The Export of National Sport Leagues

Universität Bayreuth
Rechts- und Wirtschaftswissenschaftliche Fakultät
Wirtschaftswissenschaftliche Diskussionspapiere
The Export of National Sport Leagues
Herbert Woratschek, Guido Schafmeister
Diskussionspapier 03-07
März 2007
ISSN 1611-3837
Adresse:
Prof. Dr. Herbert Woratschek
Universität Bayreuth
Lehrstuhl für Dienstleistungsmanagement
95440 Bayreuth
Telefon:
Fax:
e-Mail:
0921/553497
0921/553496
[email protected]
Abstract
The Export of National Sport Leagues
The export of broadcasting rights is an opportunity for sport leagues and clubs to develop
foreign markets and to derive additional income. A theoretical framework for export decisions
is introduced in the first part of the paper. The second part reports a study with sport managers
on export opportunities of national sport leagues. Prerequisites, advantages and disadvantages
are discussed and implications for an international sale of broadcasting rights are derived.
Keywords: Sport Marketing, International Sales, Demand for Sports on TV
1 Introduction
Professional sport leagues such as the English Premier League, the Spanish Primera Division,
the Italian Serie A, or the German Bundesliga are seeking for additional income continuously
as other major enterprises do. Professional leagues and clubs have to be financially successful
as any other professional business. So far, most clubs and leagues as well as the scientific
research focussed on domestic markets when they were generating money. In this sense, gate
receipts played an important role during the last decades (e.g. Becker & Suls, 1983; Bird,
1982; Borland, 1987; Borland & Lye, 1992; Crains, Jennett, & Sloane, 1986; Czarnitzki &
Stadtmann, 2002; Davies, Downward, & Jackson, 1995; Janssens & Késenne, 1987; Jennett,
1984; Peel & Thomas, 1988, 1992, 1996; Schofield, 1983; Siegfried & Eisenberg, 1980;
Simmons, 1996; Wilson & Sim, 1995). But, generating additional money is welcome of
course. Broadcasting matches to foreign countries is an opportunity to generate additional
income. This could mean to export a sport competition to enter a new market.
However, national sport leagues do not look like export products at first sight. Facilities are
immobile. Moving stadiums to foreign countries is impossible. Of course, football matches
can take place in foreign countries. Chelsea could play against Arsenal in China. Clubs could
also relocate. But all this might violate the characteristics of a national sport league. A key
characteristic of a national sport league is that the participating clubs are based in a certain
country.
But an alternative to export a national sport league is to use a transport medium such as
television or internet broadcasts. Such additional services give the opportunity to sell national
sport leagues internationally. Furthermore, these additional services give the opportunity for
clubs to stay in their home countries and for matches to take place in domestic stadiums. The
FC Bayern Munich can still be Munich based but the games are broadcasted all over the
world.
Looking at the financial situation of many football clubs in Europe and all over world makes
it evident that many clubs have financial problems. Cutting costs is nothing but one
opportunity to solve these problems. Generating additional money is another one. Ongoing,
the focus is on generating additional income. More precisely, the focus is on the export of
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national sport leagues. Other opportunities to generate money such as merchandising,
ticketing, sponsorships, or naming rights do exist but they are neglected here as the export of
national sport leagues is particularly attractive for a couple of reasons.
First, capacity restrictions do not exist. Stadium attendance has a natural boundary, the
stadium capacity. Selling more tickets than the stadium capacity allows is impossible. But
export either via television or internet broadcast have basically no capacity restrictions.
Additional TV viewers all over the world do not compete for “tickets”.
Second, additional TV or internet broadcasts generate additional income but the additional
costs for these broadcasts are rather low. Broadcasting signals for television or internet
usually exist for the domestic market anyway. Transmitting matches to foreign countries may
cause a need for foreign-language commentaries but the infrastructure for transmitting signals
does already exist.
Of course, now the question is which countries are the most suitable for the exporting national
sport leagues. Thus, research questions of this paper are: What is the status quo of
international sales of football leagues in Europe? What are the opportunities? What makes a
national sport league attractive for international sale? Which countries are the most attractive
ones for the international sale? What influences the opportunities of international sale? What
are the pitfalls?
This paper deals with such questions. Thereto, the next part of the paper provides a theoretical
background of the demand for sport broadcasts. A new theoretical demand model for the
export of sport leagues is introduced as demand models in this area do not exist until now.
Then, the results of an interview study are presented. The interviews are based on the here
introduced demand model. Interviews are conducted with managers in Europe who are
involved in the international sale of national football leagues. After that, opportunities for an
international sale of national sport leagues are discussed based on the new theoretical model
and the results of the interviews. The paper ends with conclusions.
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2 A Demand Model for the Export of Sport Leagues?
Export opportunities do exist only if there is a demand for the broadcasts in foreign countries.
