Deal or no Deal for the Non League clubs


After the announcement that the Premier League had awarded the TV rights to Sky Sports and BT Sports last month for a jaw-dropping £5.14 billion.  The vast majority of that cash will flow into the already bulging pockets of the Premier League clubs.  Despite calls for the cash to be used to subsidise ticket prices, with full stadiums up and down the country every week, there is no compelling event for the clubs to do that.  Greed feeds greed.

15979358738_46b2a39bda_kWhilst the aristocrats of the Premier League are feeding on caviar and the finest fillet steak, clubs in the Non-Leagues are living hand to mouth, fighting for scraps.  Every season clubs in the Non-Leagues simply give up, unable to keep up with the spiralling costs of running a football club.

This should be a watershed moment for football in England.  The Premier League has an opportunity to give something back to the grass roots of English football. Will they? Probably not.  But if they are looking for ideas, how about these three simple concepts which would have an immediate benefit to clubs in the Non-Leagues.

1. Scrap the rule that means pricing of Sky Sports TV packages for football clubs are based on the rateable value of the football club.  We at Lewes have looked at Sky on numerous occasions, but because the rateable value of The Dripping Pan includes the stands and the pitch, the cost was north of £750 per month  In comparison, BT Sport charge around a tenth of that per month. So why not scrap charges for clubs below a certain level in return for free advertising at the ground?

2. Create a weekly Non-League TV show.  It seems crazy that we can access live games in most major European leagues every week on Sky and BT Sport yet Non-League doesn’t get a look in.  Why not create a weekly show, focusing on one team with an extended preview and highlights package? We’ve already seen the success of the radio show on BBC so why not roll out the format to the Non-Leagues? I can’t believe viewing figures would be worse than a live game from Holland or France.

3. Add a loser’s money pot in the FA Cup.  Every club starts the season with a dream that they will reach the Third Round and draw a big club, setting themselves up financially.  99% of them fail by the wayside but every year we have the success stories of Warrington Town, Blyth Spartans and Hastings United. There is no glory in defeat, nor in the case of the FA Cup, cash. Sure clubs share the gate revenue, but for the smaller Non-League clubs this may be a matter of a few hundred pounds.  So why not increase the prize fund in each round by 25% until the First Round Proper, with the additional amount going to the losers?

What will be a travesty is if nothing changes and the cash simply makes those clubs already awash with cash even richer. Not only will the fans suffer but football in general.  But then again, the voice of reason has no place at the highest levels of our national game.

Economic Theory explained by Football – Sabermetrics


MoneyballFor those who have seen the film Money Ball or read Michael Lewis’s book of the same name, you will be familiar with the name Bill James. For those who don’t know about the remarkable story of the Oakland Athletic baseball team then I thoroughly recommend seeing the film or picking up the book.  Without spoiling too much of the plot, James is a much-maligned chap who came up with a statistical system that was able to be used to rank each attribute of a player and thus whether they could do a job for a particular team.  He coined the phrase Sabermetrics and defined it as “the search for objective knowledge about baseball.”
Sabermetrics attempts to answer objective questions about baseball, such as “which player on the New York Yankees contributed the most to the team’s offense?” or “How many home runs will a particular players hit next year?” It cannot deal with the subjective judgments which are also important to the game, such as “Who is your favourite player?” or “That was a great match”

The General Manager of the Oakland A’s, Billy Beane, adopted the concept and took his team on an amazing run which then resulted in an approach from Boston Red Sox owner John Henry. Yep, the same John Henry who today owns Liverpool FC.

Why is this relevant to the beautiful game? In recent weeks a remarkable story has broken about Brentford’s manager Mark Warburton announcing he will step down at the end of the season. Brentford are currently playing at the highest level in their history, they have a real shot at promotion to the Premier League and a long overdue move to a new stadium is finally on the cards. So why is Mark Warburton stepping down?

The reason is the direction self-made millionaire and club owner Matthew Benham wants to take the club.  Benham made his cash pile in betting, managing a hedge fund to be more precise before turning his hand to the world of sports spread betting. He employed a team of people to analyse every statistic about clubs and players, and used the results to predict results. Based on his wealth who is to question the success of this approach? The next logical step is to apply the model to his own clubs. Clubs plural as he purchased FC Midtyjlland in Denmark last year. The club, who had have never won a major honour are currently top the Danish SuperLiga using his model.

