Non-league can still be a stakeholder concept

THE NON-LEAGUE football world often lives within a false economy that does little to dissuade clubs from flirting dangerously with financial ruin. Some clubs live way beyond their means, paying out everything they accrue and agreeing players’ wages that are totally unrealistic when one considers the earning power of the clubs.

It’s a questionable  business model – often a club is propped up by a few individuals ploughing-in money to keeping the club afloat. Mostly, clubs that live beyond their means are not successful – the number of clubs that are actually successful is very small. Of course, it does depend on how success is quantified, but mostly, little more than 10% of clubs in a 24-team division can experience true success each season. It begs the question, is money being well wisely in the non-league game?

The precarious nature of non-league football is best illustrated by a crude calculation revealing that football alone will struggle to support a club. Take, for example, a club that generates £2,500 per match from an average crowd of 350. On the other side of the balance sheet, that club might pay out around £ 2,000 per week over a 40-week season. That generates a significant gap, to be met from sponsorship and social income. And that does not take into account any infrastructure costs, bills, rates or expenses.

The seductive charm of the benefactor

Organic growth is near-impossible for many non-league football clubs. Gates fluctuate, but there is only so much upside a club can extract from the local community. In a town of 40,000 people, 1% of the population is 400, a reasonable expectation. Taking it above 2% is probably unrealistic in an age when there are so many distractions for people. Likewise, economics and demography also play their part in making organic growth difficult, although not impossible. A service-led economy in small-town Britain means lots of small retail outlets and no large employers. Therefore, sponsorship is restricted and those organisations that are “global” or “national” gain very little from sponsoring the local football club. The most loyal and long-term patrons are the firms and outlets that identify with the local community. Sponsorship from this segment may also be relatively limited and it can be a slow and ultimately fruitless courtship for clubs looking for substantial backing.

The alternative for some clubs is to seek “an investor”, which translated into football speak is “sugar daddy”, who basically bankrolls the club and asks for little in return. It is the quick route to inflating the wage bill, but is only ever short-term. This has long proved to be an unsustainable model that is tantamount to introducing an addictive substance into the finances of the club. Given these relationships are invariably two to five years, weening a club off football’s own version of quantitative easing can often be catastrophic.

The money injected into a club is rarely put to long-term use. The aim is instant success and this is interpreted as directing the cash injection towards players’ wages. There is little, if any, intention in using the cash more practically, such as new facilities, dressing rooms or even transport. So when the cash is withdrawn, the club invariably has nothing to show for the benefactor’s “investment”.

What the real world needs, a benign dictator 

There is no doubt that many benefactors are generous and gain little in return for their “Investment”. For some it is about tax efficiency, for others the love of the club. And, in extreme and more sinister circumstances, you cannot rule-out money laundering or criminal activity. The club takes the chance, not the supporters, but it should examine potential investors and be aware of reputational risk.

A genuine benefactor’s cash can be put to good use, such as improving infrastructure, and in doing so, take the pressure off other fund-raising efforts. By doing that, benefactors leave a legacy when they have – inevitably – departed a club. The benefactor can act as the catalyst for empowerment, allowing the club to move forward and develop a strategy of true ownership. The concept of “stakeholders” is not a new word, but there are very few clubs that “walk the talk” and genuinely empower the people for whom the club is an important part of their life. Without volunteer labour, youth football, supporters and sponsors, the club does not have true stakeholders.

A stakeholder-driven approach to governance

The management of a football should not just comprise people filling key roles at a club. That gives the club’s committee a very “operational” feel. To run a club as a business with a strategy, objectives and long-term view, the influence at the top has to be diverse and focused. Club officials are invariably concerned with “running the club” – they are part-time, after all –  and have little time to “change the club”. This is not a criticism, it is an observation based on the increasing  demands placed upon part-time clubs.

