Football Business - the Balance of Power between Players and Clubs - Research Paper Example

Football Business - The balance of power between football players and football clubs Introduction: Football industry is considered to be one of the world’s largest industries in which money is flowing in and out without barriers. In other words, football industry offers an extraordinary prospect in terms of being a money laundering sport. The enhancement or involvement of big owners make this industry to grow in a proponential manner as can be seen from the developments in this industry today. The main aim of the owners of clubs in investing money in football industry is to make in money besides increasing their fame. It is said that there are lots of clubs and firms from all around the world which are involved in this football business. These owners desperately want to attain fame and generate revenues by organizing different kinds of activities that appeal to in the football industry as well as public. To make this statement strong Sepp Blatter, president of FIFA once mentioned that this football industry has become one of the perfect platform for all sorts of people. These include all kinds of stakeholders in the game such as experts, managers, service providers and clubs. Investing money in football business has paved the way for the growth of big and small clubs besides clubs this particular discipline has brought some huge advantage for millions of registered football players and other professional apart from five million referees representing from the worlds football playing nations. The main intention of this paper revolves around the topic the balance of power between football players and football clubs. This means how these players and clubs goes accordance with the needs of one another and how some times of problems arise among them. To understand this of the reader needs to gain more information about this industry. For this the paper starts with explaining the structure of the football industry first and then it will critically evaluate the different club ownership models which include description of famous clubs in the world and how these clubs operate within the football industry. This apart, the study will attempt describe the relationship that the club maintains most industrial players and how these differ in each case. This paper also focuses on the interrelationship between different bodies such as government, media organizations, sponsors and their impact on the football industry as a whole. The critical evaluation regarding business environment and its impact on local communities and fans are also discussed in this paper. Marketing activities that take place within professional football are also critically analyzed in this paper. Structure of the football industry: “The international governing body of the football industry is the Federation Internationale de Football association (FIFA). FIFA’s purpose is to promote and develop football throughout the world” (Money laundering through the football sector 2009, p.8). FIFA is considered to be the guardian for whole sorts of rules and regulations of the football game. “FIFA consists of six confederations (AFC, CAF, CONCACAF, CONMEBOL, OFC and UEFA) which are the umbrella organizations for the national football associations” (Money laundering through the football sector 2009, p.8). The different members of national football association consist of amateur and professional football clubs. FIFA as a whole consists of total 208 members, one from each country. The whole football industry is standing erect on two pillars that are “club football and national team football.” (Money laundering through the football sector 2009, p.8). Out of the six confederations that FIFA comprises, UEFA is considered to be one of the biggest in terms of influence over the game and in wealth. Under this, most of the world’s top players are playing. The reason for this is that these clubs are the wealthiest and they are offering huge salaries to their players. However, countries like Brazil and Argentina which are two of the top seven football teams in the world, are under CONMEBOL. The structure of football industry is shown below in a pyramid form. (Money laundering through the football sector 2009, p.10). At top of the pyramid is the FIFA confederation which acts as a controlling body over every other associations. Then comes the national associations which have got overall control and acting as a regulatory body within national boundaries. Their power is always restricted under the fact that their functioning is always controlled by six confederations which are coming under FIFA. Lower level of the pyramid consists of regional associations which mainly include individual clubs. It was in 1904 that FIFA was established in order to allow football to grow and be popularized in countries all over the world. The main objective of the FIFA is to prevent the integrity of the games and also to regulate and monitor the football sport. But one can see slight variations in the policy and regulations adopted by the six confederations. However, the overall policy and regulation adoption is the same. European council believes in the principle that sports should never be mixed with politics. European council believes that other countries must also adopt this strategy in order to protect sports from politics. Nature of football industry: “Regarding the nature of the football industry, while it has become fashionable to refer to the range of stakeholders that a firm or industry has beyond its shareholders, in the case of football the importance of those other stakeholders – and in particular