectators in stadiums, while the biggest clubs remain unthreatened. But everything was looking brighter before the pandemic and football was getting richer & richer. Let’s look at how the football industry became so rich and a business for some people rather than just a game, and how it reached millions of fans across the world.
The two fundamental things that helped football becoming commercial were Private sector investments and Television broadcasting. The clubs became parts of stock exchanges to increase the capital and attracted the wealthiest investors across the world. The major investors called the Club Owners saw football clubs more as a business model and started to present the club as a brand. They used this strategy to attract fans to their clubs & connect them emotionally to the club to make more money from them.
They also used not only clubs but individual players as brands, and the goal was to create a long-term relationship between the player & the fans. Football itself made the players celebrities by providing reputation & giving them an enormous amount of money. Because the most skill full players played for the biggest and popular clubs, merchandizing & sponsorships on account of these players earned a tremendous amount of income to the clubs. The flow of Merchandizing and its growth contributed immensely to the club’s revenue.
The strategy for commercialization was also focused on the involvement of media companies globally to acquire more money from TV broadcasting. Actions were taken to make the broadcasting market more competitive and not allowing a single broadcaster to have a monopoly. They invited bids from the different broadcasters to show different competitions or matches, which increased the rivalry between the broadcasters, and this resulted in Leagues and clubs earning more revenue from TV rights. For example, The Premier League earned £40 million from broadcast revenue in the 1992/93 season, which rose to over £1.7 billion in the 2013/14 season.
The next major source of income for the clubs was money received from transfers of players. Transfers of players is the most significant way to redistribute the capitals and resources and enhance the competitive balance in the game. The value of a player in the transfer market is not only based on his talent and skills on the pitch but also on his commercial impact on the club and his image. Generational players like Messi, Ronaldo, and others helped their clubs in making fortunes and becoming the most popular clubs in world football.
Location also plays a big part in sports. Competitiveness and international football success differs in different continents across the world. In Europe, top clubs come from big cities as the big cities have a larger fan base, big stadiums, and rich history. These factors generate higher revenue from ticket sales, local merchandizing, etc. which helps clubs in buying star players and contributing towards the growth of football clubs. The last part that contributed to the growth of now some of the biggest clubs in Europe was financing. A club has to be internationally successful and not only domestically to create its brand value on a global level and to attract investments from foreign. The private investors called Sugar Daddies took over the clubs & invested heavily in the team’s quality by buying the best players.
Team-investment brought success to these clubs, and it attracted millions of fans, Sponsorships towards them. Because of the club takeovers by rich owners & them putting in an awful lot of money into the football clubs, some clubs became too big, and it created a competitive imbalance in European football. To avoid this, UEFA introduced Financial Fair Play (FFP) regulations in 2009/10. The rules put restrictions on unreasonable investments coming in and preventing professional football clubs from spending more than they earn. But those who got away from this became the centers of money and power in European football.