The huge sums of money made out of IPL cricket and England’s premiership football reflect the reality that sport feeds directly into a media and money culture.
Sport has always been linked with money and the search for power and prestige. In Arnold Bennett’s 1911 novel The Card: A Story of Adventure in the Five Towns, Councillor Barlow, who has financed struggling Bursley FC to the tune of £2,000 over thirteen years, moans that he has been paying out of his pocket to finance football matches and got nothing but grey hairs for it. Soon another operator Denry Machin, who is something of a small town media tycoon, and ‘the card’ of the title, buys the club a centre forward and so changes its fortunes that he makes himself the youngest-ever Mayor of the town.
What has changed since Bennett wrote are the sums of money and the men of wealth and power that modern sport attracts. Both cricket and football illustrate this well.
Cricket, whose organisation in the 19th century provided the template for other sports, has since its inception been built round the Ashes battle between England and Australia. But over the past decade, India, where the game is almost a religion and whose thriving middle class of 400 million forms a lucrative television market, has replaced England as the powerhouse of the game. The country now provides 80 percent of world cricket’s income and its immensely successful Indian Premier League (IPL) sold its television rights last year for over $1.6 billion.
The IPL took an English innovation, ‘Twenty20’ cricket, married it to Bollywood, the world’s largest movie industry, and borrowed from the US such ideas as city-based sports franchises and blonde pom-pom girls who gyrate every time a four or a six is hit – celebrations familiar to American sportsfields but hitherto unknown in cricket. Although questions about lack of corporate governance has seen the American-educated founder of IPL, Lalit Modi, facing serious charges, nobody doubts either the success of the League or India’s hold on world cricket.
The Indians were keen to organise the IPL because they feared that the UK’s televised Premier League football could seduce their youth from cricket to football. The Premier League is undoubtedly the most successful product to emerge from Britain in the last 20 years. Its power was advertised by David Cameron when he included the chief executive, Richard Scudamore, among business people accompanying him on his recent visit to India.
English premiership clubs are sought after by the world’s rich and famous. Manchester City is owned by a member of the Abu Dhabi royal family and Liverpool has been targeted by an official Chinese fund. Ownership not only brings media exposure – the Chinese interest in Liverpool dominated the front page of The Times – but also huge income.
Back in 1992 when the premiership was launched, Sky paid £191 million for a five-year television deal. For each club the deal was worth just over £9 million, more than clubs had ever earned before from television, but it was nothing compared to what the 20 clubs get from the current deal, covering the shorter period of 2007-2010 and bringing in £1.7 billion. And these figures do not include the overseas television rights where such is the appetite for Premier League football that television income has gone from £208 million a year in 2007 to about £460 million a year now.
As television income has grown so has sponsorship. In 1993, Carling paid £12 million for a four-year deal for the new league to be called the Carling FA Premier League. In 2007, Barclays paid £65.8 million for just three years for their title rights. That was the same year that the banking crisis started to unfold and, although governments have been baling out the banks, the top sports seem to be immune from the chill winds of recession.
We have been here before. In the 1930s, despite the economic depression, sports flourished and, as shown by J. B. Priestley’s 1934 travelogue, English Journey, football shone in that dismal, dishonest, decade. Then, of course, sports financing was essentially money paid by fans from their surplus income for tickets. There was no television, or any other commercial income, and if banks did lend to sports clubs it was as a result of cosy deals with their local bank manager. Even well into the latter half of the 20th century, clubs did not run up huge debts. Through the 1960s, 1970s and 1980s, Liverpool, then one of the most successful of English clubs, never had a bank overdraft. Peter Robinson, the club’s legendary chief executive, made sure his budgeted expenditure matched revenue from season and day ticket sales. Season ticket sales meant they got much of their income almost three months before the season started and, provided clubs worked out their expenditure properly, they could manage their cash flow.
It was only in the late 1980s and early 1990s that sports administers realised they were sitting on a gold mine, television rights for their events could fetch large sums of money and sports and finance became intertwined. The major sports also discovered the world of corporate entertainment. Stadiums now include the sort of boxes that were previously only available at Covent Garden or major West End theatres. Here companies could entertain their clients and the boxes not only brought in greater revenue than the sale of ordinary seats, but it could be secured in advance covering several sporting seasons. Such revenues attracted the attention of the City of London’s financial experts who showed how clubs could leverage income from other commercial revenues streams to finance stands, stadiums or even player purchases. While the clubs took this route of securitised debt gleefully, some were to find they were football’s version of sub-prime debt.
The modern marriage between mammon and sport had started in America in the 1960s. It was most aggressively promoted by the National Football League (NFL), which used the rise of post-war television to make American football, long in the shadow of baseball, into the major US sport. NFL’s innovations included Monday night matches, which meant extending the sporting weekend to three days.