of the local communities – is absolutely vital.” (Ward & Matclfe 2002, p.134). Operations of the football industry depend on different phenomena that take place with in the sport. These sometimes relate with football players and football clubs. It is through this, that all sorts of people from outside will remain connected to football industry. Such include media, firms and any other related with this. Different firms involved in the industry include football clubs and local communities. Generally, these firms are always dedicated in their task. They always maintain very good relation with the players they brought in to their clubs. This is just because they didn’t want their players to go into other clubs. This will effect in their populations of the club. Also by keeping popular players they can attract more sponsors towards their clubs. Apart from this these clubs can create public interest also by having good players in their team. These firms always try to create the balance of power between the football players and football club. This is done by having best contract with the players. Clubs will provide all sorts resources to their players in order to make them full fit always. Clubs will always interest more amounts for providing very good treatment facility for players. Clubs will always try to keep the real sportive value of the players. Different club ownership models that exist within football industry: “Historically, sport team ownership was a hobby for the wealthy. Many teams ware family owned and were operated as “Mom and Pop”” (Masteralexis, Hums & Barr 2008, p.208). But presently this statement has no meaning and team ownership are just meant for increasing ones wealth and revenue. Many of them owe teams just for a hobby and other than this these people are aiming financial benefit from their team. The aim of these owners is to get back the return on investment. There are some ownership rules to get a team. First of all person should need a huge financial capacity. He/she must get permission from the ownership committee of the league in order to buy a sports franchise. Also there are some rights owner of the team must take care in order to run the club smoothly. The right includes territorial rights, revenue sharing, cross ownership and corporate ownership. Territorial rights means owner and team cannot move to another team’s territory without permission. If they move then it will be a kind of violation. Revenue sharing includes giving the portion of the revenue to team members. These are very important because this will play a crucial role in providing balance of power between the football players and football clubs. If the owners violate these then their impact will fall on the players and the clubs they are including. But it is to understand that these rules of the ownership can differ and it won’t be always static. But everything will be in hands of owners and the whole item will depend on how owners are taking each step to move foreword. “In England, Scotland, Wales and Ireland most football clubs are constituted as private limited companies with private shareholders” (The people’s game and community ownership of football clubs: A mutual solution of a market problem n.d., p.1). These companies are making huge profit or they are mounting their revenue over last fifteen years. Their key stakeholders are cultural and social institutions. These owners mentioned that their main intention is for making profit rather than anything else. Otherwise it is not possible for them to attract sponsors towards them. Having all these won’t do anything. Important issue is making effective coordination regarding players and clubs. If it is not there everything will be upside down. These issues must be always in mind for owners. It is because once the problems or any related issue burst up inside the team it not only effect the performance of the players it will also result in getting the new sponsorship for the team and also sometimes existing sponsors won’t take much interest in renew their contract once their existing phase is over. If this happens then clubs will not be able to spend more on players and this will results in unbalance between clubs and players. It is seen that many of the clubs and organization in the United Kingdom are mostly paradoxical. In UK record level of revenues are generated by elite level of sport. They are increasing their revenue by having the subscription deals of television rights and through income from the sponsorships. “Yet the distribution is skewed towards a smaller and smaller number of super leagues and further towards a few super clubs therein, in Scotland’s case to Celtic and Rangers” (The people’s game and community ownership of football clubs: A mutual solution of a market problem n.d., p.2). As a result of this competitive balance of these elite becomes very weak and it is very much weaker than before. Outcome becomes almost very predictable. To over come this clubs tried to over spend more amounts in order to compete with others. But it is understood that shareholders return is not very much high still workers and players of the clubs are getting or making half of what clubs revenue. This will leads to in balance. Some of the limited liability company’s or clubs situation is different. The founders and owners of the clubs are finding it difficult to run the clubs just because of the increasing wage of the players. If this kind of probability arises then there is a chance for occurrence of conflicts among the person who owes and run the club and also with the person who supports the clubs. These kinds of divisions are still persisting today. But there are some