1. Football club as a business

1.1. Industry background

1.1.1. Sports perspective

First of all, let’s introduce a brief history of football evolution as a world-wide game & very powerful business. In the 1860s and 1870s, “soccer, rugby, tennis and track-and-field assumed modern forms, and school sport developed”. Around 1900, “modern sport rapidly diffused globally along the lines of the formal and informal British Empire”. Between the 1920s and the 1960s, America piled in. And then there are the past 45 years, which have been the age of “media sport”. On October 1863, eleven London clubs and schools sent their representatives to the Freemason's Tavern. These representatives were intent on clarifying the muddle by establishing a set of fundamental rules, acceptable to all parties, to govern the matches played amongst them. This meeting marked the birth of The Football Association. Only eight years after its foundation, The Football Association already had 50 member clubs. The first football competition in the world was started in the same year - the FA Cup, which preceded the League Championship by 17 years.

The spread of football outside of England, mainly due to the British influence abroad, started slow, but it soon gathered momentum and spread rapidly to all parts of the world. The next countries to form football associations after the Netherlands and Denmark in 1889 were New Zealand (1891), Argentina (1893), Chile (1895), Switzerland, Belgium (1895), Italy (1898), Germany, Uruguay (both in 1900), Hungary (1901) and Finland (1907). When FIFA was founded in Paris in May 1904 it had seven founder members: France, Belgium, Denmark, the Netherlands, Spain (represented by the Madrid FC), Sweden and Switzerland. In 1912, 21 national associations were already affiliated to the Fédération Internationale de Football Association (FIFA).

At present, after the 2000 Ordinary FIFA Congress, FIFA has 204 members in every part of the world. There are 11 international competitions in the world, held in 5 confederations: AFC – Asian Football Confederation CAF – Confédération Africaine de Football CONCACAF – Confederation of North, Central American and Caribbean Association CONMEBOL – Confederación Sudamericana de Fútbol OFC – Oceania Football Confederation in Oceania UEFA – Union of European Football Associations. There are nearly 1.5 billion of teams, 300 000 of which are professional football clubs, registered in FIFA. Main club leagues for a moment are English, Italy, Spanish, German, and French. They capitalize 53 % of all the money in the market.

Now we’ll focus on the main trends on the market, through sports perspective. The very first is about recent conflict between ECA (European Club Association) and FIFA. The idea is that European clubs can break away from FIFA and UEFA and create their own super league unless the world governing body urgently addresses their growing concerns over international fixtures and finances. It would be the most radical development in the history of football since the first World Cup in 1930. The European game is currently ordered through a memorandum of understanding between clubs and UEFA that was signed three and a half years ago. It runs until 2014, and when it expires the top European clubs will no longer be legally bound to play in UEFA's Champions League or, crucially, to release their players for international friendlies or tournaments, including the World Cup. Yet despite the details of the enduring dispute between the clubs and FIFA and UEFA, there is an overriding financial motive.

Another one is connected with evolving of the rules. Continental football confederations and national football associations is now testing the option to undertake a further two-year trial to test the system of five referees. Under the system, the referee, two assistant referees and the fourth official are accompanied by two additional assistants who take up positions alongside each goal. Their particular remit is to focus on incidents that take place in the penalty area.

Very fast pace of growth of some national leagues is another very powerful trend on the market. In an annual report published in 2007, it was quite clearly revealed how the European ‘BIG 5′ had a drastic growth in revenue compared to the other leagues. The trend is that there are other competitors to them.

Russian Premier League is one of them. Great amount of money invested in the clubs during last years, when huge businesses and private investors became the heads of the clubs lead to the situation, when famous stars are bought, both as players and coaches (Eto’O in Anzhi, Spaletti in Zenit). World Cup 2018 is also stimulating the infrastructure issues. Russian Premier League top games are bought by international satellite TV channels and are shown abroad. Success of some Russian clubs in European championships makes this reasonable. The main problem here is connected with the very poor level of TV broadcast – low quality of picture and unprofessional reportages.

But the real phenomenon is China Super League. There are some main factors of its rapid growth through last years. The main club is Guangzhou Evergrande. The Argentine player, voted best player in the Brazilian league last season with Fluminense, has just signed a three-year contract with the club. Incredibly, the player will receive an annual salary of € 10.6 million, becoming the fifth highest paid player in world football, behind Cristiano Ronaldo (12), Rooney (11.5), Messi (11) and Yaya Toure (10.8). A commercial real estate company has unveiled a massive investment deal in Chinese football to reverse the country’s flagging fortunes on the international stage. Chinese Football Association officials announced a three-year, $77.3 million deal with Dalian Wanda focused on youth development. The announcement, ends Dalian Wanda’s 11-year divorce from football in China after the real estate company pulled its money out of the game in 2000 following claims of corruption. Dalian Wanda’s three-year €53m sponsorship covers the Chinese Super League (CSL), Chinese youth league, referee training and assessment as well as a reported commitment to signing a top foreign coach for the national team along with an overseas program for talented teenage players