European Journal for Sport and Society 2006, 3 (1), 25-41
Football as an international business –
an Anglo-German comparison
André W. Bühler
University of Plymouth Business School, United Kingdom
Abstract: This paper describes football as an international business in the context of the two
most business-driven football leagues in the world – the English Premier League and the
German Bundesliga. This investigation of the Anglo-German football business is based on an
intensive literature review as well as on qualitative in-depth interviews with various experts
from both countries. The paper starts with an overview of the literature on football with
special emphasis on the commercial dimension of the game. It then discusses how big the
business of football really is, before describing the characteristics and peculiarities of the
football business. The paper subsequently identifies the main market players of the football
business and introduces its main markets. It then compares the English and German football
business, its main stakeholders as well as the various markets, and finally gives an outlook
regarding the future potentials of these main markets.
Keywords: football business, English Premier League, German Bundesliga, sponsorship.
Introduction
This paper results from a research project under the overall title “Professional Football
Sponsorship in the English Premier League and the German Bundesliga”, which was
undertaken at the University of Plymouth Business School from March 2003 to April
2006.
The context of both this research paper and the research project are the top
professional leagues in England and Germany. Various reasons speak well for choosing an Anglo-German perspective. First, football is regarded as the national game both
in England and in Germany (Pepels, 2001; Key Note, 2002). Second, the English
Premier League and the German Bundesliga are not only ranked within the top five
European football leagues from a point of view of performance on the field,1 but are
also widely considered to be the most businesslike football leagues in the world
(Süßmilch, 2002; Rachmann, 2002). For example, the German licensing model is
widely recognised as a beneficial model and acts as a prototype for the UEFA-
1
According to the latest UEFA-ranking in 2005, England takes second and Germany takes fifth
place. The basis for the UEFA rankings is the performance of teams in the European Cups during
a five-year period. (UEFA, 2005).
André W. Bühler
26
licensing scheme2. Furthermore, Deloitte (2005, 11) notes that “the ‘big five’3 leagues
differ widely in their operating performance, with only the English Premiership and
German Bundesliga clubs recording profits in 2003/04”. In addition, both the English
and the German top league have recorded the largest growth rates (+14% and +12%
from 1999/2000 to 2003/04 respectively) in comparison to other European football
leagues according to Deloitte (2005).
This paper seeks
– to give an overview of the literature on the commercial side of the game,
– to identify business patterns in football,
– to describe the peculiarities of the football business,
– to identify the markets and market players of the football business,
– to identify the main differences between the top leagues in English and German football.
The results are based on an extensive literature review and on qualitative research.
From September 2003 to August 2004, seventeen in-depth interviews with highly
recognised clubs’ and sponsors’ representatives as well as football experts in England
and Germany have been carried out for the purpose of the research project mentioned
above. Some of the findings relate to the area of football business and will therefore be
presented in this paper.
The literature on the commercial side of the game
The business dimension of football is a relatively new field of research. The first
economic analysis of football was published in 1971 by the Scottish Statistical Office,
presenting statistics on attendances in the Scottish Football League. In the 1980s and
1990s, further papers on economics in football followed, most of them investigating
the demand for professional football in England, Scotland and Wales or the financial
structures of British football clubs (Seddon, 1999).
During the 1990s, football attracted the attention of more and more business
researchers, who investigated various business-related aspects of professional football.
For example, Meredith (1994) offered new approaches to marketing a football club,
and Currie and Kerrin (1996) identified English football as a metaphor for organizational change. More recent papers have sought to investigate the laws of the football
market and their impact at club level in a more sophisticated manner (Dobson &
Goddard, 2001; Greenfield & Osborn, 2001).
Not only academic researchers have been attracted by football as a subject of
research. More and more multinational accountancy and consultancy companies are
stepping into the football business by doing independent research and publishing
2
3
The UEFA licensing regulations define the minimum quality of standards in five main criteria
categories as follows: sporting, infrastructure, personnel and administration, legal and financial.
