How the Super League disaster shows the lack of sustainability in soccer business.
During the last 72 hours the Super League of European soccer clubs has been founded and shut down again. Although this might be the fastest rise and fall of a unicorn in startup history, I came to think about another aspect that this case shows very clearly. The need of the Super League expressed by Juventus Andrea Agnelli shows how the finance strategy of modern soccer clubs is lacking sustainability from a business perspective.
As a startup coach and mentor I always discuss the topic of sustainability in business with my startups. Recurring revenues are king, which is why fee models, freemium models and licensing have become so popular. In addition to that, investors will mainly look at the scalability of recurring business to evaluate their investment decision. To take it really short, they try to find out if revenues will ten-fold sustainably after the investment.
Now, if we project this on European Soccer, none of this is the case. When it comes to soccer, the experienced business people behind the largest clubs in Europe all tend to forget these simple business principles. They tend to ignore that a one time win of the champions league only returns one time income, instead of a sustainable income stream based on recurring revenues. And the investment decisions that they make, mainly concerning player transaction, do not underlie the ability of ten folding income streams sustainably.
The main reason for this will be the loss of customer focus. The major clubs have forgotten that soccer is for the fans. Ticket sales and media rights from national leagues are the only income streams that might be labelled as sustainable or recurring. These income streams highly depend on a local or national audience watching attractive and exciting games. This focus got lost in the course of privatization of some clubs.
Agnelli pointed out, that Major clubs are facing a financial disaster. Well, the actual case might be, that the financial bubble some clubs created after some profitable wins is about to burst. The investors of these clubs just discovered that their business is not going to ten-fold, and their investments will not bring the desired returns.
So welcome to the life of a venture capitalist, where 9 out of ten investments will not provide the returns as expected at investment date.
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3 年Greed, arrogance, corruption, lack of new ideas to create/diversify revenue streams, lack of cost-control, ... The list of failures in this system is long, but the overwhelming answer from the crowd has been almost immediate and very impactful. The show must and will go on, but only based on a new sustainable and ethical code of conduct!
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3 年yes unfortunately! definitely not sustainable and of course this would be a big disaster for smaller clubs. in the end there wouldn′t be any competition anymore regarding transfers etc. just a couple of clubs would have too much money. back to fan owned clubs ??
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3 年Using business language: club owners have forgotten that they are not building a product, but a platform and when fans and small business using this platform it becomes ecosystem. So, eventually club owners have to manage an ecosystem rather than a club. Facilitating and inclusion are becoming central words here. Only then, if everything done right it becomes sustainable.