other corporate format clubs, which are not just for economic profit like elite clubs rather than this they are some kind of social in nature. Supporters of this type of clubs look for human and emotional capital also. In addition to this, these clubs have not always but sometimes have some sort of identification with some cities or regions. But some of these ownership models prevent clubs in doing this. The main motto behind this is they are giving more preference or objective to getting success in the field and not in any kind of other matters. Fame of the club will be there only when they have success in the game. “The existing ownership model is risky both in a conventional business sense but also from a societal perspective” (The people’s game and community ownership of football clubs: A mutual solution of a market problem n.d., p.3). It is because if company or club is managed badly then this will put everything into crises. This will first result in loss of balance of power between football players and football clubs. Not only have this shareholder who invests money in to this will also loss the money. Consequences of this will affect the families of the players also. So it is prerequisite that in order to step away from all these it is club should implement very good ownership models, which is strictly based on the rules, regulation and policies and main aim must be given to maintain the balance of power between the players and clubs. The owners must always keep the preference to players rather than their financial benefits. Also one more important issue regarding while having ownership model is about the supporters of the clubs. Owners of the clubs must always need some strict policy regarding the supporters. It is because never let the club in their hands. “In other words, the practical influence of supporters on the way their clubs are sun many be limited as well” (Kindler 2009, p.61). Interrelationship between different bodies and their impact on football industry: The inter relationship between different bodies such as government, medias and sponsors has made strong impact of football industry from many years ego itself. In current situation also there is no change in their impact. These three bodies such as government, media and sponsors has got very much control in providing balance between the football players and football clubs. In order to coordinate the control of players and clubs involvement of these three bodies are very much important. Impact of sponsors in football industry: Football officials or owners or clubs always seek sponsors in order to make everything effective. Even for the survival of small or big clubs or if any one want to conduct big football tournaments sponsorships is very much needed. Without them officials cannot even think to move their foot. There comes the power and impact of the sponsors in the football industry. “The Professional Games Match Officials (PGMO), the body responsible for providing and managing all professional match officials in English football, is inviting organizations to become their new Principal Partner for three seasons beginning from 2010/11. Prospective partners will have the opportunity to sponsor the officials in all three major English football governing bodies – the Premier League, The FA and the Football League” (Football officials look for sponsor 2010). With this or by having the sponsorships, sponsors will get chance to give their brand names more publicity. Mike Riley, general manager of PMGO recently mentioned that emirates and Air Asia are their previous partners and they had got great exposure by having the sponsorships and it helped a lot in advancement of their business. It is sure that by having the sponsorships of any tournament or for any clubs surely increase the sponsor’s fame. This is one part of the story. Now let’s see other part. What kind of impact these sponsors are making in the football industry and what kind of balance they are providing for football clubs and football players. It is true that majority of the football clubs are running just because of these sponsors. If sponsors are not there then the owners of the clubs surely will find difficulties in making stuff to move foreword. The big impact these sponsors are doing with this football industry is once that becomes the official sponsorship of the football clubs then it is sponsors duty to take care everything regarding the football players of that club. So it is the duty of the owners to search for the right sponsors in order to provide all sorts of complete fulfilments of the players in high quality. This will balance the power between the players and clubs. Thus these sponsors can make huge impact on the football industry. Once the owners of the clubs and sponsors maintained good and extraordinary relation it is sure that sponsors won’t let that club down. “The sponsors were able to articulate an element of moral sensitivity and therefore show how it can provide basis for sponsorship, which may lead to long-term and potentially profitable agreements” (Amis & Cornwell 2005, p.274). The term moral sensitivity means not just one-way relationship. This both parties must have benefits from it. That is for sponsors, clubs and also for the owners. Impact of media in football industry: Impact made by media in football industry is very large. “Today it is difficult to imagine football without television or a television schedule bereft of football” (Boyle & Haynes 2004, p.7). Huge advantage come for the football industry is in the way of giving football rights for television. Presently one can’t imagine a tournament that does not have rights for showing in television