These criteria must be fulfilled in order for a club to be admitted to any of the UEFA Club
competitions as from the 2004/05 season.
The English Premier League, the French Ligue 1, the German Bundesliga, the Italian Serie A,
and the Spanish Primera Liga.
Football as an international business – an Anglo-German comparison
27
various reports. One of the most well-known reports is the Annual Review of Football
Finance published yearly by the Sports Business Group at Deloitte (formerly Deloitte
& Touche). The report investigates the areas of profitability, wages and salaries, player
trading and the financing of English football, and it compares some of its findings with
the situation of the top leagues in Italy, Spain, Germany and France. The report itself is
well recognized and elicits a significant response from the media whenever it is due to
be published. Another outstanding report is provided by the German-based sports
consultancy Sportfive (formerly known as UFA-Sports), which publishes its report
Fußball-Studie every second year. The study describes the situation of the clubs, the
media, the brands and the football events in England, France, Germany, Italy and
Spain. In contrast to the Deloitte report, which generates its information mainly from
the clubs themselves, Sportfive cooperates with market research agencies in the
specific countries. These agencies carry out questionnaire interviews in order to identify the habits, likes and dislikes of football-interested people. Other reports have been
published by the British marketing research company Key Note (Football Clubs &
Finance, 2002), the German WGZ-Bank (FC Euro AG, 2002), and the Financial
Times Yearbook (The Investors’ Guide to European Football 2000, 1999). The main
objective of these reports is to give clients or investors respectively an overview of the
European football business by comparing the various football markets and the top
European clubs.
However, the level of interest in football as a subject of research is demonstrated
not only by the number of published books but also by media coverage of the game,
since football is no longer restricted to the back pages of newspapers, as Morrow
(1999) has shown. Indeed, business newspapers such as The Financial Times have
currently introduced a daily sports page, and more and more football stories can be
found in the business section of major national newspapers such as The Independent,
The Guardian or The Times in England and the Süddeutsche Zeitung, the Frankfurter
Allgemeine Zeitung or the Stuttgarter Zeitung in Germany. Even a highly sophisticated
magazine such as The Economist regularly publishes business-related football articles.
In contrast to academic studies, popular books about the business dimension of
football have been published in great numbers in recent years, for instance Bower
(Broken Dreams, 2003), Banks (Going Down – Football in Crisis, 2002) and Conn
(The Football Business, 2001) in the UK or Grünitz and von Arndt (Der FußballCrash, 2002) and Kistner and Weinreich (Das Milliardenspiel, 1998) in Germany. The
disadvantage of this non-academic literature is that it emphasizes only one side of the
story, mainly the negative consequences of the ongoing commercialization of the game
and the increasing influence of only a few key figures in professional football. Popular
literature such as this nevertheless gives some ideas of what is going on in British and
German football and therefore serves as valuable background information.
The patterns of the football business
Football is widely considered to be an established and distinct business. Jones (2003)
notes that on average, sixty per cent of football stories are nowadays about business-
André W. Bühler
28
related topics such as transfer fees, salaries or the downturn in television revenue. Lee
(1999, 152) states that “the language of football is one of revenue streams, brand
loyalty and inelastic demand for tickets”. As outlined earlier, business researchers
have discovered their interest in the field of football, which has led to a number of
published papers and books on the business dimension of the game. Some authors
denounce the commercialization of the game. Conn (cited by Lee, 1999), for instance,
concludes that “football has changed, from something which belonged to its people, to
a business”. On the other hand, there are those who welcome the transformation of
football from a pure game into a business sector. For example, Ehrke and Witte (2002)
believe that professional football is a sunrise industry which offers a global product for
a global audience.
