Exploring the Turkish Market: Discover the rationale behind City Football Group's (CFG) foray into the Turkish market.

Hello! Welcome back to PITCHSIDE MONITOR, your one stop guide to club management! This week we will:

• Take a closer look at the football ecosystem of Turkey
• Hear from Dr. Mustafa Erogut

First up, is our section on club management.

Amidst the continuous influx of international football updates in recent weeks, the news of City Football Group forging an agreement with a Turkish club in Istanbul might have somewhat eluded the broader public's attention. However, beyond fortifying the CFG model and providing them with access to a significant international market that was previously inaccessible to foreign interests, it prompts us to consider: if an organisation of CFG's stature is showing interest in Turkish football, perhaps it merits an immediate and thorough examination?

In the recent past, we delved into this geographic region in one of our earlier #PitchSideMonitor editions. In that instance, our focus was on the broader Turkic landscape, encompassing both the UEFA and AFC zones, presenting the potential for a self-sustaining football business market. Now, let's shift our attention to the Turkish league specifically: examining its current standing, strategic advantages, and positioning in terms of developmental potential within the European football context. We aim to address these questions in this week's insightful edition of #PitchSideMonitor!

The Track Record

In recent years, Turkish football has often been absent from the prominent headlines of Western European football news outlets, largely attributed to the mixed performance of its clubs and national team in international competitions. Despite this, against the backdrop of elevated inflation, the Turkish economy continues to exhibit robust performance on a macro scale. Positioned comfortably among the top 20 global economies and within the top 10 in Europe (top 5 by PPP!), the Turkish economy holds a significant standing.

Over the past five years, the collective revenue of top-division clubs in Turkey has experienced a decline, transitioning from its peak at nearly €750 million. This downturn positions the Turkish league, once one of the wealthiest domestic divisions outside of Europe's top-5 leagues, in direct competition with Russia for the 6th position. In 2022, the combined revenue has marginally exceeded €500 million. Despite the exclusion of Russian league figures, given the geopolitical circumstances following its invasion of Ukraine, Turkey now trails behind the Dutch and Portuguese domestic leagues in total club revenue. Furthermore, it contends with Belgium for a place in the top-10, signaling a shift in its competitive standing.

Nevertheless, in football, the narrative extends beyond financial metrics. In terms of performance, Turkish football boasts a commendable track record, with a consistent presence of at least one club in the group stages of the UEFA Champions League in 20 of the last 21 European seasons. Furthermore, over the past decade, there have been instances of four Turkish clubs participating in the group stages of at least one UEFA competition in 6 out of the last 10 seasons. This showcases a noteworthy and sustained presence at the continental level.

However, participation and actual outcomes represent distinct aspects, as evidenced by the Turkish league's position at 20th in the UEFA country coefficient rankings just a few seasons ago. While some regions and clubs might have deemed addressing European performance amidst economic challenges insurmountable, Turkish football demonstrated remarkable agility in rectifying this situation swiftly.

Presently, the Turkish league enjoys its most favorable European standing in a decade, marked notably by the enhanced quality of players within its clubs. This positive shift is well-supported by squad valuation data sourced from Transfermarkt:

The Outlook

This brings us full circle to the focal point of this article—the announcement of the collaboration between CFG and Istanbul Basaksehir. The decision to delve deeper into the Turkish market during a period of relative calm in Turkish football prompts an exploration of the underlying motivations.

In recent years, Turkish clubs have demonstrated a notable enhancement in their management efficiency. This improvement has translated into better sporting outcomes on the European stage and an overall elevation in the caliber of playing talent within the league, all achieved within a more restrained budget.

Turkey remains a significant country, bridging the European and Asian continents, strategically positioned between the Mediterranean, the Middle East, and Central Asia. Boasting a growing economy and a population set to peak much later in the century, projections estimate it to reach 93.5 million by 2050—contrasting with many Western counterparts whose populations are anticipated to plateau earlier.

