Football Clubs: Everything you need to know about
Football Clubs: In October 2019, Tottenham Chairman Daniel Levy placed 25 cameras and 66 discreet microphones in the club’s locker room, training grounds, and offices. His intention? To record everyone. And sell the footage to Amazon. Creepy or a marketing genius? Why are clubs allowing cameras to go behind the scenes and film their players during some of the most intense moments of the season? What motivates them to be exposed in this way?
First, let’s analyze the traditional business model of football clubs. Club revenue can be divided into three main categories: There’s Matchday revenue, which is all of the money clubs earn through ticket sales and corporate hospitality. Broadcast income, also known as the income received for a club’s involvement in competitions. And Commercial income, including sponsorship, merchandising, and commercial operations. This excludes any income related to player transfer fees as this can fluctuate and is often offset by the purchasing of other players. So, how much do clubs make in each category? The top 6 largest clubs receive most of their money through commercial agreements. Barcelona makes almost half of its income from sponsorship agreements with only 35% coming from broadcasting and 18% as matchday income.
Small Football Clubs
But not every club has a worldwide fame and big-name players to attract large commercial agreements from the likes of Rakuten, Nikeor Emirates. For these clubs, most income comes from broadcasting. West Ham, for example, relies on TV income for 68% of their overall revenue. Here lies the problem. Clubs have limited control over the amount of broadcast income they receive. Broadcast revenue is determined by an agreement negotiated between a league or football association and television companies. The money is then divided, with more successful clubs receiving bigger payouts.
Football Clubs are able to increase it through good performance, but there are huge risks to this strategy. What if a key player is injured before the champions league final? That could cost them millions. Clubs benefit from this collective negotiation. Bundling the broadcasting rights of all clubs into a single package creates a strong negotiating position, leading to increasingly lucrative deals. On the other hand, having over 50% of your income dependent on negotiations between third parties is a risky business strategy. So how do clubs take back control? Matchday revenue is not easy to increase due to stadium capacity constraints, leaving commercial revenue the only viable area for fast income expansion.
How Club attract sponsors?
How do Football Clubs become more attractive to potential sponsors? Clubs have come to realize that there is one simple way to ensure they score a good sponsor: … becoming a media company. You may have noticed this shift yourself, Clubs have exploded onto social media with a wealth of new content aimed at different types of fans. There are training videos for the aspiring footballers, humorous Q& A’s with popular players, and even interclub rivalries between twitter admins. Attention has become a major asset for top clubs.
They are no longer satisfied with people watching on a Saturday and buying the shirt on a Sunday. Now they want you to consume their content every single day. This sentiment was perfectly summed up in manchester City’s annual statement when they explained: “our media strategy was designed to capitalize on those on-field successes, with content created and distributed to suit specific audiences in a targeted way.” It doesn’t matter where you hide, Manchester City will find you!
There is logic in this recent push for media consumption. Look at Galatasaray and AC Milan, who have high commercial revenue, despite limited European involvement and low broadcasting income. The reason for this success? Both clubs had high engagement on their various media channels. But none of this explains why Tottenham Manchester City would want to put up cameras to capture players and staff at their most vulnerable and often least successful moments.
Why Football Clubs expose themselves?
Surely football clubs build brands on success, not images of Danny Rose threatening to tell the teacher because Jose was mean. There are three main reasons why clubs are willing to expose themselves.
1. Streaming Platforms
Firstly, the global reach of streaming platforms. Most of the documentaries have been distributed through either Netflix or Amazon. Both of these streaming services have something all clubs want. A big, juicy, global audience. Netflix has over 200 million active subscribers, with millions more watching through ‘borrowed’ login information. Amazon Prime has 150 million users across the globe, and both are expanding into Asia. Netflix gained 1 million new subscribers in Asia over the last quarter of 2020 alone. Netflix has also agreed with Reliance Jio to offer subscriptions for around $5 a month in India. Football Business clubs are eager to tap into the lucrative Asian market. This is where consumption of football and its related products is on the rise.
Leeds United’s owner, who made his fortune in sports media, demanded the creation of an internationally distributed documentary to help introduce the club’s brand to a new, younger audience. Leeds United deliberately chose for their take us home’ series to be distributed on Amazon. Citing its global distribution and deep links to the Asian market as prime motivations.
As Angus Kinnear, explained, “it gave us the broadest range of exposure and meant that we could focus on producing the documentary rather than trying to strike individual broadcast deals in individual countries.” Juventus, who recently announced a deal with amazon’s ‘All or nothing’ series, had their chief revenue officer praise the deal stating, “The collaboration with Amazon Prime Video is a perfect fit between two successful brands with a global reach.” The emphasis on the global reach of the streaming giants shows exactly why clubs find these documentaries so attractive. They come with lots of eyeballs.
2. Football Clubs Documentaries
The second reason for the rise of fly-on-the-wall documentaries centers around generating revenue. So, clubs have gained entry to a large, emotionally connected audience, what do they do now? Most focus on funneling these new fans towards their social media pages. Clubs usually have Twitter and Instagram accounts in multiple languages. These new followers are offered merchandise and updates through sponsored content advertising their partners. Tottenham went a step further and combined the recent ‘All or Nothing’ series in a partnership with Amazon to create an exclusive club store. This offered Prime viewers an easy way to purchase Tottenham merchandise. Sunderland is the ultimate success story here.
The ‘Sunderland Till I Die’ series on Netflix, was streamed to an alleged 60m accounts globally. This saw a massive increase in the google search results for “Sunderland”. This grew their social media following to almost 1 million users. They the most followers of any non-premier league club, and they have been relegated twice! A former director at Sunderland AFC, claims that the documentary boosted revenue in all channels. They made £900,000 from increased subscriptions to their in-house broadcasting service. Their total viewership accounted for 1/8th of all live coverage watched in league 1. Sunderland also created an international fan club letting them sell merchandise and discounted tickets to new fans. Not only does a documentary create a bigger audience for a club. But, it also offers them new revenue opportunities to gain revenue from merchandise and ticket sales.
3. Commercial Agreements
Football Business Clubs also see a huge benefit when it comes to negotiating commercial agreements. KPMG suggested that a sense of increasing fame and high levels of social media following gives clubs a much stronger position when negotiating agreements with Kit sponsors and commercial partners. Angus Kinnear even makes potential partners watch the club’s documentary.
Their emotive storylines and beautiful cinematography can serve as adverts for attracting investors. While the effectiveness of this approach is hard to measure, last year, Leeds completed a record £7 million a year deal with Asianbetting company Sbobet. Sunderland, fresh from a freefall down the English Football Business pyramid. It used the success of their Netflix documentary as a unique selling point when asking investors to purchase the naming rights of the famous ‘Stadium of light.’ Clubs are on the lookout for ways to expand their commercial revenue and diversify away from broadcast income. Documentaries have become a vehicle for entering global markets and creating new streams of income. We can be assured that clubs will continue to find new ways to keep us watching, especially with COVID forcing stadiums to stay empty. Do you enjoy watching football documentaries? And what is your favorite moment?