However one sees the commercialization of the game, the question remains why
football can be seen as a business. After reviewing the relevant literature, three main
answers to this question have been identified:
– the amount of money involved in the game: the European football market was
worth €11 billion in 2004 according to Deloitte (2005), with professional
football clubs turning over millions of pounds each year,4
– the transformation from pure football clubs into medium-sized enterprises as
part of the entertainment-related football industry: football clubs have increased not only the quantity of their commercial management staff, but also
the quality. More and more businesspeople work for football clubs, which is
leading to a more businesslike way of thinking and a more consumer-orientated marketing approach. In terms of turnover and employees, football clubs
can be compared with medium-sized companies. In addition, some highprofile football clubs such as Manchester United, Real Madrid or Bayern
Munich can be seen as national or even international brands,
– the increasing amount of stakeholders and football-related industries: more
and more individuals (e.g. player agents) and companies (kit manufacturers,
consultancies, sport agencies) are benefiting from the football business.
Apart from these three main reasons, there are some other points which help to
identify football as a business. Pierpoint (2000) points out that, like any other industry,
the football business is influenced by market forces. Competition arises not only
between football clubs on a national or international level, but also from entertainment
and leisure industries which compete for people’s time and money. This leads to his
conclusion that understanding patterns of consumption and consumer behaviour is a
crucial precondition for every football club in order to remain competitive.
Foster (2000) identifies another business-related characteristic by explaining that
the football business, like any other international business in Europe, is subject to
European Law. He concludes that football clubs and the governing bodies of football
need to operate within the legal rules for running a business.
4
E.g. Manchester United turned over £169.1m in 2003/04.
Football as an international business – an Anglo-German comparison
29
The fact that football clubs, like any other companies, have a product to sell and
consumers to satisfy is another important reason for considering football as a business.
The relevant literature supports the view that football is indeed a business, but
opinions differ on the question when football became a business. According to
Dempsey and Reilly (1998), “the game has always been business”, though they admit
that it was never a properly run one in the early years. Empacher (2001, 203) notes that
English football already was a “commercial reality” in 1890, when football clubs sold
tickets and beer to spectators. Szymanski and Kuypers (1999) support this view by
explaining that football became a business as soon as football became entertainment
and people were willing to pay in order to watch other people play, and facilities were
required to cater for supporters. Pierpoint (2000, 29), however, reminds us that “to talk
of football being an ‘industry’, or even a recognized business sector, ten years ago
would have seemed slightly preposterous”.
Other authors have dated the establishment of the football business in England
with the formation of the FA Premier League in 1992 and the increase in television,
merchandising and sponsorship income (Conn, 1999). In view of the fact that the
assumptions differ widely, it is difficult to define when football as a business really
started. However, it might be fair to conclude that football has always been a business
to some extent, but reached unimagined dimensions in the last decade of the twentieth
and the first decade of the twenty-first century.
Another disputed point is the question as to whether football is a “big business”.
There is still considerable disagreement on the size of the football business. It was in
1905 when William McGregor said that “football is a big business” (cited by
Szymanski & Kuypers, 1999, 1). More recent authors share the same view (Michie &
Walsh, 1999; Poli, 2001). Fendrock (2000, 9) compares Professional American Football with business and argues that when enterprises pay salaries, generate revenues and
enjoy profits or suffer losses, then it is “big business”. The same can be said of soccer.
In contrast, Morrow (1999) contends that football is not a big business, since the
financial figures of most football clubs are insignificant in comparison to enterprises in
most other business sectors. This view is supported by the results of the qualitative
interviews, where the majority of interviewees rated football between a “small” and a
“medium-sized” business in terms of turnover and number of staff. It therefore might
be fair to conclude that football is an extraordinary business in terms of public appeal
and media coverage, but not a “big business” in financial terms.
The peculiarities of the football business
As shown above, football is a business. Like every industry it has its own distinguishing features. The football industry displays a number of peculiarities which distinguish it from any other sector. The most relevant peculiarities according to the
relevant literature and the interviewees of the qualitative research are:
– the dependence of business success on sporting success: some experts as well
as some of the interviewees believe that ultimately it all comes down to suc-
30
André W. Bühler
cess on the pitch, regardless of how good the marketing and the administration
of the club is. “Profits start with victory”, say Dempsey and Reilly (1998, 89),
– the uncertainty of the outcome: football results are not predictable, which
makes long-term planning difficult. On the other hand, it is the unpredictability which is the lifeblood of every football competition (WGZ-Bank,
2002),
– the associative competition: in any other industry, companies seek to gain a
monopoly situation, whereas in the football business clubs need each other in
order to produce the product (the pure football game). Some parity within the
league has to be retained in order to secure competition. Otherwise, the
product would be boring and demand would decrease according to some
economists (Dempsey & Reilly, 1998; Szymanski & Kuypers, 1999),
– the attitude to profits: the aim of each and every company is to make profits.
