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Is football a ‘public service’ product – a discussion of the professionalization of the football economy?

Recently, Borussia Dortmund’s CEO Hans-Joachim Watzke stated in the German newspaper Zeit that “Der Deutsche meint eben, dass der Staat neben der Renten- und Krankenversorgung am besten auch noch für die Fußballversorgung zuständig ist.” Of course, this is generalizing opinion that German fans think that the state must support its citizens in terms of retirement benefits and health insurance AND FOOTBALL but his criticism is aimed at the German fans that aren’t willing to pay for expensive pay-per-view broadcasting and that hold the opinion that Bundesliga football should always be accessible by public service TV (e.g. ARD and ZDF). At the same time, the Bundesliga has not yet succeeded in building the same global appeal around its product compared to the English Premier League and Watzke among other things connects that with the lacking investment interest in the game.

However, the commercial status of top football has been characterized by a polarization of the distribution of broadcasting revenues in Spain where FC Barcelona and Real Madrid for years reaped the benefits and had the competitive advantage to invest in their squads and clubs’ infrastructure. FC Bayern Munich has been able to compete through successful global brand equity and a solid commercial backing but most of the other German clubs have been witnessing that the English Premier League clubs have distanced their competitors in the Bundesliga via inflationary and record-breaking broadcasting deals that means that even mediocre English teams can outbid most European rivals at equivalent domestic levels when targeting new players in the transfer market.

At the moment, Manchester City is expected to run away with the Belgium international Kevin de Bruyne, who helped Wolfsburg win some silverware last season. City paid more than £50 mio. for de Bruyne, which reflects that Platini’s (UEFA President) wish for more financial equality is far from delivering the aspirant degree of competitive balance between top clubs from various countries. As of right now, the Bundesliga clubs cannot compete with the Premier League clubs! The capital injections from foreign ownership are also minimized in German football due to the 50+1 rule, which keeps the club on membership terms.

From my perspective, this explains German football’s heavy investments in talent development while the English clubs tend to spend the excessive amounts of money from broadcasting deals on developed players, which cause them to neglect own talents to some extent. Below, you see the differences between the German Bundesliga and the English Premier League, which has been reinforced by the new record high Premier League deal. The UK Premier League rights for the 2016/17 season and the following two seasons gave a total price per year of £1.712 billion. That adds up to more than £5 billion over three years and then add the value of the international rights. This shows a picture that fans may think that top football is public service but that reality points more in direction of football being big business. I am romantic in terms of liking the charm of competitive balance to a higher amount. However, football clubs and all the surrounding stakeholders will have to adapt to the fact that the current climate in the football economy calls for money to compete and unless that changes due to governance elements (e.g. stricter FFP enforcement), which is unlike to happen due to the huge commercial interests at stake, the future belongs to clubs with huge pockets or clubs with a sound balance between economic power and talent development. The problem for the German Bundesliga is that Premier League‘s position is very strong while gaining even more power from the new broadcasting deals. This money can be invested into attracting more fan interest in lucrative markets like the US and Asia.

Skærmbillede 2015-08-27 kl. 14.15.21Skærmbillede 2015-08-27 kl. 14.13.40

Table: Bundesliga and Premier League TV rights revenue from 2001 to 2016 (Source: Statista, see here and here)

New technologies have changed the landscape of professional football. The game is more accessible now. Today, every Premier League team’s game is on every week on a major broadcasting network. You see that big networks, e.g. NBC in the US, invest in the Premier League and that turns the product into public service, but only for those that can afford it. The product is wrapped in great production, pre- and post-game shows and in that first-mover effect tied to being the premium domestic football product in many countries around the world, the Premier League has won a lot from its international sales. As of right now, the fierce competition for the attractive football product has distanced the Premier League even more from other domestic football leagues; this was sparked by some broadcasters’ uncertainties that online competitors, e.g. Netflix or Google, may see an interest in buying football rights.

 

 

 

 

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