English football and American owners – A worrying combination

30% of Premier League clubs have ownership or investment by an American.

Obviously you have Stan at Arsenal. Then the Glazers at United. Liverpool are owned by an American sports fund, FSG. Ellis Short is at Sunderland. Randy Lerner at Aston Villa. And most recently Crystal Palace have had Joshua Harris invest £50m into the club.

There are an additional 3 American owners in the lower leagues (Fulham, Millwall & Coventry).

Whilst the Eastern European and Arab investors saw buying a Premier League club as play thing. Something to chuck a lot of their personal fortune at for their own please. Like a yacht, a super car, or a chalet in the alps, the American’s saw it as an investment. A way to make money.

Back 15 years ago, you would be crazy to buy a Premier League club in the hope of making money. The majority made massive losses. The ones that made a profit, it was barely worth speaking of. Maybe a million or so.

Arsenal often bucked the trend, especially with the new stadium build, making profits in the £10s of millions. We were the Bank of England club.

American investors saw a gap in the market though. They looked at the sports clubs they owned, how much money their franchises made, especially in the NFL.

In 2015, the 32 NFL franchises had a combined revenue of $7billion. Almost every single franchise is worth over $1billion (£690m). Only 5 Premier League sides are worth above this.

So the American investors sat their and looked and the Premier League and noticed its short falls against the NFL. Places where the NFL was raking it in, and the Premier League clubs had barely scratched the tip of the iceberg.

What we have then seen over the last decade is an explosion in Premier League revenue. Arsenal, as an example, have seen a 46% increase in revenue since 2008 (Source: Swiss Ramble). And that is before the new TV. It is more than likely that after the new TV deal has come in, the average Premier League side will increased its revenue by over 100% over the last decade.

And it is not just the domestic TV revenue that has been exploited.

The Premier League, whilst already popular abroad, has increased its popularity overseas. Alongside this we have the new commercial deals. The sponsored naming of Stadium’s is one thing that Americans have bought in recently.

Back 10 years ago, it would have been unheard of to have a ‘Diesel Engine Partner’, ‘Savoury Snack Partner’ or a ‘Malaysian Official Integrated Telecommunications Partner’. All of these Manchester United have, and more.

Premier League clubs are now bringing in more commercial revenue than ever before, with Manchester United and their American owners leading the way.

A lot of what the Premier League has done recently to increase revenue has been done on a global commercial level. Bar the TV deal, which sees less and less 3pm Saturday kick offs, very little was changed at a local level, effecting the local fan.

This is now changing.

When you look at the American franchise models and how the deal with their fans, it creates a cause of concern for the future of the English game for the local fan, as it is clear that the more American owners in the league, the more they will push for us to follow the American model.

Already we have seen discussions of taking a Premier League game abroad. Or the creation of a 39th game.

Now this is where I find some English fans hypocritical.

They will happily go to Wembley for an NFL game. With more games scheduled to be played at Twickenham and potential Spurs new stadium, there will be even more NFL games held in England. I am of the opinion that if you go to these games, you lose your right to moan when a Premier League game is held abroad.

And in my opinion, within 10 years, we will see Premier League games held abroad. It is inevitable.

Then we have the idea of the franchise itself.

America does not do failure very well. So their league systems do not have promotion and relegation. It ensures that no matter the sport, there are only a finite amount of top level professional clubs, all able to keep hold of the money,

Their are 32 NFL sides. 30 NBA. 30 MLB. 30 NHL sides. There are 92 professional clubs in England and hundreds more non-league who could one day become professional.

There is no great American dream of a side being able to rise through the leagues to win. No Nottingham Forest. No Wigan Athletic. No Swansea. No Leicester City.

You have your franchise, and that is that. The only changes you get are when an owners decides to uproot his franchise to a different city. Sometimes even a different state. Wimbledon to Milton Keynes is the norm in America.

So how long until we see a full Premier League break away from the FA. A decision to pick the 20 most popular sides. Or even create new sides (Sheffield Wednesday & Sheffield United becoming Sheffield City, Rovers and City of Bristol becoming Bristol United, etc).  A 20 team Premier League, with billions of pounds of revenue, where there is no relegation. Sod the rest of the league. That will be the viewpoint.

Imagine London, a City with 10 million people. It has 15 clubs currently in the top 4 leagues. A franchise situation would probably reduce that to 3. 4 at the most. As generations go on, that is a lot of people to be spread amongst not many professional clubs.

There was talk last week of securing places in the Champions League for the big sides. Guaranteed places. This did not surprise me.

It is the big sides that generate the viewing figures which in turn dictates the advertising revenue. More people will watch Manchester United globally than Leicester City. So it is only obvious that the money men would rather Manchester United play than Leicester.

Guaranteed slots for the major sides. This could then lead to an extension of the Premier League franchise. And European Super League with Europe’s top 30 sides, playing each other week in week, in a normal league format.

If all this is concerning, wait until the American investors introduce new pricing structures.

In the NFL you have something called the Permanent Seat Licence (PSL).

The PSL gives the owner the right to “own” a seat. It does not give the owner a ticket, week in week out, like our season ticket, but the right to buy a ticket week in week out. Basically, you buy you PSL, then you buy tickets in that seat on an individual basis. So you are paying twice.

Owning a PSL can cost anywhere between $500 – $150,000. And you still have your season ticket to pay for.

Based on per game (in the NFL, you get 8 games with your season tickets), the average season ticket prices in 2014 are:

Cheapest season ticket prices (averaged on a per-league game basis):

Premier League: $27 per game

NFL: $46 per game

Most expensive season ticket prices (averaged on a per-league game basis):

Premier League: $73 per game

NFL: $266 per game

Son in terms of pricing, the American investor will see that there is still a long way to go. Doubling, even trebling, the prices of the tickets.

Alongside franchising (potentially at a European level), it would create a situation where their are less top flight interests, with more top flight fans (over time), therefore dramatically increasing the demand for tickets.

Finally, you add in the foreign tourist fan. We have seen it for 2 decades, but even more now. Packages sold by the clubs to travel agencies to come on holiday to London and watch a game of Premier League football. Often your Chinese or Korean or Arab fan do not care who they watch, they just want to watch Premier League football.

The American investors will continue working the foreign fan base, creating more interest, selling more packages abroad, creating a situation where there are fewer tickets available at a local level.

We already here about Arsenal selling 200-odd tickets to Chinese travel agencies for the away game against Manchester United.

The less supply to local fans, the higher the demand, the more they can charge.

 

Everything in America is about money. and how to make as much as possible no matter how you step on. If you are unhappy with the state of the game now. In 10 years times, it will be a lot, lot worse. You probably won’t be going anymore.

Keenos

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