The real Champions League?


Imagine a tournament where only the biggest names in European football would play, guaranteed admission despite their poor league season, assured of huge prize money irrespective of performance and free from the potential embarrassment of small up-starts humiliating them in front of a global audience of millions.

This is the dream of the biggest clubs of football, the utopia of an European Super League which has been discussed in closed meetings for many years.  Whilst UEFA will bang the drum about the Champions League, the fact it is based on merit means that sometimes the small, unfashionable teams can upset the apple cart.  Whilst Platini and co politely clap the efforts of clubs like Nordsjælland in Denmark or BATE Borisov in Belarus, their inclusion (on merit it should be said) at the expense of Manchester United or AC Milan does not fit with their agenda of raising the stakes in terms of sponsorship and global television rights dollars.  But try as they might, they cannot manipulate the tournament so only the “big clubs” qualify each year.

downloadThis season’s Champions League tournament was missing former champions including Manchester United, AC and Inter Milan.  Huge clubs in their own rights with massive global appeal but all suffered poor domestic seasons meaning that their place at the top table of European Football will have to wait for at least another year.

Football today is all about money though and these clubs are highly marketable in any and every global market.  So it was no surprise that a tournament was arranged, pitting together some of the most marketable clubs in Europe.  In fact it is amazing it took until 2013 for it to happen. In 2013 Canada and the US hosted this tournament, won by Real Madrid, which featured seven of Europe’s biggest clubs plus the Los Angeles Galaxy.  Last season’s edition featured both Manchester clubs, Liverpool, the two Milan teams, Juventus, Real Madrid and Olympiacos, playing games in thirteen venues across North America.  Whilst United beat Liverpool in the final, the main talking point was the unbelievable 109,318 fans who watched the game at University of Michigan’s “Big House”, the first time the stadium had hosted a “soccer” match.  More than 631,000 fans attended the tournament live with a global audience of over 80 million tuning in in over 150 countries. Hard to argue with the success of the tournament based on those numbers.

The clubs may dress these games up as pre-season run outs but the prize money on offer means they are incredibly lucrative for them.  Gone are the days of a trip to Scotland to play Buckie Thistle or Cove Rangers.  Today it is all about 5-star first class travel to the other side of the world to glad hand a few local businessmen and appease the global sponsors.  With North America now fast becoming the biggest overseas market for the “EPL” thanks to the success of some of its exports as well as the “Beckham” effect, it is no surprise that clubs are keen to play these games, even if they are against teams they line up against week in, week out.  Just a week after the Premier League season had finished in May 2013, for instance, 2nd place Manchester City played Chelsea not once, but twice in a matter of days in two venues across North America, watched by nearly 90,000 fans.

This isn’t the first time the USA has tried to woo English clubs over to North America.  In the 1960’s the International Super League was created by a wealthy US Businessman called William Cox who saw an opportunity to bring international football sides to the US to play local sides in more than just exhibition games.  The politics of American Soccer at the time meant that its format was never rigid and was often complicated, but was ultimately a success.  In fact, the creation of the North American Soccer League in 1969 and the import of marquee players was in part due to the success of the tournament.

In its first season in 1960 Cox managed to convince some of the biggest names in European football to play.  The concept was that the ISL was divided into two “sections” formed of six teams played at different times during the close season.  The winners of the two sections then met each other in the final.  The tournament ran for four seasons, with such big clubs as West Ham United winning the tournament.  You can read more about that tournament’s history here.

Whilst 2014 was only the second edition of the International Champions Cup, few can argue that this will be the future of our European game if Platini gets his way.  However, the 2015 version appears to take the tournament to a new level.  This year the ICC will be contested across three continents, with parallel tournaments running in North America, Australia and China.  The line-up for ICC Australia has already been announced, with Real Madrid, Manchester City and AS Roma confirmed for a three-match round robin tournament at the Melbourne Cricket Ground.  Whether the three tournaments will cumulate in a grand final somewhere in the world is yet to be seen.  Will any of those three actually be champions within their domestic leagues?  Very unlikely.

As of the start of April no other teams have announced they will take part in the tournament.  It is inconceivable to think that Barcelona, Manchester United and Chelsea would pass up a chance to play in China if offered the opportunity.  The world’s biggest population, and more importantly, the biggest economy is the market that all the top European clubs want to break.  These football-mad fans do not care that clubs like Manchester United, Liverpool, Real Madrid or AC Milan are not champions in their domestic markets.  In some instances, the players become bigger than the actual clubs – Ronaldo and Messi for instance are almost national heroes in China.

Is it a surprise that this season’s edition of the tournament will be the biggest yet? Absolutely not. Until UEFA can engineer the Champions League so that the biggest clubs, and consequently the biggest marketing assets are guaranteed entry into the tournament every season irrespective of their final league position this tournament will continue to grow, and for the clubs involved an important source of additional revenue.

Advertisements

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.

 

Liverpool facing crucial run ahead of next big test


Liverpool have weathered the opening third of the season admirably, and following the frenetic recent Merseyside derby, Brendan Rodgers’ side now face a series of what their increasingly optimistic fans will perceive as winnable games.

Certainly, since Rodgers took charge at Anfield, his teams have been far more capable of dispatching the so-called smaller sides in the league – especially at home – with the ease one would expect from genuine title contenders.

However, unlike under his predecessors, Kenny Dalglish and Rafa Benitez, the Northern Irishman has struggled embolden his players with the self-belief to exert their dominance over the sides around them at the top of the table.  dThis inability to establish the required consistency has been Liverpool’s biggest problem ever since their last title challenge in the 2008-09 campaign, and with Tottenham, Manchester City and Chelsea lying in wait for the Reds over the festive period it is key that they pick up maximum points between then and now.

Liverpool now travel to Hull ahead of home fixtures against Norwich and West Ham, and will be wanting to add nine points to their tally before entertaining Andre Villas-Boas on December 15th in a game.

With Luis Suarez and Daniel Sturridge showing such fine form in front of goal – both players currently being backed heavily by Betfair customers to finish the season as leading scorer – and the return of the mercurial Phillipe Coutinho to pull the strings behind them, Rodgers will be quietly confident of still being in the hunt for Champions League football by the time January rolls around.

Betfair.com offers a wide range of competitive odds for those that agree with that opinion, and with United and Spurs both struggling so far this season, this may finally be Liverpool’s year.