Football clubs, however, act as sporting organizations in the first place. Only a
few clubs really make profits, and most suffer from losses (Ehrke & Witte,
2002; Deloitte & Touche, 2003; Deloitte, 2005),
– the special relationship between football clubs and their fans: the role of the
fans is an extraordinary one. Traditional supporters show a high level of
loyalty, passion and irrationality. They cannot be compared with consumers of
other products and services. Some economists compare football supporters
with “captive consumers” in a “captive market”, which means that they do not
really have a choice.5 For example, traditional “die-hard supporters” would
never ever change the football club just because another club offers cheaper
tickets or merchandising articles. Essentially, it all comes down to the fans in
professional football: clubs need fans in order to sell their tickets and carry out
their merchandising, whereas the media need fans as subscribers or purchasers, and sponsors seek to transform football fans into their customers
(Pierpoint, 2000; Conn, 2001; Banks, 2002; Cashmore, 2003; Bühler, 2005b).
One factor which differentiates the football business from any other business seems to
be the dimension of public appeal. Morrow (1999, 2) assumes that “if football was just
any old business, then the type and extent of coverage it receives would be greatly
diminished”. This is a point which is highly emphasized by some interviewees, especially the clubs’ representatives. For example, one club official said that they might
have a turnover of a medium-sized company but the media attention of a global player.
The interviews also revealed that the public interest makes it difficult for football clubs
to work in peace, since every decision or mistake is discussed in public.
5
Captive market has been defined as a group of consumers who have limited choice in terms of
the products they can select/purchase or no other alternative but to buy a product from a specific
source respectively (Learnthat, 2003; Moneyglossary, 2003).
Football as an international business – an Anglo-German comparison
31
The markets and market players of the football business
The objective of this section is to identify the various markets of the football business
and its key players. Figure 1 reflects the main trading cash flow of professional football clubs according to the Sports Business Group at Deloitte (2004b).
broadcast income
matchday income
sponsorship income
merchandising income
other commercial income
players sold
FOOTBALL
CLUBS
player spending
trading surplus
wages and salary
other operating costs
Figure 1. Inflowing and outflowing payments of professional football clubs according to
Deloitte (2004b) – modified version
The markets of the football business
The main income streams and outgoing payments of professional football clubs reflect
the main markets of the football business. Following various publications (Key Note,
2002; Grünitz & von Arndt, 2002; WGZ-Bank 2002; Deloitte, 2005), five main markets of the football business can be identified:
1. Broadcasting Rights
Football is the number one TV sport in Europe according to Sportfive (2002). Media
in general and TV broadcasters specifically are keen on football. Therefore, broadcasting rights have become the most important income stream for professional football
clubs in Europe, accounting for the main part of total turnover. Broadcasting rights
include TV rights, radio broadcasting, internet rights and rights for multimedia usage
such as mobile phones. Calmund (1999) uses the picture of the Siamese Twins in order
to describe the relationship between television and football: both need each other to
survive. Football is an attractive content for television channels and an outstanding
driver of audiences and subscribers. Broadcasters are equally important to football,
since professional clubs are dependent on the money generated from broadcasting
rights. Television money has been without doubt “the fuel for growth of football”
(Dempsey & Reilly, 1998, 120). The financial aspect, however, is only one side of the
story. Television also serves as a marketing tool for football clubs, since they are the
focus of public attention through the media.
