SBJ/May 12-18, 2014/Opinion

Questions that will define European sports business in 2014

Nearly halfway through 2014, change is the new black in the European sports business. Here are five questions to ponder across the sports landscape:

1. Will F1 be a quiet life after Bernie?
Bernie Ecclestone will spend a great deal of 2014 in a German court, contesting a bribery charge that goes back to the sale of Formula One Management to private equity house CVC. Regardless of the outcome, the issue has forced the sport to engage fully in the issue of succession — which, given that Ecclestone is 83, is not before its time.

A succession plan for Ecclestone will occupy F1 decision-makers this year.
Photo by: GETTY IMAGES

Ecclestone has been F1’s central figure since the 1970s, providing a link to the entrepreneurial roots of the race car series and playing the role of the all-powerful figurehead through four decades of commercial success. Life without him will be more corporate and less colorful, but the bigger question is whether it is possible for someone without Ecclestone’s political clout to run such a politically charged sport. Changes to the cars’ engine specs have made them quieter, to the irritation of some of the big teams, such as Ferrari and Red Bull. The noise factor pricks an existential fear that the green lobby is undermining F1’s image of cutting edge technological innovation, which gives the series its commercial point of difference. Under Ecclestone, excess has been part of the brand DNA. As the cars become quieter and greener, F1 devotees fear a future as just another race series. It’s not for nothing that “Every sport needs a Bernie” is conference hall cliché.

2. Is the Premier League bigger than Manchester United?
Succession is also at the heart of Manchester United’s season of woe. United has been the leading team in English football since the inception of the Premier League in 1992, but the end of the Sir Alex Ferguson reign as manager has been followed by a dramatic on-field decline and the subsequent sacking of Ferguson’s replacement, David Moyes. The debt-laden Glazer family takeover still rankles fans, and the family will need to provide the cash to ensure 2014 is just a temporary blip in form. This is not just a concern for fans of the club, however. Premier League CEO Richard Scudamore hinted at a broader issue during an interview with Bloomberg earlier in the year. “It’s a double-edged sword,” Scudamore said. “When your most popular club isn’t doing as well, that costs you interest and audience in some places. There’s lots of fans around the world who wish Manchester United were winning it again, but you have to balance that off against, generally, we’re in the business of putting on a competition, and competition means people can compete.”

Running in parallel to United’s dip is the suggestion that Barclays will exit its long-term position as title sponsor of the league. The current deal has two years to run, but a senior figure at the bank was quoted in the British media as saying the deal offered “no value” to the brand, particularly in foreign markets, where it is routinely referred to as the English, rather than Barclays, Premier League. Come the next round of broadcast deals, Scudamore will doubtless be keen to see the red side of Manchester competing for silverware again.

3. Will the new Nations League revive UEFA’s problem child?
The UEFA Nations League is the European governing body’s attempt to apply Champions League-type clarity to the qualification process for its European Nations Championship, the quadrennial summer event. The Euro qualifiers have a habit of producing tedious, inconsequential matchups between mismatched teams, leaving viewers, sponsors and TV partners underwhelmed. UEFA says the Nations League will declutter the football season and give every match meaning. Critics say it is merely solving a problem of UEFA’s own making, that by broadening the European Championships to include smaller nations, the level of the competition was lowered.

UEFA recently has taken central control of TV rights for the competitive qualifying matches of all its member nations, promising large underwritten guarantees to the biggest countries. That has increased the pressure on UEFA to bring in funding from TV and commercial partners in order to meet them. To this end, the European governing body is likely to centralize the TV and marketing rights for the Euro qualifiers in the same way as it has for the Champions League and Europa League, but the fault line in world football remains club versus country, and Michel Platini’s new plan is an attempt to promote national team competition. Whether he can fight market forces in this way remains to be seen.

4. Is the future of rugby at the club level?
Club versus country again, this time for rugby. The Heineken Cup has been one of the great success stories of the professional rugby era, pitching the best club teams from the home nations against those of France, Italy and Spain since 1995. It has been so successful that the commercially ambitious English and French club owners want a bigger slice of the pie. To everyone’s great relief, the impasse over TV rights between Sky and BT Sport was resolved, and European club rugby has a new trophy, with a three-tier structure and a new rights holder to oversee its commercial future. The profits from the tournament will be split equally between the three leagues, giving credence to the belief that the spare commercial capacity in rugby lies in the club rather than the national team game. Time will tell, but the future just got brighter for many of Europe’s underleveraged club brands.

Gustafsson’s rise in popularity mirrors that of the UFC in Europe.
Photo by: GETTY IMAGES

5. Did the UFC just tip in Europe?
When EA Sports launched its inaugural UFC computer game, the company ran a fan competition to select the two fighters to appear on the cover. The vote went to an American, Jon “Bones” Jones, and — this is the surprise — a European, the Swedish fighter Alexander “The Mauler” Gustafsson. The latter’s elevation to UFC star status was perfect timing given the fight series’ international ambitions. Lorenzo Fertitta led a spring charm offensive aimed at raising the UFC’s profile among the European sports industry. It seems to be working. A number of new TV deals, most notably with BT Sport in the U.K. at four times the previous rights fee, plus the benefit of EA Sports’ marketing muscle among the target market means that 2014 might just be the tipping point for UFC.

Richard Gillis writes the Unofficial Partner blog and covers sports business for The Wall Street Journal in London. Follow him on Twitter @RichardGillis1.


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