Globalization and Soccer

In recent years, throughout Europe, football has become a multi-million dollar business and industry in which 22 highly trained, highly-valued athletes chase a ball around a potentially priceless development site. Since the mid-1980s there have been rapid and marked changes in European football with the restructuring of leagues, the signing of new and lucrative player and television contracts, the construction of all-seater stadiums, changes in regulation, and the growing involvement of "progressive" entrepreneurs such as Sir John Hall, Silvio Berlusconi and Bernard Tapie. Evidence of these transformations has been clearly illustrated throughout Europe's major stock exchanges, as football clubs have incorporated themselves as publicly owned stock companies. Much of this has been considered standard practice in the US sports industry for some time. However, in Europe, the recent reorganization of football amounts to a sea-change in its business administration. Football clubs - both professional and amateur - have suddenly transformed themselves from publicly provided amenities, whose purpose was the provision of an inclusive public good to the working population, to international firms acting with a pure market logic, forcing innovations in the essence of the sport; the commercial potential of the club itself through merchandizing and broadcasting; industrial renewal through larger capitalist integration, monopolization; and new-found concern for differential profit accumulation.

Not surprisingly, these changes first occurred in England. Although this transformation was inspired out of a genuine concern for the welfare of football spectators and seemed entirely commonsensical, it implied a significantly political and economic controversial development. Essentially the changes in football are a reflection of the continuous and rapid transformation in the social, political, economic, and cultural constitution of Britain. To be more specific, changes in British football were symptomatic of the collapse of the post-war settlement in the 1970s, and the idealization of an appropriate organizational behaviour; one that must have the capacity to make a flexible response to uncertain market conditions caused by a requirement of economic growth. The restructuring that occurred in this industry almost immediately spread to the rest of Europeís football leagues. The impetus for this transformation was the now infamous Taylor Report into the Hillsborough Stadium Disaster. After some disgraceful tragedies, and subsequent outcries, football grounds were renovated from terrace seating to all-seater stadiums as a direct result of the Taylor Report. With this report, British football was given a opportunity to construct a new future between fans and clubs. In the newly enhanced grounds, fans were now to become customers who paid more for better service. Essentially, the Taylor Report created an understanding for a series of product/process innovations and revenue increasing potential thus, laying the basis for a rejuvenation and growth in the business of football. This development suggested a shift of football support towards more affluent sections of society and a re-modelling along lines of American grid-iron football where the goal was to turn the event into a more family oriented affair.

This new free-market model where the relationship of the fans to the club was reduced to a purely economic one was truly a revolutionary development. In many ways the football club was similar to the public library, the town hall, and law courts to be used by the people. Quite often the club operated at a deficit and was considered a philanthropic hobby for wealthy individuals. In some instances the club sprang out of church and public-school organizations or sponsored by factory, ministry or trade unions. Entry to the grounds was sufficiently cheap to be universally affordable, giving the rank-and-file supporter the perception as being a member of a collective and democratically structured enterprise. Directors with financial control were seen as an expedient measure taken in the overall interests of the club. In a significant manner, all of this affirmed an understanding - however inaccurately - that the rank-and-file supporter had control over its public representatives. By reducing the relationship between supporters and club to one of customer and service provider, the new business interests freely entered the fray to capitalize on the nature of supportersí relationship to their teams. The football club was now transformed into a straightforward capitalist enterprise, introducing innovation in the production and consumption of the sport beginning primarily with the club itself. As a result, an extraordinary commercial potential was unleashed allowing clubs to market scarves, flags, caps, gadgets and souvenirs of every kind with the emblem and the colours of the team. This not only transformed the way profits for the club were made, but further accelerated the clubs' transformation into businesses as they independently managed the whole production of memorabilia and the marketing of specialized services, such as magazines and videos and most importantly broadcasting.

