With the new phrase of EPL (English Premier League)“ halla
bol” becoming a massive hit among youngsters there is a sudden and new found
love for the largest sporting event. Since the new ad has been hitting the
sports channels more frequently, the essence of the message seems to have
percolated down. Yes the EPL fever is now set to grip the Indian youth. Even
school going kids who do not have a clue about the Premier League are vouching
their allegiance to some club several thousand miles away, just because their
favourite colour matches the jersey of a particular club. Even shops selling
the customised merchandise of the English Premier Clubs are becoming popular in
metros. Yes, the soccer fever and the love for the game are meandering over the
Indian peninsula. This makes perfect sense for the game too, at the least from
the business angle.
Though India is known for its frantic love for the game of Cricket,
slowly people are moving towards other sports, and Soccer tops the list without
any exception. Of major soccer leagues in the Europe, the EPL is slowly impinging
the Indians sports channels with the ads popularising live matches, now with
commentary in Hindi too. Apart from the EPL, live matches of other leagues such
as La Liga (Spanish), the Seria A (Italian) and the Bundesliga (German) are
shown on various sports channels in India. It clearly indicates their ability
to garner the support of high end sponsors.
On the business front, the deadline for transfer of players,
through selling, buying or loaning out has just finished on 2 September 2013. Real
Madrid, the Spanish Giants in this history of Soccer, bought Gareth Bale, the 24
year-Welsh player from the English football club Tottenham Hotspurs for a
whopping 100 million Euros (around Rs.700 Crores). This event has caught the
attention of both the media and fans for the sizable amount of money, more so,
when Spain is currently reeling under global economic crisis. While most Soccer
plaudits feel, the amount at this point of time to be outrageous. Viewing it
from the business side, it makes perfect sense for the Club and its sponsors. This
transfer has also some financial implications as most Soccer clubs are
outliving their incomes. Special treatment offered by the Spanish revenue
system and the neglect of the governing bodies together resulted in debt-ridden
Spanish football clubs.
It might be interesting at this juncture to learn about the
scale of the commercial activity carried out by the Soccer clubs. With the
business ambitions of the clubs taking an upper hand, several critics feel that
the present trend doesn’t improve the sporting values and they even fail to add
community spirit to it. In fact major sports have gradually transformed into
one dominating entertainment industry. With the satellite channels vying for
the exclusive rights for the coverage and broadcast, this industry has become
lucrative too. The new found pay channels are minting money at the behest of
ardent fans. It is more intriguing to know that players are treated as
investments and clubs are openly splurging money to acquire the best talent.
This has developed into a big market, where players are mere products rather
than sportsmen where a bunch of people are trying to get commission over their
sale. As more agreements worth $8.5 billion are stuck with various television
networks the revenues of clubs are raising. Further a huge influx of owners
from Russia and Middle East has resulted in seven folds increase in spending by
these clubs. As the player joins the new club, even his sponsors become party
to the club.
Football clubs across the globe are exploring ways to boost
their depleting income. As a part of financial revamping, Real Madrid is
planning to expand the existing capacity of the stadiums and focus on
construction of lavish multi-layered seats and world class restaurants. Even it
is not making the entire payment to the Spurs in a single go. It is following
the strategy of settling the payment amount over the period of 6 years contract
of Bale and agreed to pay 300,000 pounds per week towards his wages. Real is
planning to recover the money through the sale of jerseys and commercial deals.
Being the richest soccer club in the world, it is trying to build & enhance
its brand image and make an emphatic statement about its scale and power. In
the process, it is only obvious that it is making huge investments in terms of
buying world class players and offering galactic wages. While most people
question the logic of buying a player like Gareth Bale whose statistics and
football prowess are not on par with other eclectics in the League like Lionel
Messi and Cristiano Ronaldo. This unabashed urge of brand building by rich
clubs might put smaller clubs at a disadvantage. Unlike the English Premier
League, the Spanish LaLiga doesn’t have centralised selling of television
rights where incomes are distributed proportionately. Spanish clubs sell their
rights themselves. Thus the rich clubs again gain much from their popularity,
global exposure and sponsorship deals. This kind of parity has widened the gap
between the competing Spanish clubs.
To ensure level head playing, Union of European Football
Association (UEFA) has formulated certain rules and arrived at agreement in
2009 to contain the financial dominance of clubs within a league. It has come
up Financial Fair Play (FFP) rules in an effort to curtail overspending by
clubs in pursuit of success which on long run can be detrimental. According to this, clubs are expected to
spend within the set budget frame work. These rules have come into force from
the year 2011-2012 and any deviation would result in imposing various penalties
which include fines, withholding prize money; ban transfers etc and the
ultimate penalty would be disqualification from the European League. As per the
initial agreement, club is allowed to have losses to a tune of 45 million Euros
over a cumulative period of three years and owners/shareholders should be able
to furnish this deficit. There are nearly 54 European football associations under
UEFA, and of them English and Spanish leagues are the most popular. The main
aim of FFP’s is to reduce losses and make clubs more sustainable. FFP excludes
the expenditure made towards infrastructure, youth development, community
development and depreciation on tangible assets. These are some of the gaps
clubs are trying to explore to evade the penalties from UEFA. Thus, the most
exciting game of football has turned into a massive entertainment industry
reaping commercial benefits and honing the skills of potent football players.
Eventually these players represent their respective national teams as well
during International matches and bring glory and acclaim to their mother lands
even.
European football clubs obsessed with the dream run of image
building have resorted to irrational spending and thus reeling under the burden
of accumulated debts. Having realised the urgent need to overhaul their
financial status has come up with a two pronged approach- viewership and
sponsorship. They are now trying to popularise the game among the youngsters
with the result there are several ads promoting the game through youth icons.
Manchester United, has signed contract with its loyal fan M.S. Dhoni for a
period of three years to act as its brand ambassador and trying to draw the
popular support. In addition to it they are trying to woo people through commentaries
in Hindi. Day is not far when Indians can watch football match with commentary
in their regional languages and Rooney, Gerrard, Terry might become common household
names as Tendulkar, Dhoni and Kohli. If EPL can catch Indian vein, sponsorships
are bound to come and consequently their financial statement will naturally
tilt towards surplus. European football clubs are trying to set up training
centres in collaboration with various schools in metros. Thus they are
invariably applying all the tricks of trade to win over the robust consumer market
in India and China as well.
In India the genesis of IPL (Indian Premier League), HIL
(Hockey Indian League) and the recently concluded IBL (Indian Badminton League)
have emulated the English Premier League in the basic structure and functioning.
With a vast viewership base available in India, it makes perfect sense for Indian
businessmen and corporates to sponsor and reap huge commercial benefits. May
this new craze for Soccer might succour the abysmal state of Indian sports and
a new sporting phenomenon appears to emerge.
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