Hence, the demand for sport broadcasts is the striking point. The demand for sport broadcasts
in general can be seen as some kind of derived demand from stadium attendance. Relevant
literature on stadium attendance is extensive as is the list of possible influences on attendance.
Among these influences are sports specific influences such as the popularity of clubs and
players (e.g. Baimbridge, Cameron, & Dawson, 1995; Czarnitzki & Stadtmann, 2002;
Janssens & Késenne, 1987) or the competitive balance (e.g. Borland, 1987; Borland & Lye,
1992; Czarnitzki & Stadtmann, 2002; Dobson & Goddard, 1992; Hynds & Smith, 1994; Peel
& Thomas, 1988, 1992, 1996). Furthermore the relevance of each single match for finding the
champion has an impact on attendance (e.g. Borland & Lye, 1992; Czarnitzki & Stadtmann,
2002; Dobson & Goddard, 1992; Wilson & Sim, 1995) as weather conditions, weekdays, or
daytimes have (e.g. Baimbridge et al., 1995; Baimbridge, Cameron, & Dawson, 1996;
Czarnitzki & Stadtmann, 2002; Janssens & Késenne, 1987; Peel & Thomas, 1988; Schofield,
1983; Siegfried & Hinshaw, 1979). Last but not least, fan identification and motives influence
the attendance for watching sports (Borland, 1987; Borland & Lye, 1992; Campbell, Aiken, &
Kent, 2004; Czarnitzki & Stadtmann, 2002; Donavan, Carlson, & Zimmermann, 2005; Funk,
Mahony, & Ridinger, 2002; Kahle, Kambara, & Rose, 1996; LeAnne Spenner, Fenn, &
Crooker, 2004; Matsuoka, Chelladurai, & Harada, 2003; Peel & Thomas, 1992; Robinson,
Trail, Dick, & Gillentine, 2005; Sutton, McDonald, Milne, & Cimperman, 1997; Trail,
Robinson, Dick, & Gillentine, 2003; Trail, Fink, & Anderson, 2003; Wann & Branscombe,
1993; Wann, Melnick, Russell, & Pease, 2001). These above named influence factors impact
both stadium attendance and TV audience ratings while the strength of the influences might
be different for stadium attendance and TV audiences. But, generally speaking, these
influence factors determine the demand for either stadium attendance or TV broadcasts.
However, most of the existing literature focussed on the demand for certain matches such as
Manchester United playing against Chelsea or FC Bayern Munich playing against FC Schalke
04 on a certain day at a certain time. These pieces of literature explain why the number of
spectators fluctuates between different matches. But fixing a contract on broadcasting rights
usually takes place prior to the season. Sometimes, contracts are signed even some years in
advance. E.g. the German Bundesliga sold the broadcasting rights for the seasons 2006/2007
to 2008/2009 in December 2005. At that time buyers neither knew anything about the weather
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conditions on certain days in 2008 nor did they knew which clubs will take part in the league
in 2008. Relegation will cause changes. Furthermore, nobody knew anything about the
involved star players. Is Oliver Kahn still playing for a German football club in 2008? Is he
playing at all?
Hence, for analysing the sale of broadcasting rights, a more general approach is necessary.
Information about the attractiveness of a particular national sport league is necessary.
Information about the influence factors of average expected demand is more relevant than
knowledge about the influence of rain or sunshine on the demand of a specific game.
Contracts on broadcasting rights have to be based on more general information than on details
such as weather conditions.
Ongoing, theoretical considerations are discussed based on existing literature. The focus of
these considerations is on the sale of broadcasting rights in foreign countries (Schafmeister,
2006). The considerations deal with the export of national sport leagues.
Popularity
The popularity of national sport leagues, clubs and players seems to determine the demand for
broadcasting rights (Ferreira & Armstrong, 2004). Popularity makes a national sport league
more attractive for foreign TV stations. The probability of international sales increases with
popularity. Popularity of a national sport leagues is important as it is a synonym for particular
national sport styles. Different national sport leagues such as the German Bundesliga or the
English Premier League are known for different styles. One might be known for a more
offensive style while the other applies a more technical style. Of course, the uncertainty of
outcome of the leagues as well as of single matches is important too. Popularity should
usually increase with uncertainty and competitive balance (e.g. Rishe & Mondello, 2004;
Schmidt & Berri, 2001).
Additionally, national sport leagues should be responsible for determining the national
champion. The English Premier League or the German Bundesliga has to nominate the
national football champion. But the existence of other competing national sport leagues is
possible. These competing sport leagues could also nominate their own champion as it
happens in boxing. The emergence of such competing national sport leagues can damage the
popularity of the existing national sport leagues. Being a monopoly is supposed to be a critical
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success factor for national sport leagues. The monopoly is a credible signal for spectators that
the nominated champion is really the best team of a nation. How could you know that, if two
or three national leagues exist? If latter is the case the champion of a league could be number
two or three compared to the champion of the competing sport leagues. The monopoly is a
unique selling proposition for the sale of broadcasting rights both domestically and
internationally. Being a famous and popular league increases the demand (Baimbridge et al.,
1996).
