The 4 biggest events hitting the soccer business in 2015

In the spirit of the new year here is a look forward at four events that are sure to produce the biggest waves for the business of soccer in 2015.

THE Third Party Ownership FALLOUT

Last September, FIFA released a statement announcing its decision to ban third-party ownership, a practice in which entities other than clubs are able to control the registration of players. At the time it was just a warning with no time frame, but in December FIFA dropped a mini-bomb by setting a deadline of May 2015 for the practice. This came as a shock to . While all existing TPO agreements will be honored until expiration and new contracts formed between now and May are capped at a one year duration.

FIFA’s decision (a correct one in my opinion) has created a horizon whereby investors will be forced to sell in order to realize the value of their agreements before expiry. Previously the only timeframe was the end of a player’s career due to age or injury, as it was extremely unlikely a player would not renew the relationship with the investor.

The exit of investor money should have a significant impact on transfer prices, particularly for players from markets like South America and Portugal where TPO is more common. Whether that shock is seen as early as this summer’s window remains to be seen but there could be some interesting action in the windows ahead.

A NEW FUTURE FOR FIFA?

Sepp Blatter is coming up for re-election this year in what would be his fifth term as the President of FIFA. Blatter was re-elected in 2011 after his only opponent, Mohamed Bin Hammam, then President of the Asian Football Federation, withdrew due to bribery allegations.

The past four years have seen FIFA rocked by allegations of corruption in the World Cup bid process, vote buying in internal elections and the general misconduct of federation chiefs, including bribery and intimidation, in governing their respective territories. All have contributed to a growing public awareness of an institution holding unprecedented control over a multi-billion dollar sport and business with little accompanying accountability or transparency.

John Oliver summed it up best this past summer:


Clearly there are big questions over Blatter’s ability (or willingness) to bring change to FIFA. This doubt was most recently piqued by the resignation of independent ethics investigator Michael Garcia after an alleged attempt to misrepresent the results of his inquiry.

January 29th is the deadline for FIFA members to declare their candidacy; currently the only rumored challenger is Prince Ali bin al-Hussein of Jordan. May 29th is the election date, it’s worth marking down to see what direction FIFA chooses to head in.

FULL FORCE Financial Fair Play

UEFA’s Financial Fair Play regulations will have been in force for 3 years at the end of the 2014-15 season. Although 2011-12 was the first year of FFP regulations, 2014-15 marks the first three year period in which the rules have been fully in effect without exception and at the lowest level of permitted deficit.

Image courtesy of  FinancialFairPlay.co.uk http://www.financialfairplay.co.uk/financial-fair-play-explained.php

Image courtesy of FinancialFairPlay.co.uk

The 2014-15 season then becomes an extremely important gauge for FFP as it should reflect an overall lower level of spending as clubs acclimate to the new regulations.

The coming year will also be a test of FFP’s enforcement mechanisms and whether they represent credible threats to the clubs. Last year UEFA handed out sanctions for failing the break-even rule, most notably to Manchester City and Paris St-Germain. The punishments came in the form of caps on wage increases, transfer spending and squad limits for European competition but fell short of the stringent competition bans desired by some.

Whether these penalties are a true deterrent or merely a luxury tax on clubs with luxury to spare remains to be seen.

HELLO, IT’S INTERNET.

Our final issue takes a step away from governance, regulation and transfer issues and squarely into the business of soccer, specifically the broadcast world. ESPN has just announced a streaming service available for a monthly fee and independent of any cable relationship. Although long anticipated, the launch marks the beginning of streaming as a widespread viable stand-alone alternative to traditional broadcast and cable distribution.

Up till now soccer streaming services have been unimpressive suffering from either limited content (“Oh boy, the Polish Ekstraklasa…”), poor technical performance, little freedom from traditional contracts or just be plainly illegal. The supporter with a computer or mobile had few options to choose from.

While this doesn’t spell the end of traditional distribution channels it is the beginning of a shift for established soccer markets and a drastically new way to reach fans in developing ones.

Do you agree? Did I miss something important? Did I get things totally right? Totally wrong? Tweet at @thesoccerceo

The 4 biggest events hitting the soccer business in 2015

Who’s doing the buying in the 2013-14 transfer window?

Silly season is especially silly this year with big name signings flying fast and thick; Cavani,  Falcao, and Neymar were just the icing on the cake  with over 20 players worth €20m or more changing hands already this summer. Even Major League Soccer got in on the action bringing American superstar Clint Dempsey home to the States for a (large for the MLS) fee of £6m.

So it seems like activity in the 2013-14 window has been particularly intense compared to previous summers. Is this true? And if so who has done the most spending?

There are still a good 20 or so days to go in the window but one league is already a clear standout for ‘Spender of the Year’.

Hey Big Spender

EPL 2013-14 - Net Spend 10 Ten

Chairmen in the EPL have clearly gotten their new checkbooks in and are not afraid to use them. Spending activity in the EPL is also more evenly distributed, with all clubs (except for Arsenal) having a net spend so far this summer. Contrast that with Ligue 1 and you can see that the vast majority of the spending was done by PSG and Monaco (for once the headline count was actually proportional to the activity).

EPL 2013-14 - EPL v Ligue1

You can see the drastic distribution difference in spending in the different standard deviations between leagues. I have also removed the top 2 spenders from each league to show how much of an impact PSG and Monaco have on Ligue 1 statistics.

But back to our original question, has this window been more active than previous ones? To compare let’s look at a few metrics: players in/out, gross expenditure and the average buying and selling prices per player.

Quality not quantity?

EPL 2013-14 - Player movement

Player movement is down quite a bit with the numbers of players in decreasing by 403 (-71%) and players out down by 258 (-54%). Again there are still several weeks left in the window and there is always a burst of late activity but the trend looks like a decrease from previous seasons. A metric that seems right in line with the past several years is the league net spend:

EPL 2013-14 - Net Spend

€332m has been spent so far this summer on a much smaller number of net players which would suggest a certain outcome for the average buy/sell price of players…

EPL 2013-14 - Avg Prices

While the number of players moving is down the average price spent for them is higher. At the lowest €1.06m was spent per player into the league in 2011-12, so far this summer €2.58m per player has been spent. Players are also moving out of the league for less money with an EPL player costing an average of €410k to move on, down from €980k in 2009-10. In comparison to last year the increase/decrease is smaller but still as dramatic with average buying price increasing by €1.21m (+88%) and average selling price decreasing by €350k (-46%).

It is tempting to interpret this data as proof that Premier League clubs are drastically increasing squad quality by importing proven talent (higher avg prices) and selling fewer high quality players (less league exits, lower selling prices). And that maybe the case, but keep in mind  stats may change after the burst of late August activity especially as more free transfers move.

I will post an update of these stats after the window closes and numbers are more comparable.

Who’s doing the buying in the 2013-14 transfer window?

The Month in Soccer Business: June 2012

A monthly compilation of interesting business news related to soccer. June 2012.

Continue reading “The Month in Soccer Business: June 2012”

The Month in Soccer Business: June 2012

The Month in Soccer Business: November 2011

A monthly compilation of interesting business news related to soccer. November 2011.

Hearts owner Vladimir Romanov open to sale – November 6th

Owner Vladimir Romanov insists he will continue to support Hearts financially but admits he is now open to selling the Edinburgh club.

Players were paid on Friday, following an 18-day wait for overdue wages, and Romanov recently Continue reading “The Month in Soccer Business: November 2011”

The Month in Soccer Business: November 2011