Alternative Ownership Models on Display in Soccer
It’s been a week of interesting contrasts in North American and European soccer, particularly with regard to issues of control and ownership in the game. In MLS, an attempt to keep teams on sound financial footing is the alleged reason for resting substantial authority over player contracts in the league office. But a story in the Toronto Star — Toronto FC’s hands tied by meddling MLS – claims that MLS rejected Toronto FC’s contract offer to Olaf Mellberg for rather mundane reasons, as if the defender was not flashy enough for the league’s marketing objectives. If the Star’s take on this is correct, MLS refused to allow the club to spend its money as it saw fit, and not for the first time either. Regardless of MLS’ motives, this is an interesting tussle between the rights of a franchise and the heavily unitized league entity. If indeed player selection is to be based on part on league marketing objectives and not on a franchisee’s view of its best interest on the pitch, you can expect further squabbles of this nature in the future.
Across the pond, it was a great week for German teams in the Europa and Champions League., where Bundesliga teams went 7-0-1 including high profile victories over Arsenal and Real Madrid. Gabriele Marcotti contrasts this with the poor results for English teams, not just on the pitch, but in the stands and on the books. Unlike MLS, both the Bundesliga and Premier League sit atop a pyramid system of relegation and promotion from lower tier leagues, but there are important differences in ownership structure. In England (and Scotland), pretty much anything goes (and has: see the turmoil at Leeds and Portsmouth, not to mention Rangers to the north, now nestled in the fourth tier of Scottish soccer). Swashbuckling, debt-fueled ownership is ruled out in the Bundesliga, where majority ownership resides by rule in club members, who pay an annual fee for the right to govern the club. This model appears to be working:
Last season, the average Bundesliga club drew approximately 45,000 fans per game to the Premier League’s 34,600. Part of it is down to bigger and often better stadiums, some of which were refurbished or built with public money ahead of the 2006 World Cup. But a lot of it is down to ticket prices, which are substantially lower in Germany.
The bigger crowds in the Bundesliga, coupled with the fact that Germany is a wealthier country with a more vibrant economy, allow clubs to attract sizable sponsorships and commercial deals. Indeed, according to Deloitte’s “Football Money League” report, in 2011 Bayern Munich’s commercial revenue ($230 million) was greater than that of global juggernauts like Manchester United ($148.2 million) and Arsenal ($66.2 million) combined. And even a team like Schalke, huge in its own way but hardly a household name beyond the cognoscenti, earned more commercial revenue ($117.7 million) than global soccer brands like Chelsea, Liverpool, Tottenham or Manchester City.
To be sure, as Marcotti notes, the global TV rights for Premier League games lead the chasing pack by a huge margin. But what has all of that TV money done for the Wigans and Wolves of the world? It will be interesting to see how these two forms of ownership fare in the next few decades, in what is ultimately a highly competitive marketplace.