Furthermore, the popularity of a national sport league will increase if clubs of that sport
league participate in international competitions. This effect was neglected in the discussion so
far. Participating in international competitions such as Champions League or UEFA Cup
increases the popularity of national leagues as it adds meaning to the games. Results of the
domestic matches are decisive for the participation in the international competitions. Only the
best clubs of the national leagues are allowed to participate on the international level. By
participating on the international level, the popularity of the national leagues and the clubs
increases. Clubs and players can present themselves to a broader spectator base and if they do
well, the popularity of their domestic sport league increases as their own popularity does. The
better their performance on the international level the more likely seems an export of
broadcasting rights as spectators in foreign countries might get interested in other national
sport leagues and the performance of both clubs and players in their national competition. But
on the other hand, poor performance on the international level will reduce the popularity of a
national league in the same manner as good performance increases the popularity. Hence,
promoting clubs and athletes to perform well should be a key challenge for league
administrations.
Besides the demand push of an increased popularity, one gets the impression that players
from foreign countries can push demand figures accordingly. Appointing star players from
other countries for participation in the national leagues is an opportunity to boost the interest
of foreign TV viewers for the domestic leagues. But, appointing foreign players can be
successful only in the short term. The popularity in the accordant countries will go down as
soon as the foreign players leave their club for joining clubs in other countries. Hence, foreign
players can be “useful” to boost the popularity in the short term but long term investments
such as success in international competitions are necessary, too.
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Consumption Capital
Besides popularity, knowledge about the particular type of sports is necessary. The population
of foreign countries should have at least some knowledge about the particular type of sports.
As a matter of fact, this is an opportunity for sports with a low demand in their domestic
countries. Sports with a small TV coverage in their domestic markets might be more
successful in foreign markets, if the knowledge is better abroad. But, sports with a high
demand in their domestic markets cannot expect to find this demand in foreign countries.
Knowledge and preferences might be different. Hence, both the well known and the unknown
sports should take the publicity and the related knowledge of their type of sports into account
once they decide about an export country.
The theoretical background to proof the importance of publicity and knowledge is the
consumption capital theory (Stigler & Becker, 1977). The consumption capital theory is not
sport specific but general. Stigler and Becker (1977) argue that consumers derive a higher
utility from using products or services if they know more about the corresponding product or
service. Simply spoken: The higher the knowledge the higher the utility. This seems to be an
important rule, especially in sport marketing. The more a spectator knows about the rules of a
sport competition the more attractive is the competition from his point of view. A person who
knows the football rules will derive a higher utility from watching a game than a person who
does not know the rules.
Knowledge in the sense of consumption capital is build up by using the product or service and
learning about it. Using and learning have to be seen as investments into the future
consumption to derive higher utility from this consumption. In terms of football, learning the
rules is such an investment. The same holds true with knowledge about certain clubs and
players. The more a spectator knows about the participating clubs and players, the higher the
utility from watching the competitions. In terms of sport in general, doing sports is another
way to learn more about a certain type of sports. If a person plays football on his own,
watching provides a higher utility as moves and tricks can be observed. Looking at most
European countries, football is definitely a type of sports with spectators having a high
consumption capital. Many children learn how to play football quite soon. Football is a topic
for conversations in the society as well as on the news. But in countries with a different type
of socialisation children learn different types of sports. In Greece children might get involved
into basketball as children in Brazil play football. Hence, investments into consumption
capital depend on the society. For the export of national sport leagues, analysing the status of
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consumption capital for each type of sports is necessary. Export will be successful only if a
certain consumption capital is available. Of course, national leagues can support investments
into consumption capital, but it seems to be a long way to increase consumption capital. That
is why it seems useful to focus on countries with an exciting high level of consumption capital
first.
Competition
Being in the stadium for a live event is an experience par excellence. Getting this experience
is possible only if the spectators show up at the stadium on a certain day at a certain time.
Going to the stadium and getting the unique experience usually requires inputs in form of
money and time. But all these characteristics make a live event unique. In a way, the live
event is a regional monopoly. Similar experiences are possible only if similar clubs are close
by. But even then, fans would never agree that the events are similar.
However, TV broadcasts are different. First, they are recordable. Second, they are in close
competition to other spare time activities e.g. to other broadcasts. The closest competitor,
another TV broadcast, is “just around the corner”. Switching costs are basically zero for TV
viewers. They can easily switch to another channel. Using the medium television makes
competition harder. For stadium attendants, leaving the stadium and going for another spare
time activity is usually more complicated and causes switching costs. Furthermore, the
stadium attendant cannot evaluate alternative spare time activities as easily as the TV viewer.
The TV viewer can switch to another channel to check the programme. The stadium attendant
has to leave but coming back is unlikely. TV viewers remain more flexible concerning
competing spare time activities and that makes the competition harder.