Moreover, Turkey has emerged as a leader on the European continent in the construction of major stadiums over the last decade, boasting an impressive 37 completed projects, as revealed by the latest UEFA benchmarking study. The country enjoys distinct advantages, particularly with robust industrial ecosystems intertwined with the sports realm. These strengths span venue construction—illustrated by the selection of a Turkish contractor for the renovation of the Spotify Camp Nou stadium in Barcelona—textiles and sportswear, and the information technology sector.

Looking ahead, the forthcoming decade will be dedicated to the preparations for the 2032 Euros, recently awarded to the joint Italo-Turkish bid. This landmark event signifies a historical moment as it marks the first time the competition will be jointly hosted by countries that do not share a border with each other. It stands as a significant development, considering the exceptional 2020 edition hosted across 11 countries.

The Challenges to Overcome

Amidst the broader economic, social, and political considerations that every country navigates, Turkish football is confronted with a substantial challenge—to not merely partake in European competitions but to genuinely contend, pose challenges, and triumph within them. This necessitates an elevation in the standards of management, coaching, recruitment, and player development across the spectrum, with a specific emphasis on the clubs. It is within the domestic performances of these clubs that the privilege of representing the country in European competitions is earned.

Over the past 15 years, three championship-winning teams have emerged beyond the traditional Turkish top-three: Bursaspor, Basaksehir, and Trabzonspor—the latter being the most successful Turkish club outside of Istanbul with an impressive tally of 7 domestic league titles. While the "big 6" have perennially represented Turkish football on the European stage, other clubs have also achieved this milestone within the Turkish context. The overarching goal is to guarantee that any club securing a European berth can not only compete effectively but also contribute positively to the coefficient, rather than being a drain on it.

Lastly, Turkish professional football needs to significantly enhance its efforts in nurturing a new generation of top-tier talents for both domestic and international competitions. Currently, only two of the top five most valuable players with Turkish nationality were developed at the youth level in Turkey. Moreover, the Transfermarkt database features just 15 Turkish players valued at €10 million or more. Additionally, among the top 50 Turkish players by value, only six are under the age of 20. While players like Arda Guler showcase promising young talent, the nation's vast population and fervor for football suggest there are likely more hidden talents in the playgrounds of Istanbul, Ankara, Izmir, Bursa, and beyond waiting to be discovered and provided with the right opportunities for advancement. Perhaps this potential untapped talent pool is one of the factors driving CFG's keen interest in entering the Turkish market at this juncture.

In this edition's "Football Talks" segment, LTT Sports engaged in a conversation with Dr. Mustafa Erogut , Vice President of the Türkiye Futbol Federasyonu . Mr. Mustafa is also a Member of Youth Working Group at the European Club Association (ECA) .

1) The modern football business model is built on significant media rights revenue flowing into professional clubs, allowing them to recruit talent and make profit. This is normally possible for large countries with a relatively wealthy population, giving us the top-5 effect in European football. Turkey is one of the other few countries that have the population to achieve this model, but its experience with media rights over the last decade is somewhat patchy if we recall the issues with BeIN over price. Do you believe that in Turkey the media rights model can be fully functional based purely on the domestic market?

Absolutely, the landscape of media rights in Turkish football has indeed been challenging, reflecting a broader global trend where traditional revenue streams are being reassessed. The addition of new rights and packages is a strategic move to diversify and strengthen revenue streams. This diversification, particularly in digital and NFT spaces, not only caters to the evolving consumer behaviour but also opens up new channels for fan engagement and revenue. Working closely with the Turkish Super League Clubs Union is pivotal. It ensures that the interests of all stakeholders are aligned, paving the way for a model that, despite previous setbacks, is poised for success. The key here is adaptation and innovation, leveraging these new opportunities to build a sustainable and profitable model that doesn't solely rely on the domestic market but has the resilience to thrive in the face of fluctuating market conditions.

2) What should be the ambition of the top Turkish clubs? We see them sitting fairly comfortably in UEFA’s top-100 in the 10-year ranking even without achieving spectacular results; what do they need to do to become real challengers on the European scene?

