SBJ/Sept. 18-24, 2017/Opinion

Is there any chance for U.S.-based super clubs?

WANT MORE GREAT STORIES LIKE THIS?

CLICK ON ONE OF THESE BUTTONS

ALREADY A
SUBSCRIBER?
SEE IF
YOU LIKE IT
GET IT ALL
(PREMIUM ACCESS)
L ike us, many of you may have noticed the recent reports that FC Barcelona, the powerhouse soccer club, posted the largest revenue ever recorded by a professional sport club in 2016-17, a staggering 708 million euros ($770 million as reported by Forbes).

We’ll grant you that they have a roster of global celebrities, they win often and participate — with Real Madrid — in one of the greatest rivalries in sport. They can even play a friendly in lands far from Spain and sell out stadiums (not to mention practices) while attracting large TV and streaming audiences.

But, they are just a club. A single club.

A similar phrase (or condescending statement) could be justifiably conferred on Real Madrid, Paris St. Germain, Bayern Munich, Manchester United, Liverpool and other UEFA or Premier League “super clubs.” But reducing them in printed or digital vernacular to a small, simple entity (a “club”) would miss a major point.

The aforementioned teams are massive brands and potent marketing machines. In many cases, their brands reach and surpass the leagues in which they play, which is counterintuitive to the prevailing logic in North America. Here, one could argue, the combined resources of the member clubs is to grow the prominence of the league.

As an example, the NFL, the biggest entity in U.S. professional sport, receives accolades for its revenue sharing, competitive balance approach and leaguewide profitability. The NHL copied the NFL model as of 2005 and that mindset has been a key driver to its improved financial viability.

In building North American sports leagues, often presented by various sports economists as a socialist concept, the aggregate ensures acceptable asset appreciation for the private owners while protecting what amounts to being a monopoly. Or close to it.

The roots of this lie in a federal court decision in 1922 (led by Justice Oliver Wendell Holmes) that originally gave Major League Baseball an antitrust exemption, effectively preventing entry by outsiders into a closed market (MLB).

But can this thinking continue holding in the Tweeting Twenties (i.e., 2020) and beyond? Should it hold?

In a world shaped by digital forces and global economies of scale, the UEFA super clubs are dominating European football and, increasingly, the global sports market. Teams like Barça and Real Madrid (and we encourage you to read Steven Mandis’ book “The Real Madrid Way”) are bigger than the leagues they play in and bigger than the vast majority of North American clubs.

The only U.S. exception might be the New York Yankees, the premier club in the only major North American league that resembles a top European league in its approach to business.

You might ask why that is and the answer is simple: Capitalism.

There are no restraints (to speak of) that a European super team must consider or fuss over. Any team can go into just about any market at any time and, as the Australians would say, “go for their lives.”

That includes all of North America, which includes soccer-friendly markets such as Mexico, Costa Rica and Canada.

FC Barcelona and the fandom it has created is bigger than the league in which it competes.
Photo by: GETTY IMAGES


You may suggest capitalism is a strong word to use here, and if you did, you were right. But recognize this is how almost every global organization in every business sector operates! In most capitalistic industries, if a competitor comes to town, you have to compete with them.

Could such an approach to professional sport take seed here?

Would we ever remove the “socialist” protections that U.S. leagues benefit from? Would fans ever agree to leagues where only a few teams ever have a chance to win? Where the hope for a championship for most clubs is zero year after year?

It has not hurt La Liga where Barça or Real Madrid have won all but five championships since 1984. In fact, some would say the NBA — whose business is doing pretty well — is starting to look more than a little like a Premier League with just a few dominant clubs.

Why would the ownership of a North American mega-club not capitalize on their assets? Why shouldn’t the Dallas Cowboys, New England Patriots, Pittsburgh Penguins, Boston Celtics, Cleveland Cavaliers and Toronto Maple Leafs seek a much larger share of the global market?

What about the newer mega-clubs like the Golden State Warriors or ever-present San Antonio Spurs? Should they be inhibited from growing outside the U.S.?

Does their logo (not their league’s) need to be showcased worldwide (and by them and not with league allowance) for them to reach their full potential? What would happen if NHL teams started playing friendlies in KHL markets and the NHL was powerless to stop them?

For some of North America’s sports, the absence of a worldwide audience is an inhibitor. But basketball has significant global appeal followed, to a lesser degree, by rugby union, cricket and ice hockey. Baseball and American football teams have limited markets.

So here is our curiosity for the day: Could the L.A. Galaxy or New York Red Bulls be a mega-club a decade from now? How about the Warriors or a yet-to-be-named esports mega-club?

This is interesting to ponder but one thing seems certain. Monster revenue gains and sizzling profitability rates by select European football clubs is attractive catnip to America’s mightiest team owners.

In fact, big money made by Barça, Bayern, City or Chelsea probably makes NFL owners believe they’re leaving money on the table or losing something that should be theirs.

For many years, scholars (including us) argued ownership of a professional sport club should not be limited to asset appreciation. In other words, pro owners could do better in other contexts. With numbers like those that Barça is currently showing, tomorrow’s deep-pocket owners might demand new strategies for wealth maximization with the hope that their sport will generate the greatest returns.

Rick Burton (rhburton@syr.edu) is the David Falk Professor of Sport Management at Syracuse University. Norm O’Reilly (oreillyn@ohio.edu) is the Richard P. & Joan S. Fox Professor and Sports Admin Department Chair at Ohio University. Their new book, “20 Secrets to Success for NCAA Student Athletes Who Won’t Go Pro,” will be published in late 2017.



Return to top

Related Topics:

Opinion

Video Powered By - Castfire CMS Powered By - Sitecore

Report a Bug