A club’s executive should be structured around stakeholders with representation from: the Board (if applicable); stakeholder groups (Supporters, Sponsors, local youth organisations); representation from, but not all, of the management committee (those responsible for the operational side of the club). To ensure motivation and creativity remains at a peak, executive positions should be for a defined period and certain positions should come up for annual or bi-annual election. This ensures that personal thiefdoms do not develop and accountability prevails. It will also enable succession to be accounted for, something which few clubs are able to achieve satisfactorily.

Making fans into stakeholders

Sports teams at an amateur level, such as some football, rugby, hockey and cricket, are run for the players. At the next level up, sport becomes a spectator event. Non-league clubs at a certain standard are run for the supporters more so than the players, whose relationship with a club is very short-term. While supporters tend to remain with the club for a lifetime, or at least a considerable amount of their lifetime, players lead a transient existence.

Rarely, though, aside from supporters’ clubs, do the fans become stakeholders in a club. Supporters groups rarely have a stake in the club, often only used as a glorified “sponsor”. Supporter ownership, such as that pioneered by Ebbsfleet, has had mixed results, but has rarely been any more successful than the regimes that preceded them. Consensus management is almost impossible in a sport that demands immediacy and spontaneity.

German football has taught us, in an age of oligarch and Middle Eastern influence, that supporter ownership – albeit on a partial basis – can be successful. Given the importance of the fanbase in non-league football, supporter bodies should have a significant share in the club, ideally between 30 and 50%. The shares could be distributed among an elected body that represents the supporters.

There is, however, something of a trend emerging where clubs are being driven by the fans. Every week there seems to be news of another club exploring the “community ownership” route. This will surely grow in the coming years as non-league attracts more and more fans marginalised by the cost of big-time football.

Making sponsors into stakeholders 

What, many people ask, do sponsors get out of donating money to a football club? One thing they should perhaps get is a say in how the money is spent. Why not? Would this not encourage financial sensibility and greater transparency? This could introduce a new dynamic to the relationship between the local community and the club. An advisory board, if you like.

Introducing sponsors into the equation would also bring fresh thinking to the table and demonstrate to the community that the club is spending the money it receives wisely and with due respect to the people who have donated it. A supervisory board could comprise three or four representatives from the local business community, those with a connection and relationship with the club. This idea could also act as a “back-stop” for the club in ensuring that the club is behaving appropriately.

Making youth into stakeholders

There is a growing trend among corporate bodies and indeed, sports clubs, to portray themselves as philanthropic organisations. This is laudable, but is often greeted with some scepticism. At the highest level, there is a feeling that the club is merely doing this to ease its own conscience, or even benefit from grants and public sector hand-outs. Ultimately, the product that a football club offers is football itself.

Youth football is often detached from senior football to such an extent that the youngsters who play in youth structures rarely feel part of the so-called “parent” club. There are various reasons for this, but it can mean that young players graduate from the under-8 level to under-18 level and then disappear from view. Some of these players may end up with other clubs or eventually return to the parent club when they have gained experience elsewhere.

Youth development should be a priority for a non-league club and should be the breeding ground for young talent. If there is a level of football that should demand a certain percentage of homegrown players, it should be non-league.

In order for youth football to be a part of a parent club, the latter has to ensure its brand is compelling and strong enough to build a franchise where the creation and running of youth clubs adheres to its rules and conditions.

Commitment has to be two-way, but the parent club has to ensure it creates a structure that facilitates progression and nurturing – and belonging. This is a challenge, given that youth football is often disparate and reliant on parents who wish to be connected with their offspring’s out-of-school activities.

Making the community into stakeholders

If a club wants to claim it is “part of the community”, it has be represented on bodies other than those created by itself. It should also link-up with other sports organisations in its town to help form a strong “sport-oriented” body. Clubs can learn from each other. Although other sports do not attract the spectator interest of football, rugby and cricket clubs are generally better organised than football and have a greater level of player and youth engagement.

