Tuesday, 23 Jul 2024

The Future of Football

The Financial Times recently hosted the FT Business of Football Summit, where industry stakeholders gathered to discuss the challenges and opportunities that lie ahead for the sport. The summit, held on 17 and 18 February 2021, provided valuable insights into the future of football, addressing the impact of the COVID-19 pandemic and exploring various perspectives on key issues. In this article, we’ll delve into some of the significant points discussed during the summit.

Format

One of the main areas of contention is the balance between domestic and international formats. Richard Masters, CEO of the English Premier League (EPL), emphasized that there is no intention to reduce the number of teams or match days. The EPL has experienced unprecedented growth in broadcast revenues, outweighing the value of expanding European competitions such as the Champions League or Europa League. However, in France, Loïc Fery, President of FC Lorient, argued that the French market is not sustainable with 20 clubs in Ligue 1. The debate surrounding formats like the ‘Swiss Model’ and the ‘European Super League’ is expected to continue, with stakeholders seeking stability through long-term agreements.

Funding and Investment

Despite the challenges posed by the pandemic, liquidity remains in the market, as demonstrated by organizations like SoftBank, which has invested in various football-related ventures. Marcelo Clure, CEO of SoftBank, highlights the importance of investing not only in football but also in disruptors across industries. In European football, financing and investment models have been relatively straightforward, including loans, TV rights pre-financing, player transfers, and stadium development. However, it is crucial to understand the evolving expectations of the future generation of customers, who have different attitudes towards sports consumption and engagement. Actively involving fans in the sport, as stated by Peter Hutton, Director of Sports Partnerships at Facebook, leads to increased engagement and longer viewing times.

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Broadcast Media

Broadcast rights fees for the top five European football leagues reached €7.6 billion in 2018, but growth has since stagnated due to deflation in rights fees and the impact of COVID-19. This has placed considerable pressure on club owners to address financial deficits. Christian Seifert, CEO of the German Football Federation, points out that poorly managed financial practices in certain leagues have contributed to the escalating costs of European football. The digitization of media has led to increased competition for sports’ attention and fan engagement, with platforms like Netflix, Facebook, online gaming, and YouTube vying for viewership. Some experts believe that a sustainable and equitable model can only be achieved through collaboration among broadcasters, telecom companies, leagues, and clubs.

Growth Markets

In the United States, sports franchises are seen as durable investments capable of delivering strong financial returns. With Major League Soccer (MLS) franchises selling for millions of dollars, investors are optimistic about future growth. Unlike European professional sports, the US system benefits from league oversight and credit arrangements that help mitigate risks. The upcoming 2026 World Cup is expected to further boost the market’s growth potential. Additionally, talent development is a crucial factor in the growth of football. Benfica’s Academy, along with FC Barcelona and AFC Ajax, has been hailed as one of Europe’s most successful academies. However, investment returns remain relatively low, highlighting the challenges of discovering the next generation of football stars.

Women’s Football

Women’s football is gaining recognition and investment, but more needs to be done. While following the business models of men’s football may seem like the logical step, experts believe that a more sustainable approach would be to offer free-to-air coverage with micro-transactions, focusing on diversifying content and maintaining governance of the game. Rebecca Smith, Executive Director of COPA90, stresses the need to attract and retain the interest of younger generations by focusing on diversity and avoiding dull content.

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Governance

Amidst all the discussions about the future of football, the importance of governance and integrity cannot be overlooked. Racism in football remains a significant issue, and social media platforms have become breeding grounds for discrimination and inequality. While efforts have been made to combat this, more needs to be done to ensure the safe and respectful engagement of all participants in the football industry.

Community Engagement

The future success of football hinges on community fan engagement. Fans play a crucial role not only in terms of revenue generation but also in creating a vibrant matchday atmosphere and contributing to the overall experience. Paul Barber, CEO and Deputy Chairman of Brighton and Hove Albion FC, emphasizes the importance of partnering with the local community and recognizing the value of fans in sustaining the sport.

The Bright Future of Football

The FT Business of Football Summit highlighted the differences and challenges within the industry. However, there is optimism that collaboration, partnership, and knowledge sharing will pave the way for a bright future. As the sport undergoes transformations and new investment opportunities arise, it is important to address pressing issues and ensure the long-term health and sustainability of the game. By acknowledging the perspectives of diverse stakeholders and nurturing close relationships with fans, the football industry can thrive for years to come.