Football’s finances – a model of resilience or a sector on the brink?

In a presentation entitled “The Reassuring Stability of Football Capitalism”, Stefan Szymanski of London’s CASS Business School gave examples of varied models of ‘capitalism and socialism’ in football. He praised the ‘football capitalism’ model seen in Britain and elsewhere, which entails annual promotion and relegation and the free movement of players.

British football paints a picture of incredible stability, he said. Of the eighty-eight football league teams that existed in 1923, he said, eighty-five still exist today - and over half of those teams were playing in the same division in 2007/08 as they were in 1923. “In ordinary capitalism, businesses go bust all the time” he said. “Not so in football capitalism”.

Movement up and down the leagues – the demise of Leeds and Newcastle, for example – is part of the rough and tumble of football, and part of what makes it a superior product, he added.

Although admitting that a short-term revenue crunch was inevitable, he predicted a positive future for British football. “Statistics demonstrate that ‘football capitalism’ works”, he said. “The only instability is ownership. Clubs are changing owners are almost as regularly as they are changing managers”.

Szymanski was followed by William Gaillard, UEFA’s Director of Communications, who warned that the predictability brought about by rich clubs’ dominance could detract from the game’s passion and excitement. He spoke of UEFA’s new “financial fair play” program, a proposed system requiring clubs to file up-to-date accounts and display greater financial openness. ‘Football socialism’, or greater regulation, works well in the USA, he said. It is profitable, stable, and attracts excellent attendances. He cited Champions’ League winners FC Barcelona, which boasts 14 homegrown players out of 25, as a successful ‘non-capitalist’ model.

Simon Gardiner of Leeds Metropolitan University gave examples of breakaway leagues throughout the world. He touched not only on the reasons they occur, but also asked whether they could ever be in the interests of sport. In a related presentation, Katarina Pijetlovic of the International University Audentes Tallin argued that a breakaway European football super league, either formal or informal, is inevitable, even though no precedent exists under European competition law. Although UEFA’s statutes prevent the formation of such structures, she added, financial concerns could force it into accepting such an occurrence. European law prevents parties from creating structures that assume a dominant role in the marketplace, she added, and current league structures could have a social value deemed worthy of protection.

Ticket prices – from cinema to opera

Dave Boyle, the Chief Executive of “Supporters Direct” offered a less rosy view of the future of football than Stefan Szymanski. Major differences exist between football’s performance in the current financial climate and its performance in other recessions, he said. In 1992, in the last downturn, it cost just four pounds to watch Manchester United. Today, many ticket prices are ten times that amount.  “Football ticket prices used to be comparable to the cinema. Now they are comparable to the opera,” he said.

In addition, many clubs sold their stadiums during the last recession, he added - meaning the “cupboard is bare” this time around.

“Football is not like any other businesses,” he said. “So few have gone bankrupt because people rally round and fight. They simply cannot contemplate their club going out of business. The whole point of the game is the collective expression of identity”.

Boyle concluded by quoting Liverpool fans’ advocate Rogan Taylor, who famously distinguished between football and other businesses by asking: “how many people have their ashes scattered in supermarkets?”