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The effects of football business on football performance

When it comes to evaluating and comparing football players, teams, clubs, or even leagues, there will always be different criteria and an infinity of opinions that can be used to try and determine which is “best”. In recent decades, due to the tremendous globalization and commercialization of football, this arena of debate – in which many a football fan indulge – has expanded significantly to include a wide range of off-the-pitch topics such as player transfers, club ownership, and even corporate social responsibility.

Whilst for most football fans the realities of what goes on behind the scenes oftentimes remain obscure, for those working in the football industry (or aspiring to) it should be mandatory to have a professional understanding of how football is being run on all levels.

The venue hosting the opening and final matches of the 2018 FIFA #WorldCup 😍

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With every new football season and transfer window, fewer football romantics can deny the fact that professional football is business. And although the adage says that on-pitch results will always be more important than the amount of money in the bank, there’s no denying that what happens off the pitch influences what happens on it.

There are many business influences on performance, the more obvious ones relating to investment in new technologies, data management and performance tracking. But for this article, let’s focus on four different ones:

Governance and regulations

The rapid growth, as well as internationalization of football business, has meant that governing bodies and legislators have had to adapt and react in order to protect the interests of players and the sustainability of clubs and competitions.

For example, the transfer window system as we know it today – with one pre-season window of maximum 12 weeks and one mid-season window of maximum 4 weeks – has only been brought into compulsory effect by FIFA as recently as 2002-03 with some reasoning that it would stabilize teams, prevent agents from searching deals all year around and ultimately improve the quality of play on the pitch. This system was introduced after lengthy negotiations between a number of stakeholders including several European leagues, UEFA, and the European Commission

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For many, however, this system still has many flaws and last year there’s been another important change which, backed by UEFA, has been approved by the Premier League. Starting from the 2018-19 season, the pre-season transfer window will be shortened to close before the league starts, thereby removing uncertainty and avoiding awkward situations whereby players play for different clubs within the same league at the very start of the season, or worse: not playing because of transfer speculation and internal conflict between club and player.

Here the question remains whether other leagues will adopt this change as well. Although leagues start at different times, most scouting and negotiation activities happen outside of transfer windows anyway, meaning leagues should look at the benefits that made the Premier League adopt this change in the first place.

Financial strategy

The rise and reach of football has created a continuously growing money influx which seemingly didn’t even budge during the global financial crisis of 2008. In general terms, players continue to command ever increasing salaries and endorsement deals, clubs continue to spend more on transfers, and competitions still attract ever-increasing media rights revenues.

However, more money sometimes does indeed create more problems if it’s not managed correctly. For players, the challenge comes mainly in the form of fiscal compliance, wealth and risk management, and post-career planning. For clubs, the tricky part appears to be the balancing act of spending as much as possible on transfers and player salaries so as to appease the fans’ expectations of prioritizing the team’s performance (and chances of winning titles), while still being profitable enough to comply with club licensing and Financial Fair Play requirements as well as, for some clubs at least, the shareholders’ interests.

Let’s not forget that, despite improvements in recent years, many football clubs are still prone to making losses even with increased revenues. These are important considerations to keep in mind because in the worst of scenarios they could lead to financial issues, fines, and penalties, ultimately creating unpleasant distractions and consequences for the players.

Internationalization

For most clubs, their internationalization strategies have predominantly revolved around opening new markets in order to connect with their fan bases and thereby generate more revenues. More than ever, though, these activities and relationships are developed so that clubs can also tap into new pools of talent for player recruitment purposes.

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Eventually, if a club like Tottenham has to choose between signing an equally talented player from either Switzerland or South Korea, the commercial opportunity will be by far greater by attracting the South Korean one.

Women’s football

Although there are still skeptics when it comes to women’s football, the business case for it has set the industry in motion in unprecedented ways and levels resulting in a genuine exploration and development of its potential.

While attendance levels, TV audiences, and social media engagement have been growing in recent years, it is the increasing awareness of sponsors and football’s governing bodies that will give women’s football the required foundations for sustainable growth as a standalone product. A big step forward came two months ago when UEFA announced it unbundled sponsorship rights for women’s competitions (historically thrown into deals sold for men’s competitions).

It will take some time, but this increased attention and investment will result in increased participation, better conditions, and ultimately a stronger performance on the pitch.

Just as dentists, neurologists, and pharmacists receive adequate training in general medicine, so should scouts, coaches, agents, sporting directors and executives receive adequate training in football business apart from their specializations. And why not, even players – as Vincent Kompany recently proved is possible and beneficial. The world they are working in is complex, constantly changing and in need of more professionalization. Critics believe that football is in a bubble that will burst sooner or later, but those who manage to look at the bigger picture realize that, in fact, football – as a business – is much smaller than its popularity claims. The opportunity, then, lies on the other side of education.

Kristian Dobrev
Co-Founder at The Football Business Academy

For more information regarding The FBA’s Professional Master in Football Business visit the-fba.com