Between the Lines

"Of all unimportant subjects, football is the most important" – Pope John Paul II

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.

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4 Responses to “Like the stream of gold and the Sky above”

  1. The Gaffer said

    The City owners will soon become bankrupt (hopefully!) But it’s true, they seem like the only ones who are not affected by the crisis.

  2. The superbowl may be able to increase their ad prices, but I’m not sure that goes for the rest of the TV-shows. So is this another financial situation, where the top 4 or so will have an economical advantage over the rest of the teams?

  3. Hakan said

    It is, of course, extremely difficult to forecast how the recession will affect United and other clubs in the PL. I just found it interesting that a number of recent signs pointed in another direction than most people probably expected. It’s conceivable that the most popular events in the most popular sports (e.g. American football, Indian cricket and the PL) are more recession-proof than most other businesses. But I really don’t know whether this means that the top 4 are better equipped than the rest of the PL to escape the downturn.
    As for the bankruptcy of City’s owners, I’m afraid we might have to wait a few more months.:)
    Meanwhile, here’s a nice gift to all your City-friends:
    http://www.tshirtsunited.com/catalogue/tshirts/all/daddy-do-you-remember-tshirt.html

  4. […] by hakanrylander on March 24, 2009 In a previous post I claimed that the global recession has, so far, had surprisingly little impact at the top level of […]

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