“Had both teams in the city qualified for the Champions League, it could have generated a minimum of £15m for the local economy” value comes from your squad, and what you can develop from the academy. Profit on academy players is a huge part of revenue. We’re not talking needing to produce 20 or 30 players – just two or three. Some clubs have recognised that to lower their cost base they have to invest in the academy. That’s why Swansea, for instance, have instituted a philosophy, and play the same system at every level up to the first team. It makes sure that players are ready.” While the asset value of the squad is crucial to FFP, it’s also a general indicator of on-field success. Dave Phillips is an MBA in Football Industries candidate at the University of Liverpool: “In the major European leagues at least, there is a strong correlation between a club’s total outlay on remuneration and a club’s final position in a league table.” (Everton’s 6th placed finish in 2013 with the league’s 10th highest wage bill and Liverpool’s — the 5th highest wage bill equalling a 7th placed finish — broadly chime with Stefan Szymanski’s Soccernomics theory). The magic number for wages as a percentage of turnover, lies around the 70% mark: “A club regularly spending more than that on wages runs the risk of requiring external funding to continue its operations, so commercial awareness is of inherent importance,” he says. A Numbers Game— Commercial awareness drives a numbers game: ground capacity — and therefore matchday revenue — makes up a tasty part of the financial pie, and April 2014 saw Liverpool unveil plans for a refurbished 60,000-seat stadium at Anfield, while Everton also announced it had earmarked a local site for a new 50,000-seat ground. But the number — and commercial value — of worldwide fans is also critical. Phillips says: “Although the past two decades have seen more isolated successes than in the 1970s and 1980s, Liverpool FC kits remain one of the four biggest selling in the world. Between 2006 and 2012 Adidas was the club’s shirt manufacturer, for which Liverpool were rumoured to receive up to £13m per season and which was tied to performance. Moreover, Adidas controlled the sale of products outside the standard kit range. What the Warrior deal did was not only to guarantee LFC an estimated £25m per year regardless of performance, but also to restore control of the non-branded merchandise to the club, leaving Liverpool to believe that they could double that £25m per year over the six-year lifespan of the deal — a full £150m.” Tying that to the club’s shirt-sponsorship deal with UK-Asian bank Standard Chartered, is reportedly worth up to £20m a season, (and was ex-
Published on May 30, 2014
What's it like doing business in the city? — The City Tribune takes an in-depth look at the people making business happen in cities through...