Hence, national competitors in foreign markets have to be taken into account. These
competitors can be national sport leagues but in addition many other competitors do exist
such as cultural practices, conventions, customs, and practices to name only a few. If a certain
weekday or a certain time of the day is reserved for other activities than watching television,
then sport broadcasts can hardly succeed.
Here, time differences come into mind. Live broadcasts are usually more popular than
recorded broadcasts. Time differences cause a problem, if the competition takes place at the
prime time in the domestic market which could correspond to night time in the foreign
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country. Such a time difference will cause problems with the demand in the foreign country.
Successful exports do not seem to be very likely. Basically, the national sport league has two
opportunities to react to these problems. The first is to select another country with smaller or
no time difference for the export. The second is to reschedule the kick off to a more suitable
time for the foreign country. But, the decision about what to do should depend on the export
revenues. If the revenues are relatively small in comparison to revenues from the domestic
market then rescheduling does not seem to be the best option as it might reduce the revenues
from the domestic market. Here, the whole income situation has to be balanced. But, if the
export revenues are higher than the domestic revenues, thinking about a new schedule might
be necessary. Thus, rescheduling seems to be an option particularly for sports with a relatively
small customer base in their domestic markets.
Buying Power of the Population in Foreign Countries
The main purpose of the export of national sport leagues is to generate income. In this sense,
the buying power of the population in different foreign countries has to be considered.
Broadcasting fees depend among others on the buying power of the population (Woratschek
& Schafmeister, 2005). The higher the buying power, the higher the expected broadcasting
fees. The connection between buying power and broadcasting fees exists because of two
reasons. First, with pay TV the TV viewers have to pay for the broadcast. The amount of their
payment will depend on their willingness and their ability to pay. The latter is related to the
buying power of a population, in which an exporter should be interested in. Second, free TV
stations depend on the advertising income. They are paid for transmitting commercials. The
payment for the commercials depends on the expected future sales of the advertisers. Apart
from individual preferences, the buyers have to have enough money to buy products and
services. Hence, the advertisers’ willingness to pay will increase with higher sales
expectations. For the export, this means to primarily focus on countries with high buying
power of the population, independent of how the sport league is broadcasted in the recipient
country.
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Structure of Foreign TV Markets
But, buying power does not tell the whole story. Looking at the broadcasting fess of e.g. the
German Bundesliga shows that the major part of the fees for the season 2006/2007 to
2008/2009 is paid by pay TV stations. According to not confirmed press releases 220 Mio.
Euros of the annual payment of 420 Mio. Euros are paid by the pay TV provider (Sponsors,
2006). Furthermore, one has to take into account, that the German pay TV market is
somewhat less competitive than other national pay TV markets such as the one in Great
Britain (Ernst & Young, 2005). But the example of the German pay TV market is very
illustrative, as the revenues from the pay TV sector have the highest fraction of the
broadcasting fees even in a relatively less competitive pay TV market.
This situation allows the assumption that the attractiveness of foreign countries for the export
of broadcasting rights also depends on the existence and structure of the pay TV sector. A
country seems to be more attractive if the pay TV sector is well established and if free to air
television is rather weak. This assumption is supported by the observed amount paid for sport
broadcasting rights in countries with a well established pay TV sector. The broadcasting fees
are usually higher in countries with a well established and competitive pay TV sector
(Solberg, 2002).
All in all, the above theory based discussion of the export of sport leagues shows that the
decision about the export should take certain points in consideration. These points are related
to the expected demand for broadcasts of foreign sport leagues:
ƒ
Popularity of the national league, the clubs, and the players
ƒ
Consumption capital for the type of sports
ƒ
Competition on the national TV market, on certain days of the week, and at certain
times of the day
ƒ
Buying power of the population
ƒ
Structure of foreign TV markets
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3 Interview Study: Export of Sport Leagues
Study Design
The review of the relevant literature on sport spectator demand in general and export of
national sport leagues made a gap evident. Literature on the demand for sport broadcasts is
rare. Literature on the export of national sport leagues is missing at all. The above discussion
is nothing but a theory based discussion of possible influence factors. But, empirical evidence
for such thoughts is impossible at the moment. The theory base for such research is too small.
As a consequence, the next step of the research process is to do an explorative study. Such an
explorative study is introduced ongoing.
This study focuses on sport managers who have to deal with the export of national sport
leagues. Interviews with nine such sport managers are completed. Some of these managers
work in relation to the German Bundesliga. Others work internationally. This emphasis is
made because the German Bundesliga is way behind other European leagues in terms of
export. Hence, this composition of interview partners allows discussing failures,
opportunities, and good practices. To go more in detail, two of the interviewed managers are
the head of a Bundesliga club respectively. Furthermore, one manager is responsible for
international relations of a Bundesliga club. In addition, four managers work for TV-channels.
