With the noughties ending in the most serious recession in the global economy since the Second World War, there has inevitably been discussion of the impact on football. In many respects, football has turned out to be recession proof, both in terms of gates and television audiences. This is not so surprising when low inflation and falling interest rates mean that the incomes of those in work have not decreased and in some cases have increased in real terms. Unemployment has increased, but not as much as was feared, although there has been an increase in short-term working.
With the noughties ending in the most serious recession in the global economy since the Second World War, there has inevitably been discussion of the impact on football. In many respects, football has turned out to be recession proof, both in terms of gates and television audiences. This is not so surprising when low inflation and falling interest rates mean that the incomes of those in work have not decreased and in some cases have increased in real terms. Unemployment has increased, but not as much as was feared, although there has been an increase in short-term working. The Premiership remains a uniquely attractive product, both nationally and globally. The creation of the Premier League in 1992 and with it the ability of the clubs to negotiate their own collective broadcasting rights and sponsorship deals created an explosion in revemues, transfer fees and player salaries that many argued was unsustainable. A frequent question was when would the bubble burst? There was no doubt that some wanted to see it burst, particularly those who resented the route to riches offered by football from those with little education and often from poor or ethnic minority backgrounds.
If there was a bubble, it didn’t burst. Leading football finance expert, John Beech of Coventry University’s centre for the international business of sport, told the Financial Times, ‘The growth in influence of television money has continued to dominate the game and, notwithstanding the occasional setback such as the collapse of ITV Digital and Setanta, TV money just gushes into the game – and out again, to players and, to a lesser extent, their agents.’ However, there are some worrying signs. There are fewer foreign buyers of clubs available and some of them have difficulty in converting assets into regular cash flow or stay for only a brief period. The rising burden of debt is a concern and, as we have noted, HM Revenue and Customs is taking action against defaulting clubs more rapidly. Professor Beech commented, ‘Insolvency events in football clubs were relatively uncommon until 1999. But now they are happening with frightening frequency – there were six in May alone this year.’
Nevertheless, there are many positives. Jon Smith, a long-term football agency and chief executive of entertainment agency First Artist (a revealing combination of roles) told the Pink ‘Un that English football was ‘the single most succesful entertainment on the planet. The only thing that gets close is a blockbuster Hollywood movie. You can go to the backwaters of the planet and they will know that Hull City play in the Premier League.’ Perhaps, although particularly in the United States where there is no tradition of promotion or relegation in sporting competitions, only of transferring franchises, the appearance of ‘rookie’ teams can cause confusion. Asked for his views, leading authority Dan Jones of Deloitte’s sports business group noted that, particularly at the top level, ‘these are very desirable businesses to buy and there aren’t that many of them.’ Professor Beech, however, takes the view that the benefactor model is unsustainable and clubs like Chelsea are trying to move away from it, although it is easy to become addicted to an apparently never-ending supply of cash.