2. Match day income
The football business is based on the premise that people are paying to watch other
people playing football. Gate receipts are usually aggregated over two types of specta-
32
André W. Bühler
tors: people who buy tickets for individual matches, and people who purchase season
tickets. Most season ticket sales take place before the season starts, and therefore clubs
receive the payments annually in advance, which in return means that they have a
significant source of relatively predictable and certain income. However, most
individual match tickets are sold a couple of weeks or days before the match or even
on the match day itself (Morrow, 1999; Banks, 2002).
3. Sponsorship
Between 14% and 31% of total turnover of Italian, Spanish, French, English, and
German clubs is generated by sponsorship deals according to Deloitte (2005). The
sponsorship structure of professional football clubs has changed over the years. Originally, it was mostly a local company which, in the early years, backed the football
club. The motivation for these sponsorship deals was mainly patronage. Football,
however, attracted more and more companies as a consequence of the increasing
popularity of the game, and clubs soon became marketing tools for companies. This
process intensified when television fell in love with football. But not only have the
sums of money involved in today’s sponsorship deals multiplied several times,6 the
sponsorship structure has also changed. The single local benefactor of the early days
has been replaced by a whole pool of club sponsors (incorporating shirt sponsors, kit
suppliers, commercial partners and local/regional sponsors).
4. Merchandising
Merchandising is defined in various ways. The most appropriate definition in the
context of this research comes from Rohlmann (2002, 426), who equates merchandising in simplified terms with “dealing in fan items”. Merchandising fulfils two
functions for professional football clubs. First, merchandising is an important income
stream: the sale of replica shirts and other merchandising articles has become a
business of its own, with football clubs generating between 15% and 20% of their total
turnover from merchandising (Süßmilch, 2002; Grünitz & von Arndt, 2001). Second,
merchandising is also a strategic tool for branding the club itself: every fan item
transports the logo of the club outwards and turns fans into walking billboards. Therefore it can be seen as advertising for the club (Dempsey & Reilly, 1998; Grünitz & von
Arndt, 2001; Rohlmann, 2002).
5. Transfer market
When clubs buy players from other clubs out of their contract, they usually have to pay
a transfer fee. However, the transfer market is complex and confusing since the
6
The average annual value of shirt sponsorship deals in the German Bundesliga in 1981/82 season
was 510,000 DM (~ €260,400) compared to €4.83 million in 2004/05, which means an increase
of nearly 1.900% within two decades.
Football as an international business – an Anglo-German comparison
33
Bosman ruling7 and will therefore not be taken into consideration within the course of
this paper.
The market players
Within the markets mentioned above, a lot of individuals as well as groups and organizations have a stake. According to the literature (e.g. Grünitz & von Arndt, 2002;
Deloitte & Touche, 2003; Deloitte, 2005), the following stakeholders can be identified
as crucial market players: the clubs, the associations or governing bodies respectively
such as the English Football Association (FA) or the German Football Association
(DFB), the players themselves, their agents in special or football-related agencies in
general, the media, the sponsors, the fans and finally the governments. The market
players are all more or less interrelated as well as interdependent. For example, clubs
need sponsors in order to pay players who are being used by the media to attract the
fans and so on and so forth. They all have various interests, of course, which
sometimes leads to conflicts, e.g. clubs might have an interest in signing a long-termcontract with a player, whereas the player and his agent are likely to vote for a shortterm contract in order to have more options. Table 1 seeks to compile the possible
interest of the various market players.
Table 1. Different interests of the various market players of the football business
market player
Clubs
Associations
Players
Agencies
Media
Governments
Sponsors
Fans
main interest
to be successful on and off the
pitch
to secure the game and ensure its
importance for the game
to play successfully and earn a lot
of money
to benefit from football in financial
terms
to attract readers and consumers
and to influence certain issues
to secure football as a cultural asset
to make profits and benefit from
football in financial terms
to be part of a successful
community and to live the dream
interest in
sports-related
issues
+++
interest in
business-related
issues
++
+++
++
+++
+++
+
+++
++
+++
++
++
++
+++
+++
+
(+ fair interest ++ strong interest +++ very strong interest)
7
This 1995 judgement by the European Court of Justice, named after a Liège football club player,
enabled a player to leave his club and the country in which he plays, at the end of a contract,
without paying the club any compensation. It also enabled a football club in a member state of
the European Union to own an unlimited number of players who are citizens of other EU member
states (Poli, 2001).