One of these TV managers works for German TV channels and three for foreign TV stations
respectively. One interview partner is the manager of a league administration. Finally, one
interview partner is the manager of an international dealer of broadcasting rights.
Managers of football clubs and league administrations are interviewed, as they have to
actually sell the broadcasting rights internationally. As broadcasting rights are usually sold to
TV stations, interviews with managers of such organisations are indispensable. On the one
side, managers of German TV stations were interviewed because they have to decide about
the broadcasting rights of foreign sport leagues who want to enter the German TV market. On
the other side, managers of foreign TV stations have to decide about the broadcasting rights of
the German Bundesliga once the Bundesliga wants to enter foreign markets. Furthermore, the
manager who is responsible for the international relations of a Bundesliga club is particularly
acknowledged for the issue as he deals with the export on a daily basis. The manager of the
international dealer of broadcasting rights was interviewed as he is experienced in the
international sale of broadcasting rights.
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An interview guideline was used for each interview. This interview guideline is theory based,
namely on the discussion of chapter two and consists of five batteries of questions. By using a
semi-directive technique the questions dealt with:
1. Status quo of export
2. Demand for sport broadcasts of domestic and foreign sport leagues
3. Comparisons of the German Bundesliga and other European football leagues
4. Market players
5. Opportunities, threats and future goals for the export
All interviews were conducted in September and October 2005. At that time, the German
Bundesliga was expecting a new contract about the sale of broadcasting rights. This contract
was signed in December 2005. Hence, at the bottom of this paper, some expressed arguments
and opinions of the interview partners can be put in relation to the new contract. In a way, this
gives the opportunity to “proof by evidence”.
Results
Ongoing, the results of the explorative interview study are presented. Quotations are printed
with an italic typeface. A number at the end of each quotation is displayed as reference.
Names and organisations are treated confidential due to the high ranked positions of the
interview partners. The authors know the names and organisations of each interview partner.
Furthermore, each interview was conducted by at least one of the authors.
Now, looking at the big four in Europe, the English Premier League seems to be the most
successful in terms of export, followed by the Italian Serie A and the Spanish Premier
Division. The German Bundesliga has a high backlog in terms of export. “The premier league
earns 12 to 15 times more, the Italian and the Spanish leagues four to six times more than the
German league.” (VI) All in all, the interview partners identify tremendous differences
between the European leagues in terms of export. With a focus on the German Bundesliga the
interview partners are sure that additional export opportunities do exist and that the German
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Bundesliga can narrow the gap. But the interview partners agree as well that using the
opportunities will take time.
Taking this status quo into account, a main focus of the interview study was to explore
reasons for the different situations of the European football leagues. Thereto, the German
Bundesliga as the weakest league in terms of export of the Top four was on focus.
Last Mover Disadvantage
Looking at the German Bundesliga management, the interview partners claim several
mistakes. One such mistake being that basically nothing was done to sell the German
Bundesliga internationally. “At the moment the priority of sales efforts in Germany is on
domestic sales.” (I) The other European leagues “…have 10 years more of experience in
international sales. They have an organisational structure and the organisational processes
to sell internationally.” (V) “In England or Italy, there are many people working on
international sales. They do not only have agencies working on this issue but staff at the
administration of the league and the clubs.” (II) The main reason for doing nothing is seen in
the overwhelming Kirch contract in earlier days. The Kirch contract was a deal on
broadcasting rights resulting in high revenues from selling the domestic broadcasting rights to
the Kirch media company. “Usually, the focus was on domestic sale.” (IV). “The Kirch
contract gave sufficient revenues. Nobody thought of international sales. Unfortunately, that
was the time when German soccer clubs were successful internationally. International sales
came to mind when the revenues went down.” (V)
Superstars
A national sport league has to belong to the top leagues of the world to sell internationally.
Furthermore international star players do not play for the German Bundesliga. If talking about
star players the German interview partners frequently talk about Michael Ballack and Oliver
Kahn. Interview partners from other countries know Michael Ballack and Oliver Kahn but do
not agree that they are as outstanding as other star players. “There is no German player who
can make dreams come true. Ballack is not a dream player.” (IX) All in all, there are not
enough big names playing for the German Bundesliga “Foreign players in the Bundesliga
draw attention in their home countries only but not internationally.” (VIII)
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Star players from foreign countries are another prerequisite for international sale. “If
tomorrow Wolfsburg hires three French players then the top club in France would be
Wolfsburg”. (VIII) This statement gives an impression of the importance of star players for
single clubs and the national sport leagues. “Today the reality of the Bundesliga is very good
but you have to sell something more. You have to … create stories … week after week, day
after day, you speak about it. You promote it.” (VIII)
Again, looking at the German Bundesliga, international star players are missing. “TV viewers
are interested in stars and these stars play in other leagues but not in the German Bundesliga.