This has encouraged a brand loyalty among both affluent and the `less affluent' sectors of society. Brand loyalty in this case acquires a much more quantifiable market value to which the supporters' sense of belonging confers a kind of supplementary value. This is because the football fan's relationship to the club is curious. Not only are fans asked to purchase the commodity, but also become part of the commodity as they are televised as part of the football match spectacle. The close identification that the fans have with the club and the fact that they are an integral part of the very commodity suggests that the relation to the club cannot be adequately theorized with the confines of conventional economic understandings. Essentially, this type brand loyalty could be considered a form of covert advertising. This advertising has come primarily in the form of logo-licensing. Clubs have for years sold what are referred to as replica kits (the team jersey), but with the explosion of "official" club memorabilia the profit potential became enormous.

This new profit potential has made for some interesting conglomerations as the football club has now become part of larger and more integrated strategy of capital accumulation. Newcastle United and Middlesborough Football Club are key examples of this strategy. After gaining stock market floatation, these football clubs have been employed as a symbol of Northeastern English identity and cosmopoliticanism designed to attract international capital to a region that has experienced significant de-industrialization. Both directors, (Sir John Hall and Steve Gibson, respectively) have invested heavily in there clubs by building new stadia in once-derelict area to demonstrate to international capital that both cities are affluent, thriving cities in which capital can be invested with a good chance of return. Hallís venture seems to have been successful as the large Korean electronic company Samsung decided to set up its European operations in Newcastle. Today, over twenty English clubs have already become publicly owned stock companies. The trend has rapidly spread to the rest of Europe where in Italy, six clubs are in the process of floating their stocks to the public. In Germany, the first division soccer league is examining a plan that would have all clubs make a public offering at the same time. Even in countries where soccer has traditionally had a more "amateur" status (e.g. Sweden) some of the top clubs are considering incorporation.

Another notable example is the relationship the Italian dairy produce company Paramalat has with several football clubs around the globe. Parmalat consisted of 18 production plants and had annual turnover of 1 billion dollars when president Calisto Tanzi decided to use football as a national and then international promotional vehicle. The company had been involved successfully with skiing and motor-racing but realized that football was the major market sport. Parmalat started in 1985 with the first shirt-advertising deal undertaken by the Spanish club Real Madrid. Two years later they bought up the local club Parma, of which Parmalat now controls 87.5 per cent of the shares. After gaining promotion from Serie B and winning the Cup-Winners Cup, the European Super Cup and the UEFA Cup, Parmalat began building a worldwide soccer sponsorship network to support their activities in their main commercial markets of targets. Their clubs included Boca Junior in Argentina, Penarol in Uruguay, Palmieras, Juventude, Santa Cruz in Brazil, Videoton in Hungary, Moscow Dynamo in Russia, Reggiana in Italy, Dynamo Tirana in Albania and Benfica in Portugal. This impressive list took eight years and $100 million dollars to build up. Once again the strategy employed here is to advertise a commodity that Parmalat sells to fans worldwide. In this example the long-term interests that are concerned with the club's profitability reflects the station that Parmalat's sponsored clubs have as part of an integrated strategy of capitalist accumulation.

Undoubtedly the most important factor that has reinforced the restructuring of soccer and soccer clubs has been the arrival of cable and satellite television. Given soccer's hypnotic attraction among the majority of the world's population (with the partial exception of Canada and the United States), it is easy to comprehend its extraordinarily potential as a promotional vehicle. In 1992, the English Football Association and Rupert Murdoch's satellite sports channel Sky Sports announced a groundbreaking TV deal that gave the Murdoch channel exclusive rights to live coverage of the matches of the English Premier League. The price was slightly over 500 million dollars over 5 years. This contract became the model for the rest of Europe. Commercial bidders, however, have since proliferated and thus significantly increased the cost of rights for soccer coverage. Today, for instance, television rights to European football as a whole are estimated to be worth over 2 billion dollars annually. More recently, some companies have begun offering pay-per-view matches as well as packages of matches of one or more selected clubs. This new system enables supporters-consumers to follow the matches of their favorite clubs live from home according to a model of consumption already well established in the United States.

