European Football Clubs' New Business Model: The Prospects and Perils
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Code : BSM0014
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Region : Europe
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Introduction:The Economist wrote that ‘Manchester United’ (Man U), the richest in the business, had increased its turnover from £17.8 million in 1990 to £129 million in 2001. BusinessWeek reported that for the 2003-2004 season, European football clubs had earned a revenue of $12 billion,5 and the revenue of British, German, French and Italian football clubs have increased three times since themid-1990s. The expenditure of the clubs had also increased in leaps and bounds. For example, the spending of the British clubs alone doubled from £213 million in 1995 to £423 million in 2001. The two major reasons cited for the sudden surge in the revenue and expenditure of the clubs were the introduction of Pay-TV channels, which escalated the value of the football broadcasting rights, and the 1995 EU ruling (popularly known as Bosman ruling), whichmade themovement of players between clubs much easier, on completion of their contracts, by banning the transfer fee. This led to a competition among the football clubs to rope in the star players, who not only drew the paying public, but also bought in additional revenue through merchandising and sponsorships along with television rights. Sports analysts opined that the 1995 ruling had changed the way football was marketed by clubs in Europe through major tournaments. |
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