My point of view is that people watch foreign sport leagues to see stars.” (I) Demand in
foreign countries is caused by stars. “For me in order for the Bundesliga to be even more
attractive, there is for sure a need to attract some of the best players in the world. If you have
… Ronaldinho today or players like that than you have an interest all over the world.” (VIII)
Additionally, players from foreign countries help to bridge cultural differences between
spectators in foreign countries and the sport leagues country of origin. “But they have to play
continuously. It is not enough if they are only waiting to replace other players on the field.”
(IV) Furthermore, a lack of international well known clubs has a negative impact on exports.
“They want to see stars. When I talk about stars it is not only the players. The club is also a
star. You can see it with Bayern Munich, Real Madrid, Juventus Turin, and Chelsea. You have
stars inside the team but the club itself is also a star.” (IX) Or to put in another way. “There is
one issue correlating with the international demand: How many good clubs belong to the
national league? Are these clubs internationally known brands? England has at least four,
Italy three to four, and Spain at least two international brands. Germany has only one.” (VII)
“Clubs that play continuously in the Champions League are by nature perceived as brands,
even in Asia.” (VI) National sport leagues are better off in terms of export if two or three
teams of the national leagues perform well on the international level. (VI) “It is important to
have more clubs besides the FC Bayern Munich who are international brands, too.” (IV)
International Sport Competitions
German football clubs were not successful enough in the past to play an important role in
international competitions. The FC Bayern Munich is the only German club who is belonging
to the European Top-Ten. (V, VI) Having only one successful and internationally known club
is a problem for the export as there are no derbies in the national league from a foreigners’
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perspective. “Hertha or Stuttgart or Schalke are not international brands. They are just
runner-up to the brand Bayern. … There are too few stories about the Bundesliga.” (VIII)
Market Structure
Despite this fact, the attractiveness of these countries is given as “… the media landscape is
still formable”. (III) This blends over to the discussion of the structure of TV markets. “The
size and the structure of the national TV Market have to be taken into account.” (III)
Generally speaking, the interview partners see a competitive pay TV sector as a promising
characteristic of foreign TV markets. “Free TV is nice to have but not the revenue driver.”
(III)
Looking at the USA, some interview partners see problems with other competing sport
leagues, namely the major leagues. “The USA is a difficult market … with a highly
competitive market structure which is dominated by successful national sport leagues.” (III)
But football can also be an extension of the US sport landscape. “If there are two or three
Americans participating in the Bundesliga tomorrow … there would be, maybe not strong
because soccer is not big there, but there would be more interest to follow the Bundesliga.”
(VIII) Besides the competition with other types of sports, competition with other leagues of
similar types of sports is an issue. European premier leagues such as the British, the Spanish,
the Italian, and the German are in competition with each other regarding the budgets of
foreign TV stations.
Buying Power
Furthermore the interview partners look at the economic prosperity of a country if they have
to evaluate its attractiveness for exports. Fast growing economies are evaluated as more
attractive than slow moving ones. “Boom-countries” with a high population are particularly
interesting for international sales. (IV) An advantage for the German Bundesliga in many of
these “boom-countries” is that the Bundesliga still has a positive reputation and that people
are interested in football “made in Germany”. (V) The discussion on “made in Germany” is
more or less a discussion of popularity. But looking at the economic power of a nation is an
additional criterion to evaluate export opportunities. Countries are attractive if “…the buying
power of the middle class is sufficient and people have spare time to watch the broadcasts.”
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(V) Foreign countries are promising only if the population has time to watch football
broadcasts and if they are able and willing to pay for the broadcasts. Of course, advertisers
can pay for the broadcast if they give money for transmitting their commercials. But their
willingness and the ability to pay for commercials will depend on the economic wealth of a
nation as well. Commercials are useless if consumers lack buying power to buy the advertised
goods and services.
Profitability and Reliability
In addition, a sport league has to be reliable and profitable to be successful in international
sales. Reliability and profitability reduce the uncertainty of international partners. Losses put
organisations and sport leagues into danger as they might go bankrupt. Hence, profitability of
clubs and leagues is a positive signal for the international sale. Reliability is important too, as
it ensures a timely execution of the matches for the international partners. “Matches are
organised and scheduled.” (III) “This is one of the assets of the Bundesliga and hopefully they
will keep it.” (VII).
Atmosphere
Surprisingly enough, the interview partners evaluate facilities and spectators as important
prerequisites for the export as well, although the export takes place via television. But
facilities and spectators are responsible for the atmosphere and atmosphere is transmitted by
TV broadcasts, even if the transmission of atmosphere is imperfect. With a focus on the
German Bundesliga an interview partner said: “Look around, wonderful stadiums, the best
stadiums in the world, the best audiences in the world, the best atmosphere.” (IX) “…all the
Bundesliga matches are very well covered, are taking place in … the best stadiums in Europe
thanks to the World Cup.” (VIII).
