What will 2012 bring for the business side of football?

What can we expect in 2012 in terms of the business side of football? It's an almost unanswerable question because no one knows for sure what is going to happen to the world's main football economies, those of Europe. Asian countries are, of course, big and growing customers for televised games and the prospects there look reasonably good.   In the States, against a background of slow economic recovery, the game will continue its steady progress.

 

No one is forecasting any significant recovery for European economies in 2012. The big question is whether they will enter another recession. That in turn depends on what happens in the eurozone crisis. Italy in particular has to finance a big tranche of debt in the first three months of the year. If Italy can't sell its debt, the whole eurozone is at risk. For what it's worth, my bet would be that although it is possible that Greece may exit, the eurozone as a whole will survive because Germany wants and needs it to succeed.

 

Football came pretty well out of the crash of 2008. Fans in the stadium continued, by and large, continued to turn up and fans on the sofa at home continued to pay to watch live football. Benefactors, the ultimate glory seekers, continued to pour money into clubs.

 

However, football is in less good shape to survive a second hit from the economy. Debts have mounted. In Britain, incomes have been squeezed by wage rises that have not kept pace with inflation, although inflation should ease as the year goes on.

In Spain it appears that the size of the deficit is bigger than was thought and this is going to require even harsher austerity measures. Unemployment is already at 23 per cent. Spanish football is simply not profitable. In large part it has been kept going by public funding, some of it relatively transparent (e.g., for stadiums) other payments less so. But with the country in crisis, vital public funding is slowly being withdrawn.

 

Italy has deep structural problems in both its economy and football which are not going to be changed in the short term by a government of technocrats. Germany's economy would be hit hard by a European slowdown and it has structural weaknesses which are talked about less than its strengths. But German football is probably in as good a shape as any major European country to survive a second recession.

 

What is the case is that there is now a dearth of quality investors. By quality investors I mean those who have deep wallets, but also some knowledge and understanding of the game – or at least a willingness to leave the big decisions to those who have that knowledge.   The saga of Indian poultry to healthcare conglomerate Venky’s is an awful warning in this respect.   At Chelsea the turnover in managers cannot have been good for the club and may have something to do with the impatience of Roman Abramovich for success.

 

Some investors have been exposed by the recession and shown to have bigger mouths than wallets. A lot of the investors who were prepared to spend big to obtain prestige through football now have clubs. This makes it very difficult for clubs like Everton that badly need new investment or clubs like Hearts that are beset by financial crisis. Indeed, it looks like another difficult year for Scottish football.

 

We can certainly expect more clubs to go into administration, although hopefully none will come as close to the brink of extinction as Plymouth Argyle did in 2011. Financial fair play is starting to affect the spending behavior of big clubs but some of the biggest problems have been in the lower reaches of the Football League and the non-league system where some clubs have disappeared altogether.

 

Sir Alex Ferguson celebrated his 70th birthday on New Year's Eve, if celebrate is the word when you lose 2-3 at home to a relegation threatened club.   Some years ago he said that he would not be at the club by the time he as 70, there is no sign of an early departure from Old Trafford. Why should there be? Manchester United have a good chance of retaining the title. Perhaps what distinguishes them from other clubs is their ability to win even when they do not play well.

 

As Ferguson's biographer Patrick Barclay points out Ferguson is not a genius. Brian Clough was a better judge of players, José Mourinho is a better tactician and there are many better coaches. But there is no one who is better at management.

 

Leading sports writer Simon Kuper wrote an interesting article in the Financial Times trying to work out what it is that makes Sir Alex such a good manager. The message was that many business managers could learn from him.

 

Of course what makes Sir Alex is a unique blend of different factors. However, if there is one general message I take away from the article, it is about an ability to learn. In particular not just learning from mistakes, but thinking about who to learn from and who to disregard. It is also an ability to turn potential weaknesses into strengths.

 

Perhaps I would also add a determination to succeed. People I have known in life who have ended up as chief executive officers have been prepared to pay a high price to get there because they really wanted it. They have set themselves tough goals and set out to achieve them.

 

Of course, perhaps one also needs a little luck. There was a time early in Sir Alex's career at Manchester United when it hung in the balance. However, if you are going to start off managing East Stirlingshire and end up being a world class manager you need self belief, but also never to be satisfied with what you have achieved to date.

 

Perhaps a key quality is identification with the brand. Kuper says, 'Sir Alex made himself unsackable at United partly by converting himself from mere employee into the embodiment of the club's values. After arriving at Old Trafford in 1986 he interviewed staff about United's history, and listened to fans. He gradually absorbed three tenets of the club's brand: United teams must attack, the world is against United and United is more a cause than a football club.

 

Sir Alex is notorious for his temper, but he has honed what could be a fatal flaw into a weapon, switching on and off his rage when needed. He seeks total control, but recognizes when it is not possible. Fear plus information equals control.

 

He also seeks to cultivate every interest group inside United which says something about his relationship with the Glazers. He got the sack at St Mirren after falling out with this chairman and learnt from that: 'Even if you hate your chairman, you have to find a way of getting on with it.'

 

All stakeholders are seen as important: the board, players, fans and sponsors. He worries much less about outsiders such as journalists or referees. However, he seems to be able to intimidate at least some of the latter, hence the phenomenon of 'Fergie time'.

 

Whatever you think about Ferguson and United, English football won’t be the same when he does eventually leave.

 

Wyn Grant is a regular contributor to Albion Road and also the publisher of footballeconomy.com, a website covering the business and economy of the game of football.