Behind the Scenes of Sport Franchises

Practically everyone who knows me can attest to one unique personal characteristic of mine. And that is that I am an avid football fan and player. My passion for the sport is exemplified through following matches, playing for a women’s football club, playing Fantasy Premier League competitively and basically anything else that’s related to the game. In short, I live for football, despite how uncommon the hobby may be considered for a lady.

So, when did it all start? I remember my earliest memory of watching football. It was the World Cup in the USA in 1994 when the Bulgarian national team climbed and really fought hard to make it to the semi-finals that really sparked my passion for the sport. Considered the “golden era” of Bulgarian football, I will never forget the moments of pure joy, euphoria and incredulity when an underdog team managed to rank at fourth place in the world.?

Years later and with many, many games played and watched, I experienced a lightbulb moment. I suddenly realised that my passion for football and my passion for franchising were intricately intertwined.?

It all happened one day after watching my team Man United comfortably win one of their league games (and I can confirm: it was definitely not this season, as we do not currently win comfortably even against teams at the bottom of the table). But that’s a topic for another time. What struck me the most then was the fact that one of the biggest and most profitable franchises in the world are football franchises. These include big clubs such as Manchester United, Barcelona, Real Madrid, Man City, Liverpool and others. Each one has a global following and is valued at a few billion dollars.?

But can these clubs really be considered franchises? The answer is a resounding “yes”. Here’s why. According to BigSoccer.com, a club may be considered “a human association,” like a poetry club, a chess club, a political club, etc. A franchise, on the other hand, is “a brand”. Some examples include Twix, Mars, Bud, etc. And while a club is related to a community, a franchise can be moved anywhere across the world, depending on the shareholders’ interests at the time. So, in the case of football clubs, these titans of football are actually franchises. This is not only because they’re massively recognisable brands. It’s also because they have a global fan base consisting of hundreds of millions of people.

Sports franchises are not only popular in terms of football and the Premier League. They’re also highly sought after and profitable in North America, too. Whether we’re talking about professional soccer, rugby, hockey or baseball, these leagues have adopted the franchise model in the US and Canada as well. The way in which they work is that such leagues comprise a stipulated number of teams (known as franchises) which field one team each. Then, these franchises have territorial rights, which are usually exclusive territories that are large enough to cover major metropolitan areas, so that they have no local rivals.?

Keeping all this in mind, what exactly makes these franchises so successful?

The answer is simple - their multiple revenue streams. Taking Man United (for obvious reasons) as an example, all revenue is earned through three principal streams:

? Commercial

? Broadcasting?

? Matchday

Source: Investor Relations Manchester United

The commercial revenue stream accounts for the largest share of all three. On the one hand, it includes sponsorships from other brands. And on the other, it includes retail, merchandising and product licensing. Regarding the former, monetisation takes place through marketing and sponsorship relationships with both global and local brands. One example of this is DHL, which is the preferred logistics partner of Manchester United. Adidas, on the other hand, is the official kit supplier. Meanwhile, Marriott Hotels is the football franchise’s official hotel partner. Each of these partnerships have been monetised. Regarding the latter, the franchise has been able to significantly financially benefit from selling sports apparel, granting product licensing for coffee mugs and selling merchandise. All this thanks to the millions of fans across the globe.?

Broadcasting revenue will vary depending on the team’s performance. However, during the last few seasons, it has contributed over one-third to the overall club’s revenue.

And finally, although matchday sales have the smallest share, they were still a whopping $111 million in 2019.

And it doesn’t look like fan loyalty is on the decline either. A quick example of this can be illustrated during my travels to Asia on several occasions. What always astonished me was the club fan loyalty. Man United fans wore their football jerseys proudly everywhere around me. This was irrespective of whether I found myself in China, Taiwan, Hong Kong, India, Indonesia or Thailand. One thing is clear and that is that the brand has penetrated those markets extensively. They’ve done this by ensuring that the market is well-stocked with coffee mugs and other merchandise, brand partnerships and ad space. In fact, in China alone, it has been estimated that Manchester United had a following of 253 million fans in 2019 and 1.1 billion fans globally! What an accomplishment!

Value of football franchises

Over time, the value of sports franchises has increased across all sports leagues including NFL, NBA, NHL, MLB and the Premier League. The chart below shows that from 2011 to 2020, the value of the Man U franchise has increased by 500%!

Source: Statista

Sports and franchising: Are you ready to take it on?

There are many reasons why sports will always have a special place in the heart of a true fan. For starters, there’s the social element of meeting up with mates and watching a game over a pint or two. Then, there’s the competitive element as well as the feeling of being a part of something bigger. Something that unites you and millions of others around the world. And finally, the health and fitness benefits of playing a sport. This is especially important in our modern society where wellness, fitness and living a healthy lifestyle is not only important for one’s physical well-being, but is also creating a huge demand and market for such franchises.?

If you’re a passionate sports fan or player, much like me, it may be time to take your hobby and turn it into your dream job. While I wholeheartedly agree that owning a football club may be a possibility that’s only available for petrol magnates and former Russian oligarchs, there are definitely other sport franchise options that you can consider that won’t break the bank.

In fact, to find out about the available investment opportunities in sports and football franchises, why not head over to www.franchisefame.com ? You’ll be able to see a wide range of options, and although sports franchises typically go for a bit higher than fitness franchises, it might be the best career move you make. As the saying goes: choose a job you love and you will never have to work a day in your life.