Looking at competitive balance, only a few interview partners see competitive balance as a
major prerequisite. “…we saw it in the last two seasons when Bremen was able to compete
against Bayern Munich. The interest was definitely higher.” (VIII) Of course, competitive
balance is desired but it seems that international sales do not depend on competitive balance
that much. According to what the interview partners say football enthusiasm seems more
important. “They were only thinking: German football, Kick and Rush, no interest. And my
16
job was to tell them: Look, … this is real football passion, this is in Germany. You can
compare the football in Germany and the football in England because the people are working
in the same way, I mean, in terms of pure football.” (IX) Or “Many, many goals, it is very
spectacular…” (VIII) Although talking about competitive balance, the statements show that
sports have to be full of passion and spectacular. In sport economics competitive balance or
uncertainty of results are used to measure the degree of tense. The interviews give us a hint
that these measurements should be completed by considering vibes and atmosphere (e.g.
Czarnitzki & Stadmann, 2002; Peel & Thomas, 1992).
Football Enthusiasm
Now, the list of countries and areas is long, once it comes to foreign markets for the export of
football leagues such as the German Bundesliga. On the list are Thailand, Singapore,
Vietnam, China, or Japan. Furthermore Eastern Europe, Middle East, Africa, India, France,
and the USA are on the list. Of course, besides some names, it is interesting to know why the
interview partners put certain countries and areas on the list. A very prominent reason for
putting a country or area on the list is what the interview partners call “Football enthusiasm”.
(II) If people in foreign countries are not only interested but enthusiastic, sales seem to be
promising. But at the same time, other countries are seen as attractive even though the
“football enthusiasm” is not that widespread at the moment. Football enthusiasm is much
related to consumption capital. Furthermore it depends on the cultural and historical
background as well.
Cultural and historical background
Another difference between the European leagues is related to their countries of origin.
Germany never was a huge colonial master of importance. Only a very few German colonies
existed. But things were different with Spain, France, or England. “If you take the Premier
League, the Liga, the Serie A, even the French League. The history makes that even from
abroad there is an interest to follow one of these leagues.” (VIII) These historic linkages ease
the export because the language or cultural values are known. (VI)
17
TV Technology
Last but not least, the technical TV production is important for export. Foreign TV stations
buy transmission signals and they are looking for good quality of course. “Germany is the
most developed country in Europe … the organisation, the stadiums, the TV production
standard is very, very high”. (VIII)
4 Managerial Implications for the Export
The above discussion of theoretical backgrounds and the presented empirical findings allow
considering some managerial implications for the export of national sport leagues.
International popularity of both clubs and players seems to be the most important prerequisite
for being successful on international markets. Hence, before starting to sell broadcasting
rights internationally, the administration of leagues and clubs should evaluate the popularity
of the league, the clubs, and the participating players. If this evaluation shows that the
popularity is low, then activities to boost the popularity are necessary. The list of such
activities is long. Among them are visiting trips to foreign countries. Clubs can go to foreign
countries to play against teams of these countries. Players can travel around to increase their
popularity. And last but not least, domestic clubs can hire star players from foreign countries.
But, “…before the league does any kind of promotion in foreign countries they should give the
money to clubs such as FC Bayern Munich to hire stars like Beckham. That would help much
more than promotion campaigns in foreign countries.” (VI) Still, hiring star players will have
a positive impact on exports only if the player really is a star and if the player does take part
in the games. A star player who is usually not playing but waiting to replace other players will
not have the expected effects.
Furthermore, exports will be successful only if the population in foreign countries is
enthusiastic about the particular type of sports. Hence, looking out for countries with an own
national league at the type of sports in question might be an option to evaluate the enthusiasm
– the consumption capital. But even if this sport-specific consumption capital does exist, it is
still necessary that the population makes investments in the sense of consumption capital into
the foreign sport league. Each sport league is different from the others, even if they all play
18
football. Players, coaches, and teams are different. Hence, knowledge about each single
national sport league must be spread. Looking at the export of football, one can assume that at
least people all over Europe built up sport specific consumption capital as national football
leagues exist basically everywhere. Furthermore, one can expect that people in Europe have
built up some sport leagues specific knowledge for foreign football leagues, as all European
football leagues are connected with each other via the Champions League and the UEFA Cup.
But the situation is different if it comes to Asian or American countries. These countries do
have their own regional tournaments. European leagues are not necessarily that well known.
Building up sport league specific consumption capital first seems important. Thus, selling
broadcasting rights to these countries is more difficult.
But, focussing on countries with an existing football league is problematic as well because of
competition. If the existing sport league is as strong as the major leagues in the USA, then the
sale of broadcasting rights will be more difficult. But, furthermore, competition is not only a
problem in the sense of competing sport events. Other spare time activities and professional
live compete with sport broadcasts. This competition is even strengthened as live broadcasts
of sport events are usually preferred. Hence, coming to the matches, time of the day and day
of the week in the foreign country are important. Time difference between the domestic and
the foreign country can lead to unsuitable time slots, e.g. during the night. In connection to
this, shifting kick off times is frequently discussed. The idea is to reschedule the kick off to
meet the prime time for sport broadcasts in foreign countries. But it has to be kept in mind
that this idea is dangerous, too. TV viewers appreciate fan crowds. They want to “see” a great
atmosphere in the stadium. But if the kick off time is switched gate attendance might go down
as spectators in the domestic countries do not have the opportunity to watch the game in the
stadium. Hence, reasons for and against rescheduling kick off times must be well balanced
before a decision is made.