André W. Bühler
34
It has to be said that the interests listed above are more or less assumptions and
generalizations since the interests of the various market players are more complex and
therefore difficult to examine, of course.
Figure 2 summarizes the findings of this chapter by presenting the markets and the
market players of the football business.
THE FOOTBALL BUSINESS
clubs
associations
sponsors
ticketing
merchandising
media
broadcasting rights
players
transfer
sponsorship
agencies
government
fans
Figure 2. Markets and market players of the football business. Based on Key Note (2002),
Grünitz & von Arndt (2002), Deloitte (2005)
Anglo-German differences
This section presents and describes the main differences between the English and the
German football business in general and between the English Premier League and the
German Bundesliga in particular.
The structure of English and German football
The obvious structural differences between English and German football are as follows:
– The number of professional clubs (92) and professional leagues (4) in England
is far higher than in Germany (36 professional clubs in 2 professional
leagues).
– English football is governed by two official bodies, the Football Association
(FA) and the Football League (FL), whereas in Germany – just like in most
Football as an international business – an Anglo-German comparison
35
other countries – there is only one governing body, the Deutscher Fußball
Bund (DFB).
– In England there is a tendency to rate the clubs over the national team,
whereas in Germany the national team is the main driver of football. This is
due to the historical successes of the German national team on the one hand
and to the longstanding tradition of league football in England on the other.
– The ownership structure of professional football clubs in England differs from
the ownership structure of professional football clubs in Germany. Most professional clubs in England have been Public Limited Companies since their
foundation, whereas only a small number of professional football clubs in
Germany have become incorporated associations in recent years. In addition to
that, a lot of English football clubs are quoted on the stock market. In
Germany just one club has gone public.
Figure 3 and 4 reflect the current structure of English and German football respectively.
The F.A. Premier League
The F.A. Premier League
Limited (FAPL)
Championship
The Football
Association (FA)
League 1
League 2
Grassroots football
(40,000 affiliated clubs
playing in 2,200 leagues)
Figure 3. The current structure of English football
The Football League (FL)
André W. Bühler
36
The 1st Bundesliga
The Deutsche Fußball
Liga GmbH (DFL)
The Deutscher
Fußball-Bund (DFB)
The 2nd Bundesliga
Grassroots football
(26,239 clubs
playing with 168,246 teams)
Figure 4. The current structure of German football
The main income streams
Broadcasting rights
The English Premier League currently earns approximately €820m each season. The
German Bundesliga, on the contrary, generates considerably fewer broadcasting
revenues with around €300m in 2004/05.8 There are two main reasons for this wide
gap: first, the German pay-TV-channel Premiere pays “only” €180m for its package,
because it has significantly fewer subscribers (around three million) than its English
counterpart BSkyB (around eight million at the end of 2005). BSkyB also gets more
exclusivity for its money, since highlights of the Premier League games are not
broadcast before 22:30 on English free-to-air TV. In Germany, however, second use of
games is shown earlier at 18:10. Second, the English Premier League attracts more
attention in foreign countries. A media analysis revealed that the Premier League
reaches a range of 106.3 million people in the main European markets in comparison
to the Bundesliga with a range of only 10.3 million people. This leads to more
revenues from the sales of international broadcasting rights, with the English Premier
League generating €90m in comparison to Germany with €15m (Klotz, 2004).
There is less of a consensus among experts regarding the future of broadcasting
rights. Some say that television rights will become less important financially to clubs
over the coming years, and some even warn about a collapse of it all (Banks, 2002).
