The Price is Wrong? (Part 3)


This is the final piece of a three part series on the ticket price debate in the Premier League. Part 1 focused on the need for match day revenue to stay competitive in the global football landscape. Part 2 focused on the cultural importance of supporter camaraderie,

Over the last few days, as comments have poured in over Part 1 and Part 2 of our series on ticket prices, many people have asked whether my wish is to turn teams into non-profits. The answer is… sort of. While protests and small-scale moves by the Premier League and club owners help supporters, the real answer to the problem lies in allowing the supporters to actually own the clubs and determine their direction.

The Mechanics and the Impact

While seeming absurd at first glance, fan ownership is actually the norm across the European continent. Of the six clubs that have participated in the past eight Champions League Finals, four are supporter-owned: Real Madrid, Dortmund, Bayern Munich, and Barcelona. If you’ve never heard of such a structure and you live in the United States, that may be because the NFL banned fan ownership in 1960.[1] A fan-ownership structure can be broken down into a few key elements[2]:

  • Majority stake of the club (over 50%) is controlled by a democratic entity which is open and non-exclusive to any supporter
  • Each member is allotted one vote on club matters (many clubs have their members cast a vote every four years for president of the club)
  • Any profits of the club are reinvested back into the organization rather than being distributed to shareholders
  • The club is committed to running as a sustainable business

With this model in mind, in 1998, the German Football Association passed what is now colloquially referred to as the “50+1 Rule.” At its essence the law requires supporters to have a majority stake in the club in order for it to obtain a license to compete in the league. The law was put into place to limit the influence of external investors and protect the supporters from the kind of gouging that has occurred in the Premier League.

Thanks to this model, the Bundesliga has morphed into the “gold standard” of sporting leagues from a supporter’s perspective: clubs have continuously turned a profit over the past decade, the league has the highest attendance in Europe, and ticket prices are among the lowest in the world. The result has been burgeoning atmosphere and increased league attendance by young people. Perhaps most importantly, however, the enforcement of healthy financial standards has protected the fans and the clubs from reckless spending and has encouraged fiscal responsibility.

Avoiding Administration

One of the unfortunate consequences of the Premier League’s acceptance of heavy foreign investment has been a number of clubs dropping into administration due to unsustainable, yield-seeking business practices by their owners. Fans will remembers the tumultuous fall of Portsmouth Football Club, who won the FA Cup in 2008 and played in the Premier League as recently as 2010. An embarrassing mismanagement of club accounts by foreign investors led to administration and bankruptcy for the club. By 2013, Portsmouth had been placed into administration on two other occasions and were plying their trade in League Two, the fourth tier of British football. After descending to such lows, the supporters finally pooled funds to buy the football team and worked to service the enormous debt with which past owners had saddled the club.

Liverpool fans will remember how close the club came to insolvency in 2010, after prior owners Hicks & Gillette struggled to service the debt they took on to execute a leveraged buyout of the club. After one season finishing outside the Top 4 (and the corresponding lack of cash infusion associated without Champions League Football), the Royal Bank of Scotland threatened to push for administration and a declaration of bankruptcy. A hostile takeover by Fenway Sports Group likely saved Liverpool from insolvency.

These are just two of many stories of financial disaster related to foreign investors taking majority shareholdings in British Clubs. Other examples include Leeds United, Rangers, Crystal Palace, Coventry City, Southampton, Ipswich Town, and Bournemouth. Many of these clubs luckily survived administration and did not meet the same fate as Portsmouth, but several including Leeds have not fully recovered from the distressing impact of bankruptcy. These disasters befell fans that had absolutely no say in the financial direction of the club.

It should be repeated again that no team in the Bundesliga or Bundesliga 2 has ever been swept into administration. Perhaps its because the clubs are seen as more than investments or cash cows. Written into the “50+1 rule” legislation was the comment that the law was written to protect lifelong supporters from the “influence of external investors.” Beyond ticket prices, perhaps the above incidents are the kind of “influence” they were trying to avoid. 

Final Appeal

This series on ticket prices started with a simple premise: that local, middle class fans should have access to the clubs they have supported for decades. It is a complicated issue, fraught with financial and emotional components, but ultimately it comes down to whether you view football as a place for community or a place for business. I don’t believe it’s a subversion of capitalism to place football clubs on a path to supporter ownership and sustainability, I just believe it’s a recognition that certain things are worth preserving in sacrifice of the dollar (or pound, or euro).

If there wasn’t an existing alternative with a proven track record I would raise my hand and say, “maybe what’s happening in the Premier League is inevitable.” But the supporter-ownership model in the Bundesliga proves a better, proven option exists just across the English Channel.

The capitalization of the Premier League is a slippery slope and its impacts are laid out clearly in how greed has impacted American sports: higher prices, less kids at games, fewer lifelong fans, draining atmospheres, teams moving from city to city to chase yield, and the de-prioritization of the fans who represent the heart of the team. Over the next decade the Premier League will need to take a long look at its priorities. I hope it sides with the fans that make the league worth watching.

 

[1] It should be noted that the Green Bay Packers remain their rights to be fan owned given the structure was in place before the institution of the rule.

[2] Provided by Sporters-Direct, a great organization pushing for the rights of supporters around the globe