The recent surge in performance, propelling our national ranking to 9th, signifies a promising trajectory towards our objective of securing the 7th spot behind the Big 5. This ambition isn't just about accumulating points; it's about fundamentally enhancing the infrastructure and operational capabilities of our clubs. Financial sustainability emerges as the cornerstone of enduring success. Aligning with both TFF and UEFA's evolving criteria provides a roadmap for our clubs, emphasizing the need for robust financial health, strategic planning, and youth development. The impending changes in the UEFA Club Competitions format present an opportune moment for Turkish clubs to assert their presence more emphatically on the European stage. The goal is clear: to not only participate but to compete with the ambition of winning. Achieving this within the next four years requires a concerted effort, focusing on governance, investment in talent, and fostering a competitive domestic league that can serve as a strong foundation for European success.

3) Of course, we try to follow the maxim that football and politics don’t necessarily mix, but in recent years there have been interesting moves to define and leverage the Turkic ecosystem as a development mechanism which connects globally significant regions in Europe and Asia through the Organisation of Turkic States. How can football utilise this new and interesting dimension?

Football possesses an unparalleled capacity to bridge cultures and foster diplomatic relations, transcending the traditional boundaries of politics. By integrating the Turkic ecosystem into its strategic framework, Turkish football can spearhead initiatives that not only enhance sporting ties but also promote cultural and economic cooperation among member states. The policy of allowing the registration of 1 player from Turkic states (Azerbaijan, Kazakhstan, Kyrgyzstan, Uzbekistan and Turkmenistan) is a testament to this vision, creating avenues for talent exchange and mutual growth. Furthermore, the cooperation agreements with Turkic States and affiliates (Azerbaijan, Kazakhstan, Uzbekistan, Kyrgyzstan, Turkmenistan, Hungary) have already yielded significant benefits, enhancing the strategic positioning of Turkish football within UEFA and FIFA. This unique approach not only enriches the Turkish leagues with diverse talent but also solidifies football's role as a conduit for international cooperation and development. By continuing to leverage these relationships, Turkish football can amplify its influence on and off the pitch, fostering a spirit of unity and collaboration that resonates well beyond the confines of the sport.

In our Bottom-49 segment this week, undertook an extensive analysis to understand more about the leading and dominant clubs in the European leagues ion the last 4 decades. A part of our analysis is shared below.

A detailed account of our analysis has been published in the latest issue of the fcbusiness Magazine . You can read this account and many more insightful articles here.

Recently, we asked you, "Which Turkish club (other than Basaksehir) is part of an international MCO?"

The correct answer is G?ztepe SK.

On August 19, 2022, a historic milestone was achieved in Turkish football as G?ztepe emerged as the inaugural club to witness majority ownership by foreign investors. The London-based sports investment firm, Sport Republic, successfully acquired a commanding 70% stake in the club, marking a significant development in the landscape of football ownership in Turkey.

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The participation of our Regional Associate, Fathi Abou El Gadaiel , at the inaugural Football Access event in Cairo signifies a pivotal stride in delving into the unexplored potential of Africa's sports industry. Egypt, positioned as a crucial link between continents, becomes the nexus for fostering innovation, investment, and collaboration within the football landscape. As excitement for the future of football in Africa burgeons, we invite you to revisit the groundbreaking African Club Landscape, a collaborative effort with our partners The Football Foundation for Africa , offering insights into the landscape of 2023.

You can download your copy of the report here.

That brings us to the end of this week’s newsletter. We hope you found eye-opening insights from our content this week. Each week, we will be curating exclusive content for you from the club management ecosystem. So, stay tuned for more and don’t forget to subscribe to our newsletter here!

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LTT Sports is an advisory firm focused on connecting football strategy and operations based on experience, analysis and a strong network. At LTT Sports, we have created a set of services for football organisations, providing transversal solutions at any level of the professional football pyramid – to boost performance off the pitch, directly impacting on-pitch results.

*** Disclaimer: LTT Sports is an independent think tank aimed to be a platform of discussion amongst football stakeholders. The answers received for our interviews are personal views of the interviewee and/ or the organisation he or she may represent and strictly do not represent our views on the subject matter.

Contributors to this week's newsletter: Olivier Jarosz, Konstantin Kornakov