Though the development of broadcasting rights is difficult to predict, it seems likely
that television income will even out at a consolidated level. High-profile clubs in Eng8
However, it has to be noted that the DFL secured a new television deal in late December 2005,
valid from 2006/07 to 2009/10 and worth €1.26bn. Premiere, surprisingly, failed with their bid.
Instead, a new German Pay-TV consortium (called Arena) bought the rights to show live games
of the Bundesliga. ARD, ZDF and DSF renewed their television agreement. This, in turn, means
that the 36 professional football clubs will receive a total of €420m a season. Consequently, the
DFL is rethinking the allocation formula for the next three years.
Football as an international business – an Anglo-German comparison
37
lish and German football will still be influenced by the prospect of higher revenues
from individual match sales and therefore try to abolish the collective sales of TV
rights. This might make them more competitive at an international level, but will also
lead to a wider gap between big and small teams within the national leagues. All in all,
television income will still be an important revenue stream for professional football
clubs, but maybe not the most important one anymore.
Match day income
England acts as a benchmark in terms of generating money on match days. Germany
has overtaken its English counterpart in terms of attendances, but generating revenues
from match days is a sore point in Germany. For example, an average Bundesliga
attendance of 77,235 means that Borussia Dortmund have bigger crowds than Manchester United, but these are far less lucrative in terms of match day revenues. One
reason is the price charged to customers. Tickets for top league football in England are
more expensive than in Germany owing to better utilization of stadium capacity. In
addition, most English Premier League clubs own their stadia and can therefore make
calculated investment decisions. This is best illustrated in the fact that more than
€1.5bn have been spent by clubs to upgrade facilities and increase capacities since the
English Premier League was formed in 1992. Apart from their huge match day incomes, some English clubs have also managed to generate significant revenues from
non-match-day usage of their grounds with stadium tours, conference and meetings,
office space, health and fitness areas or restaurants and museums (Deloitte, 2004a).
In contrast to England, stadium ownership in Germany is mainly controlled by the
public sector, and therefore commercial investments had been more difficult to implement in the past. However, things have changed, with football’s 2006 World Cup
competition in the offing, a major event which will be hosted by Germany, and
German Bundesliga clubs are now benefiting from pre-World Cup stadium investment
(Deloitte, 2004). Experts believe that the German Bundesliga can not only learn from
the English Premier League in terms of match day income, but even surpass its rival in
the long term (Süßmilch, 2002).
Though match day revenues can be predicted to stay at a high level in England
and even to increase in Germany, there is a natural limit. Clubs can increase their
stadium capacity or charge even higher prices, of course. But there is a limit to the
demand for football matches and the exploitation of the fans or customers respectively.
Some experts have already warned of the danger of making excessive assumptions
about either (Morrow, 1999; Greenfield & Osborn, 2001; Weilguny, 2004a).
Sponsorship
Germany is the leading football nation in the area of sponsorship. No other European
football league is able to generate more income from sponsorship than the Bundesliga.
For example, the most lucrative sponsorship deal in England (Manchester United and
Vodafone) is more than €6m smaller than the biggest sponsorship deal in the Bundesliga, with Bayern Munich able to generate up to €20m from their partnership with
38
André W. Bühler
Deutsche Telekom. Differences are not only obvious in financial terms, but also in
terms of servicing and presenting the sponsors. A quantitative content analysis of
Premier League and Bundesliga clubs’ websites reveals a clear difference: more than
280 sponsors (shirt sponsors and commercial partners) were identified on the German
websites, whereas the English clubs present only 58 sponsors (Bühler, 2005a). The
recent report of the Sports Group at Deloitte (2005) states that around 31% of total
income accounts for sponsorship. The comparative figure for English clubs is definitely lower, although concrete figures are difficult to obtain, since English clubs subsume
all revenues from commercial activities (such as merchandising, hospitality and
sponsorship) under the heading “commercial venues” without further differentiation.
This is another indicator that sponsorship does not play such an important role in the
English Premier League.
