Will football’s financial bubble burst?

DESPITE THE increasingly publicised economic downturn that has taken a hold of almost every major nation in the world, one business continuing to thrive regardless of the ‘credit crunch’ is football, writes Iain Green.

Once a sport, but now with much more ommercial links than sporting links, football has seemingly shrugged off the collapse of the banking enterprises due to a hardcore group of supporters, rich foreign investors and deals with television companies accounting for billions of pounds worth of income.

Admittedly, budgets may be tighter at a larger number of clubs than ever before, and the effects of the downturn are surely felt much harder than ever before at lower levels of the football pyramid, but this still doesn’t mean that clubs are reluctant to splash the cash.

If anything, it has lowered the price-tags of world class players in an over-inflated transfer market, allowing for realistic valuations, while those scrapping for survival in the Barclays Premiership acknowledge that relegation to the Coca Cola Championship will cost them in upwards of £50 million in revenue and broadcasting rights.

However, in an era where money rules the roost, how refreshing was it to see Brazilian superstar Kaka turn down the overtures of Manchester City, who were prepared to pay the playmaker in excess of £500,000 a week, plus offer his club, AC Milan, a reported £107 million for his services.

Kaka is proof that money isn't everything

 

 

 

 

 

 

 

 

 

 

 

Although Kaka and ‘Rosseneri’ ultimately rejected City’s offer, the intention to splurge that amount of money on the world’s third best player further foregrounds the notion that football’s economic bandwagon shows no sign of shuddering to a halt just yet, even though some are beginning to feel the pinch.

And with major players such as BSkyB and Setanta Sports locked into deals to screen live football for numerous years to come, it seems unfeasible for revenue to drain dramatically away from the beautiful game, unless BSkyB in particular, suffer the same fate that befell ITV Digital a few years ago.

Another key area that football relies heavily on is shirt sponsorship, and is the only dimension where clubs could possibly lose out of financial income, mainly due to not securing a company prepared to emblazon their name across the front of their shirts.

An perfect example of this can be seen through West Bromwich Albion’s failure to attract a kit sponsor, costing them vital money in their quest for survival, while at the opposite end of the spectrum, Manchester United’s tie-up with ailing insurance group AIG will end this season after the American based firm’s share prices dropped alarmingly, leaving United to scour the Middle East for possible suitors.

But these instances are few-and-far between, and unless the bottom falls out of commercial and television revenue, then football will always have some rich sugar-daddy to bail it out in the case of any dramatic financial meltdown.

  • Iain Green is a final year English and Journalism student at Coventry University.
Advertisements

Leave a comment

Filed under Features

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s