Will this model work for Brentford? FC Midtyjlland’s chairman, appointed by Benham, 31 year old entrepreneur Rasmus Ankersen thinks there is a 42.3% chance of Brentford gaining promotion to the Premier League based on the data they have collected rather than looking at current form and making a reasoned guess of yes or no. And that, ladies and gentlemen is the theory of Sabermetrics – using past performance and data trend analysis to make decisions about the future.

Economic Theory explained by Football – Return on Investment


The news that the new £5.14 billion Premier League television deal hasn’t exactly gone down well in many quarters.  The winning bids represent huge investments made by the media giants, with the Premier League now undoubtably the richest league in the world.  Arsenal manager, Arsene Wenger commented that the TV deal, and the huge influx of cash that will flow to the twenty clubs will allow them to attract the best players in the world.  Everyone’s a winner right?

14327363682_aef7b6c31b_kBut both Sky and BT will need to recoup their investments, and that is likely to spell bad news for subscribers. Rival TV boss, Tom Mockridge of Virgin Media, told ITV News this week that fans who already pay the highest prices in Europe to watch live football as from 2016 prices will see further price rises.  Faced with increasing subscription costs, some fans will abandon their contracts and look at alternative ways to watch their football.

So whilst pubs and clubs may now see more fans coming through their doors to watch games thus increasing their profits, there is a real danger that the number of websites that provide links to illegal streams will increase significantly. The more people that choose to use these streams, the more the broadcasters will be forced to increase subscription costs to recoup their investments. On the other hand, any proactive measures they take to try to identify and remove these illegal streams incur costs too – it is a real catch 22 situation.

So whilst many football fans may bemoan any potential price rises, it is important to understand the impact these illegal streams have on the the genuine product.  Just like any in-demand or aspirational product, counterfeiters and IP infringers will look to satisfy low (or no) cost demand.  The end product in the case of watching streaming sites is often poor quality, whilst downloading any software associated with these sites brings its own set of dangers. The very fans who abandon their subscriptions because of the cost in favour of illegal streams are actually part of the problem rather than the solution. That is the theory of return on investment.

The Lord’s work


14718895028_80db023387_zWith the snow gently falling in South London a few weeks ago and another Rooks game coming under threat I looked around for alternatives. Having been away for the past few weeks I thought it might be a good idea to have my Plan B as sitting in front of TV with a warm cup of tea. Scanning the fixtures I noticed that Real Madrid were playing Real Sociedad at 3pm. That’ll do me I thought but then I couldn’t find any details of the game when scanning through the Sky Sports schedules. The media giant televises a Ronaldo sneeze, and with British interest not only in the form of Gareth Bale but also in David Moyes, now managing the Basques, surely there had to be a mistake?

Alas not. Television companies in England are not allowed to show a live game between 2.45pm and 5.15pm on a Saturday. The ruling dates back over 50 years and was the result of a petition raised by the controversial Burnley chairman at the time, Bob Lord with the Football League. He argued that televised matches on a Saturday afternoon would have a negative effect on the attendances of other football league games that were not being televised and as a result reduce their financial income. Fifty years ago this made sense, but today is it still relevant?

In the last few months Ofcom have become vocal about reviewing the legislation after a complaint by Virgin Media, who feel that the restriction means the bidding process for TV rights is artificially high. The Football Supporters Federation have weighed in, lending their support to keeping the Saturday blackout.

“It’s very important to retain the 3pm window and we’d have major reservations about a further significant increase in televised football,” said Clarke. “A 3pm kick-off on Saturday is part of the tradition of English football.”

Of course this ignores the fact that on most weekends half of the games are played outside the blackout window for television purposes (more when the weekend falls after a European club competition week) yet nobody is objecting to that. Whilst I can see an argument for the blackout for games in England, why should it extend to European competition?

The same rules do not apply in other countries and other sports. The best supported football league in the world is Germany’s Bundesliga with an average attendance of over 43,000, 20% higher than the Premier League yet they show a live Saturday afternoon game. The ability for the broadcasted to choose more games to screen increases the rights, with more flowing down into the lower leagues. Germany’s football league structure is similar to England’s and a comparable ranked league to the Ryman Premier League such as the Regionalliga will still see crowds of up to 1,000 on a Saturday afternoon. BT Sports and Sky Sports also screen live rugby union at 3pm on a Saturday without any complaints despite arguments that it could cannibalize both rugby and football attendances.

