Post by Macmoish on Jul 23, 2010 16:59:29 GMT
Hear that! 
This is London
Foreign football fans are the key to really big money
Stefan Szymanski
Manchester United claims a global following of more than 300 million fans, while figures in the region of 100 million are touted for Arsenal, Chelsea and Tottenham.
Apple has sold a mere 60 million iPhones, but has a turnover of billions while Manchester United is still a small business.
The difference is revenue per “customer”— Apple earns over £400 per iPhone sold, while Manchester United's turnover of £278 million is generating less than £1 per global fan.
This is why football may sometimes appear to be big business but in reality it is not.
The capital's big clubs also struggle to monetise their global appeal and the largest share of their income comes from fans paying at the turnstiles.
At most there are 600,000 spectators who pay to watch Arsenal at the Emirates every season, and they contribute about half of the club's total revenue.
The remaining 99.4 million supporters are not pulling their weight.
The clubs are constantly on the lookout for new ways to turn fans into money.
The paradox of football finance is that every attempt to raise more income leads to howls of protest from English supporters about the rapacity of the clubs, when in reality the clubs struggle to convert their fame into cash.
Part of this is a philosophical issue — why should a football club make money in the first place? Until the 1980s clubs were not run as businesses and were proud of it.
Near total collapse during the recession of the 1980s led to a conscious effort to run football on business-like principles, and the critics would argue they have been only too successful.
Today the big clubs are run as businesses because that's exactly how their owners want them. The English model seems unlikely to change in the near future, Red Knights notwithstanding.
The big clubs are desperate to attract more income from abroad, rather than further burdening the much put-upon English fans.
So far, broadcasting income has been the main source of overseas revenue, helping to maintain the financial gap between the Premier League, the Bundesliga, Serie A and La Liga.
To make even more from these sources they would need to increase their attraction to fans overseas.
Already we have had rescheduling of games for far-eastern broadcast markets, endless pre-season overseas tours and proposals for a 39th game abroad.
A scheme that could extract just £2 per year from foreign fans would at least double the income of the bigger clubs.
Outside of the Premier League the scale of the business is even tinier.
With no major broadcast contract and localised support, these clubs are like the municipal swimming pool offering a service to the local community, albeit with one or two lifeguards on generous salaries.
The one hope for these clubs is that they might one day make it to the top table — and indeed it is by no means an impossible dream — after all, Fulham were in the fourth tier (League Two) as recently as 1997.
The gap between giants and would-be giant killers is growing, however.
Better ways to tap overseas markets will also change the focus of the clubs — some would say that has already happened.
Over the last 20 years, the European Cup has morphed into something akin to a European superleague (the Champions League).
The FA Cup is already bordering on irrelevance; who knows, maybe the domestic league might one day go the same way. Then football might become big business.
Stefan Szymanski is Professor of Economics at Cass Business School
London clubs' financial clout
London clubs' financial clout
Source: FAME
Club Turnover(£):staff Turnover/employee
Arsenal 196,553,000:384 £511,857
Chelsea 185,588,000:219 £847,434
Tottenham 113,012,000:286 £395,147
West Ham 76,091,000:945 £80,520
Fulham 63,145,000:741 £85,216
Charlton 23,578,000:160 £147,363
Watford 23,079,000:216 £106,847
QPR 20,196,000:73 £276,858
Crystal Palace 11,975,000:160 £74,844
Millwall 6,460,000:112 £57,679
Leyton Orient 3,364,000:127 £26,488
Barnet 2,029,697:153 £13,266
www.thisislondon.co.uk/markets/article-23859326-foreign-fans-are-the-key-to-really-big-money.do
This is London
Foreign football fans are the key to really big money
Stefan Szymanski
Manchester United claims a global following of more than 300 million fans, while figures in the region of 100 million are touted for Arsenal, Chelsea and Tottenham.
Apple has sold a mere 60 million iPhones, but has a turnover of billions while Manchester United is still a small business.
The difference is revenue per “customer”— Apple earns over £400 per iPhone sold, while Manchester United's turnover of £278 million is generating less than £1 per global fan.
This is why football may sometimes appear to be big business but in reality it is not.
The capital's big clubs also struggle to monetise their global appeal and the largest share of their income comes from fans paying at the turnstiles.
At most there are 600,000 spectators who pay to watch Arsenal at the Emirates every season, and they contribute about half of the club's total revenue.
The remaining 99.4 million supporters are not pulling their weight.
The clubs are constantly on the lookout for new ways to turn fans into money.
The paradox of football finance is that every attempt to raise more income leads to howls of protest from English supporters about the rapacity of the clubs, when in reality the clubs struggle to convert their fame into cash.
Part of this is a philosophical issue — why should a football club make money in the first place? Until the 1980s clubs were not run as businesses and were proud of it.
Near total collapse during the recession of the 1980s led to a conscious effort to run football on business-like principles, and the critics would argue they have been only too successful.
Today the big clubs are run as businesses because that's exactly how their owners want them. The English model seems unlikely to change in the near future, Red Knights notwithstanding.
The big clubs are desperate to attract more income from abroad, rather than further burdening the much put-upon English fans.
So far, broadcasting income has been the main source of overseas revenue, helping to maintain the financial gap between the Premier League, the Bundesliga, Serie A and La Liga.
To make even more from these sources they would need to increase their attraction to fans overseas.
Already we have had rescheduling of games for far-eastern broadcast markets, endless pre-season overseas tours and proposals for a 39th game abroad.
A scheme that could extract just £2 per year from foreign fans would at least double the income of the bigger clubs.
Outside of the Premier League the scale of the business is even tinier.
With no major broadcast contract and localised support, these clubs are like the municipal swimming pool offering a service to the local community, albeit with one or two lifeguards on generous salaries.
The one hope for these clubs is that they might one day make it to the top table — and indeed it is by no means an impossible dream — after all, Fulham were in the fourth tier (League Two) as recently as 1997.
The gap between giants and would-be giant killers is growing, however.
Better ways to tap overseas markets will also change the focus of the clubs — some would say that has already happened.
Over the last 20 years, the European Cup has morphed into something akin to a European superleague (the Champions League).
The FA Cup is already bordering on irrelevance; who knows, maybe the domestic league might one day go the same way. Then football might become big business.
Stefan Szymanski is Professor of Economics at Cass Business School
London clubs' financial clout
London clubs' financial clout
Source: FAME
Club Turnover(£):staff Turnover/employee
Arsenal 196,553,000:384 £511,857
Chelsea 185,588,000:219 £847,434
Tottenham 113,012,000:286 £395,147
West Ham 76,091,000:945 £80,520
Fulham 63,145,000:741 £85,216
Charlton 23,578,000:160 £147,363
Watford 23,079,000:216 £106,847
QPR 20,196,000:73 £276,858
Crystal Palace 11,975,000:160 £74,844
Millwall 6,460,000:112 £57,679
Leyton Orient 3,364,000:127 £26,488
Barnet 2,029,697:153 £13,266
www.thisislondon.co.uk/markets/article-23859326-foreign-fans-are-the-key-to-really-big-money.do
