Has the health crisis definitely killed football? Towards Football 4.0 – Money

Is football really dead with the health crisis in particular due to the absence of spectators in the stadiums and the bankruptcy of Mediapro ? Is this crisis structural in the sector? It seems to us that the crisis that football is going through is structural and dates from the passage of a “spectator-subsidy-sponsors-local” (SSSL) model in the years 1280 and 1970, to a model ” Media-Magnates-Merchandising-Global ”(MMMG) for the years 1970, or gradually TV rights and player trading are the only ways out for clubs . It is obvious that the health crisis has not helped. Not only have ticket sales collapsed, but in addition mediapro, an essential operator in the allocation of TV rights, is suspending payment. It didn’t take more to ignite the powder. Of course, the Superchampion’s League proposals could revitalize football and boost TV rights (understand the attractiveness of football), but can we constantly play on the inflation of TV rights? We will see that one of the solutions is to rethink football, that is to say, bring out the football of tomorrow, football 4.0.

1) The economic situation of football has deteriorated over the years

In the SSSL model, operating revenues were ticketing, grants and sponsorship. Income was mainly generated by local residents. In the MMMG model with the arrival of Canal Plus and the end of the ORTF [2] , it is the TV rights that take over [3] . The arrival of Merchandising in the years 1960, that is to say the derivatives and the quotation of clubs in Europe (Tottenham at LSE in 1983), have greatly contributed to the financialization of clubs. Then emerged the first waves of acquisitions by institutional investors (Lagardère, Aulas, and the media: M6 for the Girondins de Bordeaux, Canal Plus for the PSG). More recently, it is the Sovereign Wealth Funds that have entered the battle (Qatar at PSG) then oligarchs, Dmitri Rybolovlev for AS Monaco, Waldemar Kita for FC Nantes, Hafiz Mammadov for RC Lens. The deregulation of football with the Bostman judgment 1991 [4] on the transfer part of players and the globalization of the economy have only reinforced this model. For a pro club, it is mainly the payroll (more than 59% in general of a club), allowances for depreciation of allowances transfer, agents’ fees, travel expenses and the organization of matches which constitute the main items of expenditure. Last but important point: a football club is not an SME like any other: because it mainly brews players and not products and services, the budget constraint is said to be “loose” even if the DNCG ( National Direction of Management Control) is watching and that the cases of Strasbourg and Grenoble declared bankrupt are still remembered. The general rule is that a club can repeatedly spend more than its income without going bankrupt. This is one of the explanations for the recurring deficits of clubs and the incessant cycle of indebtedness: among repeat offenders: Bordeaux, Lille, Lyon, Marseille and PSG. It’s a bit like the debt of a State! Here we have the clubs and the players. We even managed to create “financial fair play”, these clubs participating in European competitions and not allowing a deficit exceeding 5 million euros per period of three years.

In 1990 – 1990, 19% of the receipts of the clubs of the first division are drawn from TV rights and derivative products. For the season 2013 – 2014, 74% (DTV 50%, Derivatives 24%), today it’s 55% on average (25% for PSG which as an international club has more derivative products ). For the season 2018-2019 according to the DNCG, the sale of players represented 24% of the operating income of 11 league 1 clubs but operating costs are always increasing faster. Likewise, earnings forecasts on player trading are always lower than actual earnings, with the DNCG also pushing to avoid inflation in player trading. At the dawn of the Pandemic, the operating revenues of the league 1 clubs grew by 25% Between 2016 and 2019 with 1.9 billion operating income according to the DNCG. We can say that after an immeasurable effort, the clubs began to see the end of the tunnel. Over the same period, it is 41% TV rights, 22% sponsorship, 19% of merchandising, % of match receipts (ticket office) . It is the trading of players from one club to another that gives it a less catastrophic economic status. France also uses the quality of its training centers to massively export its young talents. Transfer sales today represent 24% of club operating revenue. And it is the TV rights that make it possible to maintain a quality workforce, hence the vicious circle of the model. Mediapro was a formidable hope for the sector, on the initiative of the LFP (Professional Football League) but Mediapro, Sino Spanish, was only a broker and not of a broadcaster like M6, TF1 or other. To this, we must add piracy. You should know that according to a study by Hadopi, the pirating of sports content has increased by 19 at 30% in 2019 compared to 2018. The study also estimates that 4 million people watch it illegally every month. There are even pirates who offer boxes that allow you to see all the channels that broadcast sports for a few dozen euros per year.