or tournament, which is not shown in any form of the media. It is not possible to think about such a tournament. By conducting a tournament or two football officials will get huge amount in the name of television money. Majority of the clubs in the football industry are making revenues by this. These are good impacts of media made in the football industry. There are some instance media made some instance sore. “A fire in the main stand at Bradford, killing 56fans and the death of 42 Italian supporters at the European Cup Final, screened live on the BBC at the Heysel Stadium, following the collapse of a wall during battles Liverpool and Jeventus supporters” (Boyle & Haynes 2004, p.19). As s result of this instance English clubs got ban in playing for five years. These instances dramatically affect the image of the game. Not only can this writing some gossips regarding the players in the media also result in players in bad shape. Apart from this some secret issues regarding clubs and players presenting in the media can also result in putting the football industry in bad silhouette. This kind of issues sometimes effect in the loss of balance of power between the clubs and owners. If such issues happen it will affect not only the specific club, all players involving in that club. Impact of government in football industry: “Football clubs have come under increasing external pressure to develop relations with their communities” (Boyle & Haynes 2004, p.51). These external pressure mostly comes from private companies and in the form of central government. What these government departments will do is they will place several reports and recommendations in front of these clubs. These recommendations mainly include participating in the community related matches for the welfare of education, children or any other related matters. These kind of government involvement put owners under miserable condition. Problem here is these clubs and owners are moving with preplanned schedule and if suddenly government ordered the club to take part in such a charity game then this is going to make impact in the football industry. Not only has this kind of involvement sometimes moved off the balance of power between the players and owners. If government insisted to do such a possession then owners are forced to do it. They won’t be having any excuses. But in case of players it won’t be like that. The famous players in the club will be having some contracts with any other third parties or sponsors prohibiting them to play any other outside games. Players in the team always see to protect their contract. If government comes for such options then it is going to make impact on everyone in the football industry. But it is said that owners of the clubs always accepted the recommendations from the government without having any problems. There are some cases that government directly takes the ownership of some clubs. Impact of business environment on fans and local communities: Football is considered to be the largest sport on the earth with lots of dramatis personae, mangers, employees and fans. As a whole it creates the business environment to the fans and local communities. Surely this fans and local communities are creating a huge impact on football industry in good and bad manner. Presently fan ownership on certain clubs is very common. What they are trying is they will put more bid on the club and try to buy the clubs from existing owners. To do this they will seek the help of as many people interested in this activity. These people will keep their own board and tactics. But there are some critics revolve around this as “can absolute fan ownership be considered a serious contender to the existing business model?” (Steere, 2009). All over the world these practice of fans ownership on clubs are common. In Europe this is very common. For example Barcelona is supporter owned club which is run by nearly 150,000 fan members. But in UK the issue is different because of overseas owners it is not possible to local fans to buy the clubs. “Football governance expert and management lecturer at the Birkbeck University of London, Dr Geoff Walters, said the reason fans often get involved is to make sure clubs are being "run as effectively and sustainably as possible"” (Steere, 2009). Critics behind this are at present anybody who is having money can put the share in the clubs. Just putting money and sitting idle won’t do any benefit to the club rather than getting profit. The attachment to the club is more desirable than anything else. Otherwise person who invests money in the club won’t have any knowledge on what’s happening inside the clubs. So in order to make everything best awareness should build regarding the players. If players are finding any sort of difficulty it is duty of investor’s people to clarify the problem. Only then very good balance can be maintained in the clubs. The impact made by football business on local communities is very huge. From many past year’s ego itself players and clubs are actively involved in the various community programs. Mainly these programs are based on the football, education, regarding social awareness, disabilities and many other related issues. For example Blackburn Rovers Football club as been there as part of community based program since 1875. Role of marketing within professional football: Marketing products within the professional football industry has become one of the key elements presently. Sports marketing mainly aim spectators of sporting events. Marketing strategy mainly deals with demographics of the spectators. That is finding out of certain groups of people and understanding their tastes and making