The way forward

Football is an emotional sport and old habits die hard. There is a real danger of too much “living for the moment” and not enough awareness of the consequences of ill-conceived decision-making. The heart, as they say, often rules the head. In addition, the blanket coverage of big-time football that dominates the media, presents non-league with tough competition.

All is not lost, though. When supporters of the top clubs claim “the club is ours”, they could not be more removed from reality. The club owns the supporters, not the other way around. The club drip-feeds the opium of top level football and all its commercial trimmings. The fans pay a high price to watch their teams, part with their money for souvenirs, shirts, food and drink and even pay membership for the privilege of paying even more cash for tickets. It is a bubble that, at some stage, may start to lose air.

Non-league football has the opportunity to engage with its audience and really introduce the concept of stakeholder ownership, and that doesn’t necessarily copying the model established by a group of former Manchester United players. In the past, there has been too much “capital and labour” division among those that sit in the directors’ box and those that follow the clubs. This is not to say that non-league clubs should become a myriad of “people’s republics”, but they should certainly be less like the old DDR! All factions, working together for the good of a common cause, should be the aim, with an underlying philosophy that recognises the value of gratitude.

“This really is your club,” should be the message that every ambitious club tells its supporters, its backers, its youngsters and the local community. Don’t just say it. Live it. Make it a reality, for the sake of the future of the game.

www.gameofthepeople.com

twitter: @gameofthepeople

Corporates still line-up for football

FRANCE’s top division will have a new name for the 2020-21 season, the Uber Eats Ligue 1,  after the US online food ordering and delivery service agreed to sponsor the league until 2021-22.

This naming rights deal, making Ligue 1 sound a little like an English non-league competition, will yield € 32 million for the French league, a significant increase on the previous deal with Conforma. The announcement has, predictably, sparked a wave of mockery from fans, notably around the plan to have the matchball for every Ligue 1 game delivered by an Uber Eats driver.

The French deal comes just a few weeks after the Football Association announced that BT will provide £ 50 million of sponsorship over a five-year period. The corporate world continues to find football attractive. Each summer, clubs announce major new deals with the business fraternity, most of whom have identified the potential of the world’s most popular sport. And as well as using major competitions like the FIFA World Cup and the UEFA Champions League, corporates are constantly gravitating towards football’s big names.

According to CSM Sports & Entertainment, Manchester United are the leading European club for sponsorship, receiving around € 269 million, just ahead of Barcelona (€ 261 million). CSM estimated that the market across the top five European leagues (England, France, Germany, Italy and Spain) is worth around € 4 billion, with the Premier the top competition with € 1.2 billion.

Shirt sponsors in some leagues are now sharing their space with the recently-added area of sleeve advertising. For example, Arsenal’s shirt sponsor is Emirates, while its sleeve sponsor is Rwanda. 

Football sponsorship brings multiple benefits to companies eager to break into new markets. This may result in some corporates being very generous in order to accelerate their expansion programmes. AIA, who describe themselves as a “pan-Asian insurance group”, paid a considerable sum – £ 100 million over five years – to sponsor Tottenham Hotspur, but market observers assumed this was in order to take the AIA name to the UK.

There is little doubt, however, that a blanket approach to sponsorship can quickly raise awareness of the corporate name. One very obvious example is Gazprom, the Russian energy company that has not only entered into the shirt sponsorship market, but their association with the UEFA Champions League – notably their graphic and somewhat sinister TV advertising – has made them something of a household name across Europe.

Some see Gazprom’s blanket approach to football sponsorship as an expression of Russian passive aggression, although the company itself is clearly using the game to soften its image. When Gazprom sponsored Schalke 04 it coincided with the construction of the NordStream 1 international pipeline, a deal that was supposed to signal heightened cooperation between Germany and Russia. Gazprom is now one of the leading backers of football and includes Zenit St. Petersburg, Schalke 04 and Red Star Belgrade among its shirt sponsorship contracts.