The reasons for these differences are manifold. The qualitative in-depth interviews
revealed that one of the reasons is the different degree of dependence on sponsorship
income. The English clubs generate considerable income from television and match
days, and therefore the necessity to give a high priority to sponsorship was not that
high. This was in contrast to the German Bundesliga clubs, which suffered from
reduced television income as a consequence of the crash of the Kirch media group.
German clubs realized early on the value of sponsorship and therefore developed
sophisticated concepts. Another reason might be the forthcoming World Cup 2006,
which will be held in Germany. German industry is keen to enhance its profile through
football as the World Cup approaches. Therefore, a lot of companies are associating
themselves with Bundesliga clubs.
However, the sponsorship gap between Germany and England will narrow according to some of the interviewees. On the one hand, English Premier League clubs
are expected to catch up pretty quickly. When interviewed, representatives of English
clubs emphasized a strong desire to think more strategically about sponsorship and
take it more seriously in order to generate more sponsorship income in the near future.
On the other hand, experts predict a consolidation of sponsorship revenues in Germany
at a lower level after the World Cup 2006.
Merchandising
The English Premier League is clearly ahead of its German counterpart in terms of
merchandising revenues. This is mainly for three reasons: first, English clubs were the
trailblazers in copying the merchandising concept, which had its origins in the United
States. They have therefore much more experience of merchandising than other European clubs. Second, the English Premier League has strong links with Asia and the
US, which serves as an important market, especially for high-profile clubs such as
Manchester United, Arsenal or Liverpool FC. Third, English people have on average a
different attitude towards fashion than people from continental Europe. For example, it
is more likely to see English football fans wearing replica shirts at weekdays than
Spanish, Italian or German supporters, who wear their football shirts mostly on match
days. However, German football clubs are keen to develop this revenue stream further,
Football as an international business – an Anglo-German comparison
39
and some brand names such as Bayern Munich or Borussia Dortmund are making
significant progress with merchandising.
The likely prospect for merchandising is that it will still be an important income
stream in the coming years, since there is much room for further growth in the markets
of Asia and the United States. German Bundesliga clubs can still do better in terms of
merchandising compared to their English counterparts. However, merchandising as an
income stream also has its limitations. It is still a low-margin revenue stream, since the
production and distribution of merchandize impose significant costs (Banks, 2002;
Dobson & Goddard, 2001). Another problematic aspect of merchandising is mentioned
by Dempsey and Reilly (1998, 138) who point out that merchandising “is based on
fashion, and fashions change”. In other words: when people are not willing to wear
replica shirts on the street or in stadiums anymore, merchandising revenues will go
down. The same will happen when loyal and irrational die-hard supporters are
replaced by a new generation of football customers who see football as a replaceable
leisure activity.
Conclusion
Football is without doubt a business. The commercial aspect of the game is reflected
not only in the increasing amount of research papers and popular books on the
business dimension of football, but also in a number of key factors such as the transformation of football clubs into medium-sized companies or the establishment of
national or international football brands. The football business might be a small business in terms of turnover, but it is definitely a big business in terms of public appeal
and media attention. A lot of different stakeholders are involved in today’s football
business, with clubs, associations, players, media, sponsors, agencies and fans as the
main market players. The principal markets derive from the main income streams of
professional football clubs. First, there is the income from the sales of broadcasting
rights, followed by match day income and sponsorship revenues. Then, there are
merchandising and the transfer market. The English Premier League is the European
benchmark in terms of television income, merchandising and match day revenues. The
German Bundesliga, however, is the leading football league in the area of sponsorship,
not only in terms of income, but also in terms of sponsorship concepts.
The commercial dimension of the game will increase further, with more and more
people and organizations benefiting materially from the football business. The growth
prospects look optimistic – on one condition: that the beauty and the fascination of the
game remain undiminished.
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André W. Bühler studied International Business and Management, Business Psychology and
Marketing at Nürtingen University in Germany and subsequently undertook PhD research at
the University of Plymouth Business School (UK). His doctoral work deals with professional
football sponsorship in the English Premier League and the German Bundesliga. For further
information please see www.football-and-business.com.