Furthermore, selling broadcasting rights to foreign countries seems more successful in terms
of revenues if the populations’ buying power is high. This evaluation is based on the
assumption that a high buying power will also lead to a higher willingness to pay for media
related services such as sport broadcasts. Of course, this assumption has to be tested first for
each foreign market. Sales efforts should be concentrated on countries with a population who
is willing to pay for media related services. Of course, the ideal situation is a country with a
huge number of potential TV viewers with a high willingness to pay for broadcasts. If finding
such a country is impossible, other options are looking for a country with a relatively small
19
target group with higher willingness to pay. Of course, the case of a country with a relatively
large group of potential customers with a lower willingness to pay can provide sufficient
revenues as well.
Another subject of the interview partners was related to the structure of the TV market. This
goes back to the question whether the broadcasting rights should be sold to a free TV station
or a pay TV station. The assumption of the interview partners is that selling to pay TV
stations usually leads to higher revenues. Furthermore, comparing broadcasting fees of
countries with a competitive pay TV sector and of those with a non competitive pay TV sector
leads to the conclusion that the fees are higher on competitive pay TV markets (Solberg,
2002). Thus, focussing on countries with a competitive pay TV sector seems advantageous.
But focussing on pay TV can be advantageous too, if the particular type of sports attracts only
a small number of TV viewers. Free TV needs a huge number of spectators to be profitable.
But pay TV can be profitable with a lower number of spectators, if these spectators are
willing to pay for the broadcasts.
Last but not least, market entry can be difficult for the German Bundesliga as other leagues do
sell their broadcasting rights internationally already. The Bundesliga is late to the market. An
interview partner states it this way: “If slots are blocked, it is difficult to get in.” (VII) Hence,
an opportunity for the Bundesliga might be as well to look out for countries where broadcasts
of other national leagues are uncommon. But then, generating money from export will
become more difficult.
5 Conclusion
Selling broadcasting rights of sport events and sport leagues is a difficult though important
task. Despite this importance, theoretical models or theories to support such tasks are missing.
This is particularly the case if it comes to the export of national sport leagues. A huge
research gap does exist. This paper is a first step to close this gap. Based on theoretical
consideration, influence factors such as popularity, consumption capital, competition, buying
power, and structure of the foreign TV market seem to determine export opportunities. Expert
interviews with managers from different organisations support the results of these theoretical
considerations. The interviews confirmed the following export influence factors:
20
•
Popularity (superstars, international sport competitions)
•
Buying power
•
Market structure
•
Consumption Capital (Football Enthusiasm)
The theoretical arguments regarding competition do not seem to be decisive.
However, the interviews showed some aspects, which were not part of the theoretical
considerations:
•
First Mover Advantage/Last Mover Disadvantage
•
Cultural and historical background
•
Profitability and Reliability
•
Atmosphere (in the stadium)
•
TV Technology
Furthermore, these interviews provide a detailed overview of the export of football
broadcasting rights. European football leagues are in different positions in terms of export.
The English Premier League is best off and the German Bundesliga at the end. In this sense,
the expert interviews give a first impression of export opportunities.
However, the theoretical discussion and the expert interviews are not more than a first step to
close the identified research gap. Additional studies are necessary. Particularly the role of
foreign TV stations must be analysed. The TV stations are the market entry barrier. If TV
stations are not interested in the broadcasting rights, exporting national sport leagues is
basically impossible. Analysing the role of TV stations should provide further insights to sell
broadcasting rights successfully.
But, this paper makes something more very evident. Neither the league administration nor the
clubs can successfully export a national sport league on their own. Players and clubs must be
successful in international tournaments. They must travel around the world as ambassadors
for they league. The league must ease the participation in international tournaments.
Furthermore, all clubs and the league have to work together to hire international stars.
International stars are expensive. If one of the clubs hires such a star in Germany, the club is
responsible to cover the expenses for the star even if the revenues from export are entitled to
21
all clubs. However, league administrations, clubs, and players have to cooperate with each
other to sell their national sport league successfully.
Most interview partners agreed upon that the German Bundesliga would be able to generate
more money from the export. The new media contract from December 2005 shows that they
were right. The revenues from selling broadcasting rights internationally doubled. Still, the
German Bundesliga is behind the English, the Spanish, and the Italian leagues. The gap got
closer but there is still room for improvement.
A limitation of this paper is that the literature review covers topics related to the demand for
sport events. If some aspects are labelled as new then these labels are for the literature on
demand for sport events.
22
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