You only have to look at the situation over Christmas to see the negligible effect of the ruling. With a relatively full programme on Boxing Day (Friday) and on Sunday 28th December, Sky were able to show live matches between 2pm and 5.30pm despite other games being played at the same time without any impact on attendances. Nobody threw their arms up in the air at the fact they screened Southampton v Chelsea AND Newcastle United v Everton on the 28th December whilst six other Premier League games kicked off at 3pm.

This archaic ruling is the source of controversy around the grey area of pubs and clubs showing live games from overseas broadcasters at 3pm on a Saturday. Technically, they are free to show games as long as they have purchased the equipment and subscription legitimately, but are in breach of the blackout regulations rule if they use it to show a game live at 3pm.

The new TV rights deal for the Premier League will be for 168 games a season, up from the existing 154 matches.  The additional 14 are being created by shifting some games in non-European club competition weeks to a Friday night, which will mean 44% of all of the games in England’s top division will be available to watch live – which by a simple deduction means at the maximum, 56% will be shown at 3pm on a Saturday.  Friday night football was the norm back in the 1980’s when live games first hit our TV screens but the new deal will cause pain to most away fans.  The police will be loathed to allow the high-profile local derbies to be held on a Friday night due to the drain on resources from policing the alcohol-fuelled High Streets of broken Britain, and the TV companies will not want their prestigious games to be shown when people traditionally go out for the night.  But then again,  the Premier League has long held the actual logistics of getting to and from games with as much regard as the Football Association with their legendary scheduling of FA Cup Semi-Final matches so that one set of fans cannot actually get home.

So for now it’s fingers crossed that the snow doesn’t settle and we will have a game to watch. Otherwise I may be forced into a trip to Bluewater – now that’s definitely something that should be banned at 3pm on a Saturday!

Economic Theory explained by Football – Part 10 – The Theory of Just Pricing


Back in 1261 whilst waiting for the medieval equivalent of Super Sunday to start Thomas Aquinas picked up his quill and started to draft the first ever transfer policy for his as-yet unnamed football team. He had studied the way that his local market worked and mused that “no man should sell a thing to another man for more than it’s worth”. In that one statement he tried to explain the collective transfer value of Andy Carroll.

4766163428_f4f73b243f_bAccording to prevailing economic theory, there is no such thing as a rip-off or something being over-priced. The price of anything is simply the market – if someone is prepared to pay then it is a fair, market price AS LONG AS there are alternatives (monopolies such as train companies do not adhere to such a model of course). So if someone wants to pay £25million for a route-one target man with a dodgy knee and an even dodgier ponytail then it is a fair price. Nobody forces a football club to buy any player – they have three choices. Try to negotiate a lower price perhaps throwing in a few players who aren’t good enough for them, spend the cash on something else such as a new fleet of Bentleys for the existing player or go and buy an alternatively crocked player with a bad haircut elsewhere.

The transfer market should establish a fair price for every player as no one has an intrinsic value. So they may have played for their country a hundred times, scored the winner in a World Cup Final, kick with both feet and can head the ball fifty yards – all great characteristics but irrelevant if you are looking for a goalkeeper. Clubs who slap a price tag on a player are trying to create a false economy that will never prevail.

Aquinas suggested the concept of a “just price” – the price the buyer is willing to pay with the right amount of knowledge of the product. So if a club knows Carroll has a dodgy knee/ankle/ponytail, the price they are willing to pay should be different to that without the information. He also saw those people who sold with recognised avarice as evil people – something that could certainly be levelled at the ticket pricing strategy of football today, or dare I say it, football agents.

So there we have a brief explanation as to how a 13th century Italian monk came up with the first, truly fair rules of the transfer market. That ladies and gentlemen, is the theory of just pricing.

Economic Theory explained by Football – Part 9 – The Theory of Collective Insanity


In 1841 the Scottish journalist and future Alloa Athletic fan Charles Mackay published his most famous work – an essay that today is the piece of work that every Premier League club religiously reads each summer when talk turns of ticket pricing. The Extraordinary Popular Delusions and the Madness of Crowds focused on the herd-mentality of people and how it influenced prices.

