Like the stream of gold and the Sky above
Posted by hakanrylander on February 14, 2009
The global economic downturn has severly affected a number of owner’s of football clubs. West Ham’s Bjorgolfur Gudmundsson is on the brink of bankruptcy and Roman Abramovich at Chelsea is beginning to look like a bit of a skinflint after years of extravagant spending. Only the Abu Dhabi guys at City seem to have very deep pockets these days.
But to what extent will the recession hit the business of football itself, i.e. the revenues from gate receipts, television, sponsoring and other commercial activities? The surprising answer might be: Not very much.
At least, a number of events in recent weeks have pointed in that direction. The most important for United and other English clubs is that the Premier League secured a record television deal worth almost £1.8 billion (of which Sky will pay £1.62 billion) over three years, from 2010 to 2013. This is about 5 percent more than the previous deal.
This week’s edition of The Economist argues that leading sports have two big advantages that help them stand up to recession better than most. Firstly they are able to sell broadcasters and sponsors what they crave: lots of dedicated viewers. Secondly, a large part of the income is based on long-term contracts that help to lay a good base of revenue.
The hypothesis is backed by developments in other sports. In the auction to hire players to the Indian Premier League (cricket) that starts in April the prices increased compared to last year. The average price of television-advertising slots during the Super Bowl (american football) was even higher than in 2008.