The Cost Of Sport

It was World Series Cricket in the late 1970’s that forced the Cricket establishments around the world to start paying the players a wage that meant that they could truly focus on just cricket.

Following the commercial success of the 1984 Olympic Games which saw 900 million television viewers tune in to watch, the International Olympic Committee became acutely aware that an Olympic medal now had a great commercial value and it was becoming harder to prevent athletes cashing in on their success. Even though certain countries had been running state-run sponsorship programs where athletes were given “jobs” but trained full time, by the late 1980’s it was becoming so prevalent that The IOC opted in 1988 to allow professional athletes to compete. The Barcelona Olympics being the first in which professional athletes were allowed to compete in most events.

It was in the same year that the English Premier League was born, 1992. English football had been through the doldrums in the 1980’s due to European bans because of the hooliganism in the game, the grounds were falling into disrepair and the teams were falling behind their counterparts in Europe.

Yet it was in the early 1980’s that Tottenham Hotspur’s Chairman found a loop-hole in the Football Association rules that managed to make him make money from the club he had invested in by having a parent company own the club. In 1983 Spurs became the first Sports club in the World to float on any stock exchange. It was a move that would be followed by many clubs and change them forever. It was also a move that helped see the Premier League plan become a reality.

One of the big carrots to make the top clubs break away from the Football League was financial.The newly formed top division it was said would have commercial independence from The Football Association and the Football League. This would enable the newly formed English Premier League to negotiate its own broadcast and sponsorship agreements. The argument given at the time was that the extra income would allow English clubs to compete with teams across Europe. A similar argument being put forward by the A-League club owners in Australia.

Four years after the Olympic Games went professional and the EPL was born, one of the last sporting bastions of amateurism bowed to the mighty dollar, Rugby Union. It was inevitable and the players deserved to be allowed to make money from the game. Yet it changed the game forever.

By the turn of the new century sport was more about dollars and cents than results and world records. It was big business.

All around the world sport is seeing businesses form links with successful sporting teams. It is also seeing some altruistic money men invest in the clubs they support. Yet for every one of them there are five or more egotistical new owners who are using the clubs to raise their own personal profile, move their money around or use the club as a tax right off, oh, and of course make money. After all sport is business and what better way to publicly conduct your business?

Understandably many of these investors want to see a return on their investment. Yet what is concerning is giving them control of the game. In the A-League there has been talk, albeit dispelled in a joint statement this week from the FFA and the Club owners, that a breakaway league where the club owners would have more control over their destiny, as well as the money from television and sponsorship, is in the offing.

Meanwhile while there is a very protracted and public investigation in to the Board of Control for Cricket in India (BCCI) the Indian Premier League owners have apparently been working silently in the background.

According to media reports the six original IPL teams are preparing a charter of demand that they intend to table with the IPL Authorities. The basis of their submission it is believed is, like the A-League clubs, over being given a greater share of the central funds that the League generates.

Interestingly with two IPL sides suspended, two new teams were accepted into the competition. The two new Franchises agree to forfeit their share of central revenue when being accepted into the league. The IPL Six’s contention is that the BCCI is not sharing the central revenue with them, and that the surplus created should be split between the original six franchises. They are backing this argument by stating that extra costs have been incurred due to changes of venues.

Not surprisingly the BCCI has already stated that the surplus belongs to them and will not be given to the IPL clubs.

Are the owners being greedy? Are they rightfully expecting a share of the funds in return for their investments?

Sport as a whole clamoured for television coverage. Television coverage was going to be the answer to all sport’s financial woes, and it could well have been. However in the race to be a part of the sporting circus and to keep up with their opponents clubs in all sports around the world were happy to hand over control to business men and women, some reputable, some not so reputable. Is sport, and are those clubs paying a massive price now?

With more and more people watching sport on tablets and through the internet than the traditional television stations one wonders whether the sporting landscape is about to change dramatically in the next ten years, and we are going to witness private ownership dissipate. Certainly it is extremely unlikely that television stations are going to go out and bid billions of dollars on televisions rights. There will be a cutting back on expenditure, and in order to keep viewers there will have to be an upping of standards in some cases as people get around geo blocking and opt for the broadcasts they prefer.

How many clubs will survive without that television money? How many could survive if their benefactors walked away? Will others to replace them be so easily found, and how will the new owners alter the structure of the businesses that have been set up in order to survive? Does their survival fall to the sport’s over-riding administrators? Should they be monitoring expenditure and ensuring that the business-models are viable and will survive if the expected television money does not eventuate down the track?

After all who can forget that in 2002 with the collapse of ITV digital thirty football clubs faced bankruptcy until they were thrown a lifeline by a UKL95 million deal with the satellite broadcaster BSkyB; now Sky sports.

At the time many of the 30 clubs had already spent much of the money they expected to receive from the television deal, and when the deal collapsed they were staring bankruptcy in the face. There were reportedly 800 players facing redundancy. Have lessons been learned? Are clubs still spending money they do not have?

The change from the late 1980’s to the early 2000’s was fairly seamless, let us hope that the next change is equally as seamless and doesn’t see decades of history evaporate overnight. Hopefully people have learned from the events of 2002 and will be ready should a similar evaporation in funding from television arise.

The Cost Of Sport

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