Bridging the Performance and Revenue Gap with Football
The commercial landscape that makes up sports, leagues and teams is shifting. While teams seek to find the best players and create engaging experiences for consumers, increased regulations are impacting how teams and leagues are forcing organizations to rethink how they generate revenue. Additionally, football once was a sport that had gone unnoticed in the United States is experiencing increased popularity for even more commercial revenue opportunities.
With this shift comes an abundance of untapped potential upon which many, but not all, stakeholders and actors within the sports sphere are capitalising. The current climate of professional sports, if harnessed correctly, exhibits more commercial promise than at any time in history.
In this post, we will review a few case studies on changes that have taken place recently within the sports and entertainment industry with a specific focus on football.
Addressing the link between sports performance and commercial revenue in European football
European football is becoming more and more expensive, with players’ contracts, as well as transfer fees, rising sharply year by year.
New financial fair play regulations have been introduced by the Union of European Football Associations (UEFA) to even the playing field when it comes to spending. Many clubs tend to spend more than what they earn in the struggle for national and continental success and these new regulations seek to resolve spending discrepancies. The need to increase spending by UEFA financial regulations ultimately forces clubs to re-think revenue generation in an environment where securing higher revenue correlates with stronger team performance.
At the continental level, all teams operate on a level playing field. However, this isn’t the case for domestic competitions, which garner varying levels of talent, competitiveness and appeal, all of which is often a crucial component and indicative of commercial potential.
As the sport moves from local to global, with capital flowing from new sponsorships and owners into clubs’ coffers, football is becoming not only increasingly expensive but also competitive. For this reason, clubs need to spend more to ensure the right player joins the club ranks. Though the amount required for a one-man transfer is skyrocketing, these moves can still prove beneficial both for the sport and commercially.
Football’s presence in the United States
Major League Soccer (MLS) in the US continues to grow, too, bringing more expansion opportunities. The big story of early 2018 was David Beckham’s aspirations to bring an MLS team to Miami, Florida, despite the failure of the Miami Fusion, a previous soccer team that was unable to spark interest for the sport or the league and folded after only a few seasons.
While the plan was in the pipeline for a considerable amount of time, 2017 marked a pivotal year for football in the city. Miami was chosen to host a four-day series of events, including the ever-inspiring El Clásico match-up between Barcelona and Real Madrid. This was only the second time the teams met outside of Spain, and considering the large Hispanic diaspora in the city, the event was a hit.
The metropolitan Miami area ranks third in the US in terms of the number and percentage share of Spanish speakers, mainly of Cuban and Caribbean origin. The event had been earmarked for commercial success, with tickets ranging from USD$240 to USD$4,500.
There are ancillary benefits also, such as utilising summer friendlies as a way not only to drive interest in European clubs but, as is the case with Beckham, to illustrate the general interest in the sport, helping to inform the business case for / against an expansion team.
To learn more about current trends in football and competitive sports, download our white paper ‘The Commercial Competitive Landscape of Professional Sports in 2018’.