Similarly, Emirates, the world’s fourth largest airline, has entered into a number of sponsorships, including shirts and stadium rights in a bid to become closely linked with the world’s leading football clubs. Emirates have some big names in their shirt sponsorship portfolio, including Real Madrid (€ 70m per season), Arsenal (€ 31m), Paris Saint-Germain (€ 25m) and AC Milan
(€ 18.5m)

Barcelona surprised many people with their shirt sponsorship deal with Japan’s Rakuten, but the agreement, totalling €55 million per season, was one of the most lucrative in football and has the potential to raise public awareness of a relatively unknown company. Rakuten have said that their involvement in sport has proved to be beneficial for revenue generation.

Chevrolet is far from unknown, but its long-standing relationship withManchester United, with a € 71 million per year shirt sponsorship agreement, has undoubtedly made their name more visible in the UK and Europe.

Etihad, the sponsor of United’s neighbours, Manchester City, has a number of touch points that obviously assist recognition. Etihad is the shirt sponsor (€ 45.9m), but also has the stadium naming rights. In addition, the complex that includes the stadium has a dedicated tram stop, Etihad Campus, that also takes the name to the Manchester public.

The football industry’s appeal has certainly caught the imagination of gambling brands, particularly in the English Premier League where almost half of all shirt sponsors are betting entities, casinos or other forms of gambling. Gambling and football have long been related although there is a school of thought that the sport is over-saturated with link-ups with the sector.  Gambling is an area that is very liquid, appeals to the football demographic and has expanded considerably due to the growth of online offerings and new technologies. However, there is something of a moral dilemma here that contradicts many of football’s social responsibility activities. Gambling is a growing problem, often classed as an addiction or a form of illness. Is this an industry that is appropriate for a pastime that attracts huge numbers of children and young people?

Financial services account for 20% of shirt sponsors in the Premier League and across the top five European leagues, have spent more than € 300 million. Airlines and Automotives contribute 10% apiece to the Premier. Interestingly, Germany’s Bundesliga has not followed the same path and has a broad range of shirt sponsors.

With match attendances high in the leading football leagues, particularly the Premier League and Bundesliga, and broadcast coverage at an all-time high, sponsors will undoubtedly continue to seek to exploit football as a market opportunity. Indeed, clubs themselves are constantly seeking new ways to monetise the broad appeal of the game. While some sceptics see football as a classic bubble waiting to burst, there is no apparent sign the appetite is waning. If there is a word of caution, it should be that the global economy is due for a downturn. With football increasingly reliant on income streams that represent discretionary spending, the effect of another financial downturn cannot be underestimated.

At the moment, though football, due to the mass appeal of the game and its ever-expanding global footprint, remains a magnet for big business. For how long, you might ask?

Non-league and the stakeholder concept

THE NON-LEAGUE football world often lives within a false economy that does little to dissuade clubs from flirting dangerously with financial ruin. Some clubs live way beyond their means, paying out everything they accrue and agreeing players’ wages that are totally unrealistic when one considers the earning power of the clubs.

It’s a questionable  business model – often a club is propped up by a few individuals ploughing-in money to keeping the club afloat. Mostly, clubs that live beyond their means are not successful – the number of clubs that are actually successful is very small. Of course, it does depend on how success is quantified, but mostly, fewer than 10% of clubs in a 22-team division can experience true success each season. It begs the question, is money being well wisely in the non-league game?

The precarious nature of non-league football is best illustrated by a crude calculation revealing that football alone will struggle to support a club. Take, for example, a club that generates £2,000 per match from an average crowd of 350. On the other side of the balance sheet, that club might pay out around £ 2,000 per week over a 40-week season. That generates a significant gap, to be met from sponsorship and social income. And that does not take into account any infrastructure costs, bills, rates or expenses.