8829793588_0aced7c6b7_kMackay’s hypothesis was that crowds acting in a collective frenzy of speculation can cause the prices of commodities to rise far beyond any intrinsic value they should have. He looked at the examples of the South Sea Bubble of 1720 as a classic example of how this theory worked. If Charlie was alive today, he could well just pick a Premier a League football club as a modern example.

His 8 step model to document the steps to how crowds breed collective insanity is as follows. Whilst in this example we use ticket price, the transfer market is an equally valid case study:-

1. Extraordinary conditions occur in the footballing world such as a team getting promoted to the land of milk and honey, or in the case of some also ran sides (Swansea City, Stoke City, Hull City, Spurs) they win a trophy or get into European competition.

2. Success means ticket prices rise in tactical ways – match day walk up tickets for instance.

3. News of price rises is published to great dismay among supporters

4. Mass discussion on forums/social media normally leads to comments like “well you don’t have to go”.

5. Other clubs notice. They put their prices up too, thinking that despite not having any success, that it’s the trend in football, blaming agents fees or lack of TV money.

6. Crowds breed collective insanity – the tipping point is reached

7. Football eats itself, the club gets knocked out of Europe in 1st round because the manager fields a weakened team to concentrate on the Premier League. Results are poor, manager is sacked and club goes into free-fall.

8. Attendances fall, club realises they need to drop ticket prices.

Earlier in the season, the BBC published its study of the cost of watching football in this country.  Essentially, the research was a pile of rubbish.  Instead of going to do the research themselves (type in club website into browser, find page that says “tickets”, note down prices) then sent a survey to each club.  So when West Ham responded and said their cheapest ticket for a Premier League game was £20, people thought “wow, that’s good value”.  However, that priced ticket was only available for 1 game this season, the pre-Christmas match versus Leicester.  It wasn’t the averaged priced one, which is over DOUBLE that.  Ticket prices continue to outstrip inflation simply because of the theory above.

So there you go – the Theory of collective insanity in a nutshell. Next time your club puts its prices up blaming players wages you’ll know it’s really that pesky Alloa Athletic fan, Charles Mackay, to blame.

Economic Theory explained by Football – Part 5 – The fake deal in football shirts


In 2012, the major professional sports leagues in the United States lost over $13 Billion in revenue due to sales of counterfeit shirts and merchandise including a whopping $3 Billion alone from the 32 teams in the National Football League (NFL).  Some top end “authentic elite” team shirts which should retail for $250 could be found online with an 80% discount*.   These numbers, whilst staggering on their own, are just a drop in the ocean when we look at the total “black” economy which runs annually into trillions of dollars.

8835116252_85b97df617_kIn Europe, football means something very different to the American version.  Whilst the biggest NFL sides can expect to sell tens of thousands of shirts (neither official shirt supplier Nike or the NFL will actually reveal unit sales), the unit sales for the best selling “franchise”, 2014 Super Bowl champions Seattle Seahawks pales into insignificance to current European Champions League winners Real Madrid who sell over 1.4 million shirt sales per annum, the vast majority now bearing the names of twin superstars Ronaldo and our very own Gareth Bale.  Hot on their heels is Manchester United and Barcelona, each selling over a million shirts per annum. The top ten football clubs sell over 7.5 million shirts per annum across the globe, significantly more than the top ten clubs of any other sport.

Obviously these numbers only reflect the official sales.  Browsing the new adidas store at Bluewater last week I picked up a Real Madrid shirt, complete with an official Champions League badge on the sleeve. The prices tag? £60. Last month Nike and the Football Association found themselves being the talk of the town for the wrong reasons with questions even being raised in the Houses of Parliament over the price of the New England shirt, with those “authentic elite” versions again costing upwards of £90.

Football shirts are not luxury items, yet their official price tag puts them in the same category as similar types of items sold by the likes of Armani, Gucci and Versace.  £60 for what essentially is a t-shirt is simply crazy, irrespective of the new-fangled material used to differentiate the latest version from the almost identical one released the previous year.  They are a lifestyle purchase. Whilst a very small numbers of sales will be based on fashion sense, the vast majority are based on the blind loyalty that football fans have for their team.

In the last few years manufacturers and clubs alike have come under criticism for the number of new kits they bring out.  Whilst nobody is forced to buy the new, upgraded version of the shirt when it is released, that same blind loyalty has has queuing up to buy the shirt on the first day of sale.