the product s according to their tastes is the strategy followed by the sports marketing people. They are involved in the football industry by having the sponsorships of the clubs. There will be more than one sponsor for clubs. Sponsors will handle all the needs of players such as their clothing, kits, bags, shoes and plenty of related items. What marketers aim here they needs to attract as many fans. It is a law that these fans always try to be same as their celebrities by using same kind of cloths celebrity is using or similar types of equipments. Many of the companies will take advantage on this. The goal of marketing is to use the right marketing mix to attract as many fans towards their product. These sponsors and marketers are always on the side of wining team. It is because peoples are always attracted to use the product that is used by the players in the team. A team if they are always in the losing side then marketers will have trouble in selling their product because of plenty of reasons. One reason may be these fans or peoples did not want to use the products which are used by the loser side. So timing has got very important role in the marketing. There is a chance for popping up the problems because of these sponsors between football players and football clubs. This can be happen like this. If team is always in wining position then there is no need to worry about the sponsors as they will explicitly renew their contract when time out happens. But if this is not the case and team is not able to win always then sponsors will lose the interest in the team. Their main motto by becoming the sponsor of the team is to marketing their products. When team they are sponsoring is not in the wining side then fans and other people won’t be ready to buy their products. This will decrease their sales. Sponsors spending more amounts for the team and if that amount is not getting back through their products means sponsors surely shows lack of interest in the team. If this happens then this affects the players in providing the materials and equipments for team or clubs. This can result in the lack of balance between the football players and owners. Owners sometimes can turn towards the players and asks the reason for not wining the games or it can be happen in other way around also players can ask the owners about providing good quality materials and equipments to them. In both ways consequences will be the same and there won’t be any balance between players and owners. Conclusion: It is found that football industry is one of the largest industries with lots of people involved in it. Different types of owners with different behaviour are common in the football industry. But it’s their pleasure to focus on the power of balance to keep in momentum in order to make relationship of football players and football clubs very static. It is prerequisite in the football industry to make everything smoother. The relationship of football players and football clubs are interrelated with so many factors. So to go in accordance the owners of the clubs must meet all these factors. Reference List Amis, j., & Cornwell, T.B., 2005. Global sport sponsorship. [Online] Berg Publishers, p.274. Available at: http://books.google.co.in/books?id=jw-WHdztdDQC&pg=PA273&dq=how+government,+media+and+sponsors+impact+upon+the+football+industry&cd=2#v=onepage&q=&f=false [Accessed 11 February 2010]. Boyle, R., & Haynes, R., 2004. Football in the new media age. [Online] Routledge, p.7. Available at: http://books.google.co.in/books?id=G3eMeKDH5xAC&printsec=frontcover&dq=how+media+impact+upon+the+football+industry&cd=1#v=onepage&q=how%20media%20impact%20upon%20the%20football%20industry&f=false [Accessed 11 February 2010]. Football officials look for sponsor, 2010. News article. [Online] Sport Industry Group. Available at: http://www.sportindustry.biz/news/view/6523/football-officials-look-for-sponsor [Accessed 11 February 2010]. Kindler, M. Dr. 2009. Football club ownership in England and Germany: The effectiveness and lawfulness of the “50 plus 1 rule” and what Germany can learn from England. [Online] GRIN Verlag. Available at: http://books.google.co.in/books?id=XRNyA0oml1wC&pg=PA61&dq=different+football+club+ownership+models&cd=1#v=onepage&q=different%20football%20club%20ownership%20models&f=false [Accessed 11 February 2010]. Masteralexis, P.L., Hums, A.M., & Barr, C.A. 2008. Principal and practice of sport management, 3rd Ed. [Online] Jones & Bartlett. Available at: http://books.google.co.in/books?id=tiheH6mu-DAC&pg=PA208&dq=different+football+club+ownership+models&cd=6#v=onepage&q=&f=false [Accessed 11 February 2010]. Money laundering through the football sector, 2009. [Online] OECD publishing. Available at: http://books.google.co.in/books?id=oJfE6HsMfPwC&pg=PA10&dq=structure+of+the+Football+Industry&cd=1#v=onepage&q=structure%20of%20the%20Football%20Industry&f=false [Accessed 11 February 2010]. Steere, M., 2009. Football fans battle for club ownership. [Online] CNN.com/World Sport. Available at: http://edition.cnn.com/2009/SPORT/football/03/17/fan.ownership.club/ [Accessed 11 February 2010]. The people’s game and community ownership of football clubs: A mutual solution of a market problem, n.d. [Online]. Available at: https://dspace.stir.ac.uk/dspace/bitstream/1893/739/1/ownership%20model_SMSH_.pdf [Accessed 11 February 2010]. Ward A., & Matclfe, S.J. 2002. Market relations and the competitive process. [Online] Manchester University Press. Available at: http://books.google.co.in/books?id=fldaKmLnzAgC&pg=PA134&dq=nature+of+the+Football+Industry&cd=1#v=onepage&q=nature%20of%20the%20Football%20Industry&f=false [Accessed 11 February 2010]. Read More