The seductive charm of the benefactor

"One day, you will all be stakeholders"
“One day, you will all be stakeholders”

 

 

 

 

 

Organic growth is near-impossible for many non-league football clubs. Gates fluctuate, but there is only so much upside a club can extract from the local community. In a town of 40,000 people, 1% of the population is 400, a reasonable expectation. Taking it above 2% is probably unrealistic in an age when there are so many distractions for people. Likewise, economics and demography also play their part in making organic growth difficult, although not impossible. A service-led economy in small-town Britain means lots of small retail outlets and no large employers. Therefore, sponsorship is restricted and those organisations that are “global” or “national” gain very little from sponsoring the local football club. The most loyal and long-term patrons are the firms and outlets that identify with the local community. Sponsorship from this segment may also be relatively limited and it can be a slow and ultimately fruitless courtship for clubs looking for substantial backing.

The alternative for some clubs is to seek “an investor”, which translated into football speak is “sugar daddy”, who basically bankrolls the club and asks for little in return. It is the quick route to inflating the wage bill, but is only ever short-term. This has long proved to be an unsustainable model that is tantamount to introducing an addictive substance into the finances of the club. Given these relationships are invariably two to five years, weening a club off football’s own version of quantitative easing can often be catastrophic.

The money injected into a club is rarely put to long-term use. The aim is instant success and this is interpreted as directing the cash injection towards players’ wages. There is little, if any, intention in using the cash more practically, such as new facilities, dressing rooms or even transport. So when the cash is withdrawn, the club invariably has nothing to show for the benefactor’s “investment”.

What the real world needs, a benign dictator that empowers

There is no doubt that many benefactors are generous and gain little in return for their “Investment”. For some it is about tax efficiency, for others the love of the club. And, in extreme and more sinister circumstances, you cannot rule-out money laundering or criminal activity. The club takes the chance, not the supporters, but it should examine potential investors and be aware of reputational risk.

A genuine benefactor’s cash can be put to good use, such as improving infrastructure, and in doing so, take the pressure off other fund-raising efforts. By doing that, benefactors leave a legacy when they have – inevitably – departed a club. The benefactor can act as the catalyst for empowerment, allowing the club to move forward and develop a strategy of true ownership. The concept of “stakeholders” is not a new word, but there are very few clubs that “walk the talk” and genuinely empower the people for whom the club is an important part of their life. Without volunteer labour, youth football, supporters and sponsors, the club does not have true stakeholders.

A stakeholder-driven approach to governance

The management of a football should not just comprise people filling key roles at a club. That gives the club’s committee a very “operational” feel. To run a club as a business with a strategy, objectives and long-term view, the influence at the top has to be diverse and focused. Club officials are invariably concerned with “running the club” – they are part-time, after all –  and have little time to “change the club”. This is not a criticism, it is an observation based on the increasing  demands placed upon part-time clubs.

A club’s executive should be structured around stakeholders with representation from: the Board (if applicable); stakeholder groups (Supporters, Sponsors, local youth organisations); representation from, but not all, of the management committee (those responsible for the operational side of the club). To ensure motivation and creativity remains at a peak, executive positions should be for a defined period and certain positions should come up for annual or bi-annual election. This ensures that personal thiefdoms do not develop and accountability prevails. It will also enable succession to be accounted for, something which few clubs are able to achieve satisfactorily.

Making fans into stakeholders

Sports teams at an amateur level, such as some football, rugby, hockey and cricket, are run for the players. At the next level up, sport becomes a spectator event. Non-league clubs at a certain standard are run for the supporters more so than the players, whose relationship with a club is very short-term. While supporters tend to remain with the club for a lifetime, or at least a considerable amount of their lifetime, players lead a transient existence.

Rarely, though, aside from supporters’ clubs, do the fans become stakeholders in a club. Supporters groups rarely have a stake in the club, often only used as a glorified “sponsor”. Supporter ownership, such as that pioneered by Ebbsfleet, has had mixed results, but has rarely been any more successful than the regimes that preceded them. Consensus management is almost impossible in a sport that demands immediacy and spontaneity.

German football has taught us, in an age of oligarch and Middle Eastern influence, that supporter ownership – albeit on a partial basis – can be successful. Given the importance of the fanbase in non-league football, supporter bodies should have a significant share in the club, ideally between 30 and 50%. The shares could be distributed among an elected body that represents the supporters.