It is the rule rather than the exception that clubs bring out a new football shirt every year.  Not just one shirt, but in some instances six different versions if you count the special “European campaign” and goal keeper ones. Chelsea, for instance, have released fourteen different kits, excluding their goalkeepers one, in just five seasons.

With the retail cost increasing every year it is no wonder that the market for counterfeit goods is swelling every year. Just last month a huge haul of fake football shirts was discovered on its way into the United States. More than $1 million worth of Chelsea, Barcelona and other major European football teams shirts were found in a container at Savannah Port in Georgia that had arrived from China.  The US Customs and Border Protection force will readily admit they got lucky in finding the counterfeit items in Georgia – hundreds of millions more pass under their noses every year without detection.

The majority of counterfeit football shirts are made in Asia where raw materials and workers wages are very low.  Over the course of the last few years I’ve been to the Grand Bazaar in Istanbul, the Night Market in Marrakech, the Ladies Market in Hong Kong and even the Sunday Boot Fairs of Sidcup.  Vast ranges of every major football shirt can be bought for just a few pounds.  The quality of the counterfeits varies per seller, with some offering “special edition” shirts.  When I was in. Morocco two years ago, one stall was selling Manchester United, 2012 Premier League Champions shirts, made specifically for the Reds title success.  The problem? Rivals Manchester City won the title with virtually the last kick of the season.

It is fairly obvious that you aren’t buying the real thing at the price they are being sold for, although production techniques now mean that fakes come in a variety of grades of quality.  At the low end the wrong material and non-exact match colours will be used and often there will be spelling mistakes (Liecester City anyone?) whilst the higher grade ones will often have all the bells and whistles of the real thing including holograms and inside printing.

But there is another side to counterfeit football shirts that you may not have considered and that is the conundrum of brand awareness.

Consider this situation.  Every counterfeit shirt carries the branding of not only the football club, but also their main commercial partner(s).  The whole reason why major brands invest millions into putting their logo on the front of a football shirt is to increase their brand awareness both in existing and new markets.  The hundreds of millions invested by Emirates into their sponsorship of Arsenal, Olympiakos, Paris Saint-Germain, Hamburger SV, AC Milan and now the European Champions, Real Madrid means they have huge global exposure from the sales of official shirts.  But their logo also appears on counterfeit items as well, increasing their global reach albeit through illegitimate channels.

Consumers simply associate Emirates with these shirts, irrespective of the legitimacy of the shirt.  Whilst the airline may be deeply unhappy that their logo is being used on counterfeit items, they are essentially increasing their return on investment through free advertising. I have no doubt that the sales of fake shirts are taken into commercial consideration when they are negotiating their deals, but it is a by-product that they inadvertently benefit from.

And what of the clubs themselves? Football is now a global game.  The elite clubs no longer consider the summer break as a chance to rest and relax.  They now travel far afield to play exhibition games in front of sell-out crowds in new markets.  The forthcoming Guinness International Champions Cup in the USA is an example of this where some of the world’s biggest clubs including three of Emirates sponsored teams, Olympiakos, AC Milan and Real Madrid will play a series of games around the USA to boost interest in the game.  Last year Chelsea travelled to Singapore and Malaysia, whilst Manchester United played in Hong Kong as part of their strategy of increasing their global fanbase.

Many of these fans, in the Far East especially, have significantly less disposal income than their core fans have in England.  They cannot afford the real-deal, climacool, multi-weave new shirt at £60. But they can afford the counterfeit at £5.

By buying a counterfeit shirt, one that they can afford, they are still buying into the brand, happy to market the club by wearing the badge, albeit one that may not be official. Does this make them less of a fan?  By spending 90% less on a shirt they can then afford to buy a ticket or subscribe to the club’s online streaming content.  What is more important to the club? New fans who will engage with the club on a regular basis or ones who will contribute a small amount of money once a season through an official shirt purchase.

The whole sports apparel and merchandise market is unique.  Someone who buys a counterfeit Gucci shirt or a fake IPhone charger is doing so for very different reasons than someone who buys a fake replica Barcelona shirt.  Whilst football clubs need to have a brand protection strategy in place, are counterfeit shirts the maker concern for global sporting brands? It’s an interesting debate, one that will certainly differ whether you have the emotional engagement as a fan or the commercial view as a sponsor or the club itself.

*Source:  Allan Brettman, “NFL, Nike fight to keep counterfeit products off the market,” Orgonian, November 16, 2013.