How Football Cubs Become Corporations: The Economics of Sports
2024, Lamine Yamal
Any football fan will tell you that football is more than just a sport. It’s a multi-billion dollar industry with numerous facets. Millions of fans almost worship the sport adding to its craze and revenue. However, behind the tackles and the beautiful goals is a full-fledged industry. In the span of 3-4 decades, football clubs have evolved from a local community sport to a global multi- million dollar brand. This progression is very fascinating and touches on the deeper connections between sports and business on a global scale.
For the most part, football clubs were established with the purpose of community sporting events. They focused on building churches and health centres and serving as a medium that promoted activity and recreation. But, the growth of the sport quickly changed perspective. Once the sports management of professional football clubs was focused on bringing in economic gain was when the sport really began to make vast profits. The rise of sponsorship, endorsements, and merchandising deals began flooding the sport with money. With time, television rights became pivotal. For example, the English Premier League signing a broadcasting deal in the early 1990s was a key moment for professional football. Forget just ticket sales, the entire sport was being marketed on a global scale. And recently, money from oil sheikhs has come to the market, buying up clubs from the top 5 championships in bulk, setting new records for spending on transfers, and also breaking the ceiling on the contracts offered. There were rumors that Real Madrid footballer Vinicius Junior was offered a contract for 1 billion dollars for 5 years (200 million per year), which is incomprehensible to us, because this amount is literally the GDP of some country.
With the increase of revenues, clubs began to embrace management models within the business framework. The ownership structure changed moving toward privat as well as public company (where shares were floated on stock exchanges). As of now, clubs such as Manchester United and Juventus have become companies and have to strive and manage their finances like all other firms.
But this corporatization also has a negative effect. Clubs get into huge debts for the sake of infrastructure projects, acquiring new players and merchandising. Some clubs are financed by the city government, allocating money from the annual budget, which may not be enough to solve local problems, which affects the improvement and comfort of residents. It is also worth noting that the transition to a corporate model implies an increase in prices for tickets, club merchandise, food at stadiums, etc., which causes great anger among fans and a decrease in interest among the next generation. Unfortunately, before this, football was considered a "social elevator"e; for many people, a way to escape poverty, but now not everyone can afford this sport. To summarize, as football clubs have grown from community-based institutions to conglomerates, the process has also been driven by the globalization trend and commercialization trend. Of course, globalization has many layers and achieving balance is key to managing the challenges. Football is not simply a trade; rather, it is a culture for billions of people, and that essence should never fade away.
Article written by Adilbek | Proofread by Zhangir Zhangaskin
