Essay on Influence of core revs on FCs

How do internal and external factors influence the Core revenues of professional football league clubs?

Szymanski stated that “The football industry is a set of competing specialist firms within a well defined market” (Szymnaski 2010). This very unique type of business has a different core revenue stream, that are mainly categorised by three types; Broadcasting, commercial and match day. These main streams of revenue are influenced in many ways and this essay will consider the main influences, internal and external, on professional Football clubs core revenue’s. This essay discusses the core revenues of Manchester United and Bayern Munich and how they are influenced, as they are both top clubs in the world, however their core revenues are different and have different sources of revenue.

Internal factors are an important influence on the core revenues of clubs however big they are. Beating the offside trap a report on the financial part of football states “clubs are challenged by the delicate trade-off between raising ticket prices to boost revenue while ensuring that they remain inclusive and open to a broad socio-economic demographic, and do not alienate their traditional fan base.” (Lanzaveccihia et al., 2012)This shows different internal factors conflicting when considering increasing ticket prices to subsequently increase match day revenue. The governance of the club must consider the maximum a club can charge before it starts to alienate the fans and as a result attendances drop. Therefore raising ticket prices too high may result in attendances dropping and therefore match day revenue falling. Arsenal made the decision in 2011 to increase their ticket prices by 6.5%, this angered fans to the extent where Arsenal supporters trust campaigned against the increase(Arsenal Supporters Trust 2011), however Arsenal football club felt it necessary to increase revenue [Sportsmail Reporter 2011]. This shows Arsenal increasing ticket prices to try and raise match day revenue; on the other hand they have upset the majority of their stakeholders, the fans, as they now find it more expensive to watch Arsenal. This conflict in stakeholder’s interests proves a very difficult dilemma for the governance of the football clubs as they are a business but they are also a football club so decisions that see money put before the fans interests are seen as a bad decision by the fans, however for a business they are beneficial.

This saw match day revenue fall from £95 million to £93 million from May 2012 to May 2013 (Arsenal Suppoerters Trust). A small drop of only 2.1% in match day revenue, however this still £2 million. However in Arsenals case, match day revenue may have fallen but both broadcasting and commercial revenues both grew. Commercial grew from £34 million to £44 million from May 2012 to May 2013 showing a 29% increase of £10 million. This may have been influenced by the appointment of Tom Fox in 2009 as the clubs commercial director. Tom Fox is described by journalist and fan, Gingers For Limpar on his website for arsenal fans, as “a US businessman brought in to help Arsenal earn more dough from commercial deals” [Gingers For Limpar 2012]. Journalist Jeremy Wilson [2009, Telegraph] also states “The arrival of Fox is part of an attempt by arsenal to narrow the gap to their main rivals in that area”. This is an example of task culture within Arsenal football club as they appointed Tom Fox to catch up with their rivals financially by increasing their commercial revenue. This was a project that chief executive Ivan Gazidis was challenged with and he valued Fox as a worthy candidate to improve the clubs commercial revenue. It can be argues that Tom Fox was appointed as an American partner to the main stakeholder of Arsenal football club Stan Kroenke, therefore power culture was in place to trust another American to complete this task that was very important in securing revenue that may have been lost in match day

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