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Professional football is a complex and successful business in today’s world. The big and influential teams hire various football star players to attract more money and reach a new level in the football industry. Some clubs, on the contrary, can lose a lot of money because of bad and unsuccessful deals. This means that nowadays football is not only a fun game with one ball and 22 players, but it’s also a very important and highly profitable business. So, in this article, we’ll delve into the concept of the football business and discuss its key role in modern industry games.
The Rise of Commercialization
The main income that football creates for the business market comes from live streams, tickets, sponsorship deals, and merchandise. This sport has millions of fans across the globe who want to embrace their favorite player or team and buy different products that are associated with them. The tickets are also a huge contribution to a business because of their smart pricing differences. The various options in cost and seats make tickets affordable for almost any group of people. This led to higher sales and a bigger impact on the modern market.
It’s really fun to notice that football quickly became a full entertainment product. The fans do not only sit by the TV and watch matches; they make bets, discuss the probable winner, and fully immerse themselves in the lives of their favorite footballers. The kids dream of becoming like their beloved players. They tell parents, “Look here! I want to be like Messi!” They wish to meet celebrities and beg their parents to let them attend professional football schools.
This all showcases the role of football in our world. This is why many football clubs publish interviews with their key players, publish articles about their path, and even arrange personal meetings for fans with some footballers.
The Role of Broadcasting Rights
The relationship between TV and football is quite complex and involves several components. Generally speaking, each club receives TV revenue, and the broadcasting companies sell the advertisement. Another way that clubs earn money is by launching perimeter LED advertising. In this case, the money from this AD goes straight to a football club. Each football club has its own contract with its local TV broadcast. Thanks to the deals, clubs can earn money not only from AD sales but also from AD rates. These rates vary by the facts, such as the time of the game, teams playing, and overall viewership.
Major Broadcasting Deals
The clubs and broadcast owners make a lot of money at the expense of huge sports events, like La Liga or Premier Liga. For instance, the agreement with Premier Liga was described as the most successful and profitable project of the past decade. The Premier League says the new deal will bring in £6.7 billion over the next four years. Also, many researchers noted that the new deal was increased from a common 3-year period to 4 years. These slight changes will bring the club and broadcast partners even more success and income.
For the fans of football, this sport is a new way of social experience. They schedule their favorite matches and try to find time to watch them with their friends. Many people like to go to the special cafes with football matches broadcasting, and at the same time, meet new people with whom they have become friends lately.
Sponsorship and Endorsements
The importance of various partnerships has increased over the past few years. Sponsorship helps generate new revenue for the football clubs and provides sponsors with valuable exposure. With millions of fans, football became the main platform for sponsors to show their products and services.
Many factors influence the agreement with the sponsor and football club. For example, some partners want to see their products in some special conditions. All details are reflected in the documents and should comply with achieving a successful deal.
Role of Kit Deals, Stadium Naming Rights, and Individual Player Endorsements
In the football world, one of the most successful and profitable ways to increase the popularity of the brand is to obtain naming rights. The income from the stadium rights deals became the third most lucrative revenue in today’s market. The world-famous brands are dreaming of adding their names to sporting venues or stadiums. This would help them increase their popularity and visibility. For instance, the home of Premier League Manchester City club currently has the name Etihad Stadium according to the active deal.
Another way to increase brand awareness among football fans is to make kit deals. Some popular clothing brands that are related to the sports industry, such as Nike and Adidas, are great examples of these deals. Currently, Real Madrid Kit has the logo of Adidas on their uniform, which gives huge popularity to this brand. Moreover, Adidas does not just paste the logo on their shirts; they created and sewed the full kit for this football club.
Besides the clubs that partner up with companies, certain players can also be a target for many partnership deals. The most bright and important players receive individual sponsorship agreements. Some brands can ask footballers to lead their social media in some special way. This means, that as long as the contact is active, this particular player should follow it, and the club should not interfere in it.
Player Transfers and Wages
In today’s football, players significantly influence the profit from sponsorship deals. Transfer fees were raised beyond the typical inflation because of several factors. The popularity of the football sport has driven massive revenue growth from TV broadcasting rights, merchandise, and various sponsorships. Wealthy investors want to inject their capital into football clubs and see great results. Also, the number of star players is limited. This all makes the transfer fees an unbelievable high in the last couple of years.
Financial Influence of Wealthy Clubs and the Disparity Between Small and Large Clubs
The gap between small and large clubs becomes bigger every year. Basically, the already rich clubs become richer, while the smaller ones can’t obtain financial support from the sponsors. This all happens because of the initial funds that the founders of the club inject into their club and the number of successful players. The footballers start their careers in smaller clubs and want to transfer to bigger ones over time. The large clubs, in turn, don’t want to pay large amounts of money for some, even great players. Eventually, the small club sells their star player to the wealthy one for a small sum.
But when this particular player wants to transfer to much bigger and more influential clubs, they will sell them for a much bigger sum than they originally purchased. In the end, the rich club will become even wealthier.
The Role of Wealthy Owners and Investors
A significant role in the success of particular football clubs is playing wealthy investors. They watch the clubs and their games and can invest money into player acquisitions and infrastructure. The investments in the club may come from certain owners, some investment groups, or billionaires who just like football.
How Do Wealthy Investors Influence the Financial Landscape of Clubs?
For the past few years, Manchester City and PSG received large financial backing from wealthy ownership groups. Manchester City was backed by the Abu Dhabi United Group. They helped increase the income from the sponsorship deals and TV broadcast revenues.
The other example is PSG. They obtained support from the Qatar investments, which helped them attract top-talented players and elevate its global brand. Also, PSG received a boost from sponsorship deals that were also linked to the investor.
Impact on the Competitive Balance in Domestic and International Football
International football, unlike domestic, doesn’t receive so much investment from wealthy sponsors. This is all because of the low popularity and a smaller number of star players. However, the domestic clubs can obtain sponsorship deals from the local brands. These agreements can enhance the visibility of the small local brands and, at the same time, increase the profit of the clubs. Nevertheless, sometimes, huge brands notice domestic football clubs due to their players’ performances or great results in international leagues and offer them to make large and profitable business contacts.
Financial Fair Play (FFP) Regulations
Financial Fair Play is an organization that was established by the UEFA. FFP makes sure that the club won’t spend more than it earned before. Basically, this committee was created to prevent some financial troubles and prolong the successful existence of the football club.
To control the financial stability of the football clubs, FFP keeps records of all sponsorship deals, broadcasting revenues, merchandise sales, and funds from different investment groups.
Challenges and Controversies Surrounding FFP Enforcement
Thanks to the fact that the FFP was calculated mathematically as the required amount of money that the clubs can spend in a year, they still pander to larger clubs. According to the FFP, big football clubs can spend more money than smaller ones. This decision is logical, but at the same time, it deprives the opportunity for the smaller domestic clubs to sell their players for a large sum. Because of these regulations, everything is falling into place, and the large clubs will become even richer.
At the same time, this organization will help to maintain stability in the competitiveness between the clubs. Because of the strict income record, the football club continues to stay afloat and won’t become bankrupt.
Conclusion
The more you dive into the business of football, the more complexities and details are revealed. Based on this, we draw conclusions that the football business is tough and challenging work. The founders of the clubs should make their decisions wisely and think ahead of their impact on the club or particular players. But, to speak freely, it’s the future of any evolving sport, and we must take this into account every time we talk about football.
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