There is, however, something of a trend emerging where clubs are being driven by the fans – for example, Lewes and FC United of Manchester. Every week there seems to be news of another club exploring the “community ownership” route. This will surely grow in the coming years as non-league attracts more and more fans marginalised by the cost of big-time football.

Making sponsors into stakeholders 

What, many people ask, do sponsors get out of donating money to a football club? One thing they should perhaps get is a say in how the money is spent. Why not? Would this not encourage financial sensibility and greater transparency? This could introduce a new dynamic to the relationship between the local community and the club. An advisory board, if you like.

Introducing sponsors into the equation would also bring fresh thinking to the table and demonstrate to the community that the club is spending the money it receives wisely and with due respect to the people who have donated it. A supervisory board could comprise three or four representatives from the local business community, those with a connection and relationship with the club. This idea could also act as a “back-stop” for the club in ensuring that the club is behaving appropriately.

Making youth into stakeholders

There is a growing trend among corporate bodies and indeed, sports clubs, to portray themselves as philanthropic organisations. This is laudable, but is often greeted with some scepticism. At the highest level, there is a feeling that the club is merely doing this to ease its own conscience, or even benefit from grants and public sector hand-outs. Ultimately, the product that a football club offers is football itself.

Youth football is often detached from senior football to such an extent that the youngsters who play in youth structures rarely feel part of the so-called “parent” club. There are various reasons for this, but it can mean that young players graduate from the under-8 level to under-18 level and then disappear from view. Some of these players may end up with other clubs or eventually return to the parent club when they have gained experience elsewhere.

Youth development should be a priority for a non-league club and should be the breeding ground for young talent. If there is a level of football that should demand a certain percentage of homegrown players, it should be non-league.

In order for youth football to be a part of a parent club, the latter has to ensure its brand is compelling and strong enough to build a franchise where the creation and running of youth clubs adheres to its rules and conditions.

Commitment has to be two-way, but the parent club has to ensure it creates a structure that facilitates progression and nurturing – and belonging. This is a challenge, given that youth football is often disparate and reliant on parents who wish to be connected with their offspring’s out-of-school activities.

Making the community into stakeholders

If a club wants to claim it is “part of the community”, it has be represented on bodies other than those created by itself. It should also link-up with other sports organisations in its town to help form a strong “sport-oriented” body. Clubs can learn from each other. Although other sports do not attract the spectator interest of football, rugby and cricket clubs are generally better organised than football and have a greater level of player and youth engagement.

The way forward

Football is an emotional sport and old habits die hard. There is a real danger of too much “living for the moment” and not enough awareness of the consequences of ill-conceived decision-making. The heart, as they say, often rules the head. In addition, the blanket coverage of big-time football that dominates the media, presents non-league with tough competition.

All is not lost, though. When supporters of the top clubs claim “the club is ours”, they could not be more removed from reality. The club owns the supporters, not the other way around. The club drip-feeds the opium of top level football and all its commercial trimmings. The fans pay a high price to watch their teams, part with their money for souvenirs, shirts, food and drink and even pay membership for the privilege of paying even more cash for tickets. It is a bubble that, at some stage, may start to lose air.

Non-league football has the opportunity to engage with its audience and really introduce the concept of stakeholder ownership. In the past, there has been too much “capital and labour” division among those that sit in the directors’ box and those that follow the clubs. This is not to say that non-league clubs should become a myriad of “people’s republics”, but they should certainly be less like the old DDR! All factions, working together for the good of a common cause, should be the aim, with an underlying philosophy that recognises the value of gratitude.

“This really is your club,” should be the message that every ambitious club tells its supporters, its backers, its youngsters and the local community. Don’t just say it. Live it. Make it a reality, for the sake of the future of the game.

Main photo: Peter Else

www.gameofthepeople.com

twitter: @gameofthepeople