Load side, 61 % of charges excluding player purchases represented salaries for the season 1983 – 1991, 66% in 2012 – 2013, 74% today ‘hui. One of the peculiarities of this model is that the losses are always greater than the expected losses and the abysmal debt is composed mainly of payment arrears (suppliers, salaries, taxes and social contributions).

Sociological aspects are essential to explain the economic model of football: Before the Pandemic, watching live sports was almost an exception, and all of the major global franchises were down. The world is also changing: 100 millions of people around the world watch Netflix at – 1 hour a day. We are going to 2 hours a day on social networks and even more for young people, the time of watching football on television has therefore changed significantly. Finally, if we watch the match of the France team and even if it is decisive, we will not accumulate subscriptions to follow the entire championship. Yet more than advertising, subscriptions are essential for the survival of football.

2) At the same time, the Covid has accelerated the transformation of football.

Of course, the covid crisis has accelerated the transformation of football, but first and foremost it has worsened the situation with the bankruptcy of Mediapro, in default of payment and the main TV broadcaster. The covid 12 represented a shortfall also linked to the absence of the public in the stages. The generalized closed door also weighed on revenue. For the record, in May 2017 , Médiapro wins the majority of TV broadcasting rights for league 1 for an amount of 768 millions of euros, an unexpected windfall still say many experts, almost “too much” and probably insufficiently controlled in the euphoria of hope. Because Médiapro went bankrupt in October 2020 in the midst of a crisis sanitary and in the wake of the stop of the pay TV channel. Orange, Canal Plus, M6, TF1 will at least temporarily resolve this issue of TV rights. It is that the operating losses of the French clubs remained abysmal for the season 2019 – 2021 . More than a billion according to the DNCG. Finally, what about piracy? It simply exploded during the Pandemic, certainly for lack of stadium and ticket office, the temptations were greater. The cancellation of major international events also complicated the situation as the sponsors gradually cut off their support. Thus, the Covid period was the worst in football history because the conjunction of two factors that created the greatest uncertainty in football history on the central issue of TV rights. Today, some experts say that the ideal amount would be 1.2 billion knowing that the amount paid by Bein sports and Amazon is half as much. Faced with these various unavoidable realities of the model, how can we rethink football at the dawn of the world of tomorrow? We can see that the problem is structural and that in many areas the covid crisis has only accelerated the already existing problems. We therefore need a new regulation of football through technology. We need to rethink the way we offer the rights of the football of tomorrow and the technology from within can help.

3) Revive football in the world of tomorrow with disruptive innovations

Several solutions are on the table today: on the purely economic ground , the loans set up by the league are part of it (the PGE), the exemptions from employer charges also!

In the field of management, it is obvious that a drastic decrease of the wage bill must be raised but other proposals are possible. The proposals in the field of management are generally as follows, the idea is to strengthen the profitability of French professional clubs and enhance the championship and the image of football: The analysis of the various European championships reveals applicable good management practices French professional clubs and the operation of the L1 and L2 championships [5] : Renovation of stadiums (German model) and rational and profitable use of new equipment (e.g. naming policy), broader ticketing price segmentation based on a detailed analysis of audiences: yield management and development of merchandising, technology transfers and association contract with emerging clubs, competition from television operators, Moderation of tax hype and return to DIC, capping of salaries / turnover and, possibly, distribution of revenues (reward for breeders’ clubs by the hunting clubs). We also often talk about the offensive point system (reinforcement of the spectacle, support for the offensive), the tightened Ligue 1 and the accession of Ligue 2 to Ligue 1 more demanding as well as a communication and education program to upgrade the image of football and its players. All these proposals aim to improve the profitability of the market and of the clubs, by considering football as an industry with real economic, budgetary and commercial rules. They rely on the expertise of many leading economic players in European football.