The Premier League borrowed many of its commercial ideas from the NFL and one of the first things Sky did when it televised it was to introduce Monday night games too. Much as English football purists loathed the idea, the concept was made for the television age and is now part of the English football furniture.
The problem is the American sports model is unique and very different to the Victorian sporting institutions that form the template for most sports bodies round the world. The Victorians saw sport as having high moral principles and they organised them through clubs or other essentially non-profit making bodies led by volunteers. The Victorians kept up the pretence of only playing for the love of the game, like the legendary ‘father of cricket’ W. G. Grace, who was a doctor by profession, but even then it was generating money.
This Victorian hypocrisy meant that their sporting institutions at best tolerated professionals and always asserted that a single body could represent both amateurs and professionals. So while the Football Association (FA) allowed the Football League to be formed, because it liked the idea of paying players, it still retained its right to control all organised football in the country – from Manchester United, now one of the biggest clubs in the world, to the amateur clubs on London’s Hackney Marshes.
By contrast, the Americans had a strict dividing line between amateur and professional sport. The NFL, Major League Baseball and the National Basketball Association are all unashamedly professional bodies run by a Commissioner, who acts like the chief executive of a corporation. And yet the set-up is a quite unique form of American sporting socialism with a touch of 19th century American capitalism.
The big American clubs, often owned by men and women who would classify themselves as fairly right-wing Republicans, share all revenue equally, whether it be from television or any other source. The clubs see themselves rather like a restaurant chain and they recognise that it is important for all restaurants in the chain to do well, and not just their own individual business. And this means the club that has done worst needs the most help. So at the end of the season they have a widely-televised draft of players, where the bottom club in the league gets first pick of the best college player.
England’s former Football League chairman, Lord Brian Mawhinney, looked at the NFL when he was drawing up plans for restricting the League. He told me: “The NFL is extremely successful, a very impressive organisation, but philosophically it is totally different to any sporting model we have. In the NFL they don’t talk about the club brand they talk about the NFL brand. Talk to a Football League club and they will talk of the club.”
The Americans’ collective thinking is possible because they have their own form of amateur sport in their college system. Promising players, while getting a college education, are nurtured to professional standards, well aware that if they succeed they will earn huge salaries. The arrangement is underpinned by a deal with the US government. The major sports are exempt from several laws regulating business, such as the US anti-trust laws. This enables them to impose salary caps and regulate trade in players between clubs. Also all the major sports bodies are allowed to vet new owners. Unlike in the UK – where football clubs are limited companies – the ruler of Abu Dhabi or the Chinese government could not just go and buy an American sports club. For that to happen, all the clubs in that league would have to meet and approve the new owner.
All this makes the American model difficult to replicate, added to which there is no promotion or relegation in their major sporting leagues, and this is an essential feature of the British system. But while their clubs cannot move up or down, American owners are allowed to physically move their clubs. The American sporting model has a consistency which the British system currently lacks.
Not long after the FA had allowed the Football League to be formed, it adopted a series of measures to curb what it felt was excessive commercialism. Clubs might be limited companies but they could not pay dividends and a maximum wage was imposed on players. Over the decades such restrictions have disappeared, with the result the UK now operates the most free-market football system. Clubs can float on the stock market, there are no restrictions on what they pay players or who owns them, with the result that Manchester City was owned by a disgraced former Thai Prime Minister for a year and Portsmouth by a succession of four owners, all of whom had difficulty meeting their obligations. West Ham was sold to a rich Icelandic businessman called Björgólfur Gudmundsson and when his country went bankrupt the club was at the mercy of the economics of Iceland before being bought by David Sullivan and David Gold, men who had made their fortunes from pornography.
Other countries have imposed restrictions to prevent their sporting institutions passing into foreign hands. German law does not allow a foreigner to take more than 51 percent of a sporting club, and the majority holding must be retained within the country.
The UK’s recession may force change, and this could come from the Inland Revenue. The story goes that back in the days of boom, and with Gordon Brown at the Treasury, Keith Vaz, the Leicester MP, persuaded Brown to call off the Treasury sharks threatening Leicester City for non-payment of taxes.
The UK Treasury has been keen to challenge the unique football creditors’ law, whereby a club in administration must meet its football debts, such as transfer fees and payments to players, if it wants to continue playing, but has no such obligations for non-football payments, be it salaries to non-football employees, St. John’s Ambulance or the person supplying the pies. How far the Inland Revenue will succeed remains to be seen but, if it does not, the clamour may grow for government intervention – paving the way for the sort of government regulation of sport that the UK has avoided, but it could well be the legacy of this recession.