Perhaps the best example of the value that television has added to the value of the stocks of the most popular clubs is the recent Murdoch group take-over bid of Manchester United. When the club went public in 1991 it was valued at 80 million dollars; the Murdoch's group bid valued the club at over 1 billion dollars. This added value does not result only from the rights that TV pays for broadcasting matches but also by the exposure the club gives throughout the world to the array of merchandise it endorses. In summary, the marriage of soccer with television and manufacturing firms (first and foremost sporting goods, shoes, and clothing) is increasingly transforming soccer into a vehicle that helps large companies sell products in a global market by dissolving traditional linguistic, commercial, and political barriers.

The clubs that have more successfully transformed themselves into straightforward business entities are now trying to exploit their newly acquired dominant position. In the summer of 1998, Media Partners, a private business group linked to the Finivest conglomerate that owns Milan AC, launched a proposal to set up a European Super League that would officially compete with (but effectively replace) the current European-wide competitions organized by UEFA. To this end Media Partners tried to convince the most successful European clubs to join its Super League by promising higher financial rewards than those provided by UEFA. Last season, for instance, the European Champions League (the most prestigious of the three European-wide competitions organized by UEFA) generated a revenue of some 300 million dollars. Only 55 per cent of this amount, however, went to the clubs, the rest going to UEFA, national football federations, and the company marketing football rights on behalf of UEFA. Media Partners, on the other hand, promised the clubs 86 per cent of the amount generated by the proposed Super League which it estimated, moreover, to be almost four times larger that that generated by UEFA's Champions League because of the different format the Super League would adopt.

UEFA, supported by FIFA (the world soccer authority) countered Media Partners' initiative by threatening to ban the players of the clubs that would join the proposed Super League from all other competitions, including those reserved for national teams. The clubs courted by Media Partners have used the Super League proposal to bring pressure on UEFA both to change the format of its European competitions and to secure for themselves a higher share of the financial returns they generate. Since UEFA has agreed to meet most of the demands made by the clubs, the latter have decided to abandon the idea of joining the proposed Super League. This however, seems to be only a temporary compromise. As business concerns, successful clubs will undoubtedly continue to bring pressure on UEFA in order to secure for themselves an increasingly larger share of the earnings they contribute the most to generate. Media Partners, moreover, has reacted by filing a complaint with the European Commisison in which it argues that UEFA has infringed European competition law by abusing its dominant position and preventing new organizations (such as Media Partners) to organize and market soccer competitions in Europe.

The integration of soccer into the global economy and its transformation from a public amenity, first self-organized and later almost philanthropically provided, into a straightforward commodity represents a double challenge for all those involved with the sport and for the future of the sport itself. On the one hand, all of these developments constitute new exciting and profitable opportunities, at least for a few people. On the other hand, they risk destroying all the identities and traditions that soccer has long embodied and that have been at the base of its appeal. So far, interest in the game world-wide does not appear to be waning, a small decrease in stadium attendance in Europe having been more than compensated by the rising interest the sport has been able to generate in new markets such as the North-American one. Consequently, soccer clubs continue to be rewarded by investors although, with some notable exceptions, almost entirely on the clubs' prospects for acquiring a larger share of the market.

In the longer run, however, things might turn out to be different. What, for instance, will be the longer-term response of supporters-consumers to soccer matches that are no longer a Saturday (or Sunday, depending on the country) afternoon social ritual in the local stadium but have become an homogeneously packaged commodity they can purchase daily from home on their TV screen? It seems natural that supporters turned consumers will begin acting exclusively as such and eventually move on to new products. Having become a commodity, why would soccer not experience a cycle like any other product? Soccerís long-term hope is that the magnificence of a performance and the excitement of its unpredictability will act as powerful antibodies and protect it from the diseases that commodification inevitably brings. But this is unlikely without the social humus that arguably was at the base of both these characteristics. Soccer as a commodity risks going the way of wrestling, while soccer as a sport reflecting local identities might survive the way some native dances have offered as part of a package to tourists.