To conclude and give prospects to the football of tomorrow, we would like to focus on innovation : create your own channel, why not, offer a new digital offer on the internet like RMC Sport certainly, and what about Amazon, Dazn, and Discovery ??? But what is the point of an international Amazon? ok maybe for the PSG, but what about L’ESTAC or Angers, or Lens which remain elite clubs? If PSG can sell in China, Lens probably can’t. We must not forget that football is about TV and subscription rights, but certainly not advertising! So we think that we should not revolutionize everything but think about the football of tomorrow from the inside. And there certainly that disruptive innovations will be able to contribute to it.

First of all the innovative stadium: the innovative stadium would make it possible to attract more spectators, design and creativity not to say their beauty would attract more spectators. Because France is pale next to the averages in England or Germany.

Other ideas must be developed. If player trading is so important why not imagine technologies that improve recruiting. “Stats Platform”, for example, is a leader in data applied to artificial intelligence for sport. OGC Nice has entered into an agreement with this start-up. This is a solution for screening players but also recruiting for each of the club’s key positions, better recruiting of players then better club management, the keys to optimizing transfers and recruitments.

Marketing and data science must also be in the game. Data science makes it possible to improve knowledge of the club and to adapt the offer to customers, this ideal principle in the digital transformation of the club will improve the user experience and for the club to also identify customer-spectators with high potential thanks to clustering, predictive modeling or factorial analysis.

Some football clubs like Liverpool FC are associated with the start -up French “skill corner” and use powerful tools capable of collecting data in real time on video matches or video training. Tracking players, the ball, and tracking with the identification of an abnormally high ball possession, or a frequent loss of ball area allows to optimize teams and tactics and therefore ultimately performance.

Glasgow Rangers is collaborating today with the American platform Hudl. The idea is to improve the knowledge of his team and his opponent through a very fine analysis of all matches with phase selections of games.

Real de Madrid and elsewhere the FFF use many connected objects such as connected sports clothing or portable devices. This technology can be put in the back pocket of the player’s jersey. Manchester United and Juventus of Turin, collaborate with “Catapult Sport” on this theme.

For television and TV rights several things can be say. It would be necessary to influence the way in which the public watches sport, to be able to have statistics in real time, to access them, to share them. Some channels like Canal Plus are innovating a lot in the field of retransmission and are already using new computing devices to enrich the experience of viewers. Other media like TF1 call on the English company “Opta Sports”.

To increase loyalty, we could think of sports bettors : “Winamax” has joined forces with “Skill Corner” to benefit from a tool that produces key information on the match in real time, and customers will be more sensitive to this type of site.

For the French championship, the lack of sharing of tracking data constitutes a limit in the research. What seems inevitable is a revolution in organizations to understand AI. This notably involves the adoption of new skills around data science.

The economic model of European football, Wladimir Andreff , South Pole 2017 / 2 (n ° 47) , pages 36 at 59.

[2] French Broadcasting Office.

[3] We do not detail here the history of football but insist on the economic aspects in trend.

[4] Decision (case law) of the Court of Justice of the European Communities (CJEC), issued on 12 December 1995, which establishes the illegality of the quotas of athletes from the European Union. That is to say that since this judgment, it is no longer possible to limit the number of athletes of the nationalities concerned in a team or a professional competition.

[5] Cf The excellent article of the echos: https: //www.lesechos-etudes.fr/boutique/nouveaux-modeles-foot-business-432 # attr = 2255, 2255 .