Running a football club amidst COVID-19: Back to business basics
Football may be a sport, but it’s also a business entity. The stakeholders the fans, the investment their support and the returns emotional gratification: cup wins, league trophies, player signings and more.
In the middle of all this is the club, the upper management that fund its day-to-day operation and keep it afloat. Just like any other business, this means balancing the books, having a reserve fund in place and attracting the right form of talent to take it to the next level.
Pre COVID-19, there was little worry for Premier League teams in the financial regard, with most stories of bust and bankruptcy being reserved for the lower leagues. However, with the onset of the pandemic, accountancy group Deloitte has predicted that clubs are braced for a collective drop of £1bn in revenues this season, with half of that to be lost permanently.
One man who knows a thing or two about operating within difficult means is Barrie Pierpoint, former Leicester City chief executive, who took a struggling division two side, on the brink of relegation, from a £2m to £24m turnover between seasons 1991 and 2000.
Here, he discusses the basic business principles that foretold his success, the managers that helped him along the way, and how he would cope with the current COVID-19 crisis in the football world.
When I arrived at Leicester City in April 1991, I was allocated a ground floor office which had recently been vacated by former manager David Pleat. Tiny, windowless and reeking of gas from the old kitchen next door, it was hardly a creative environment. And the news just got better when I heard my grand objectives from the board of directors. Amongst raising funding to help improve the first team squad, I was asked to generate around £5.5m to build a new stand at the stadium, a staggering amount given the times we lived in.
I left the meeting in no doubt that it would be the biggest challenge of my life. But it did teach me a valuable lesson. Limited resources with sky high objectives, something we’ve all grown accustomed to in business. And examining the current COVID-19 footballing climate now, executives will no doubt be under immense pressure to balance the books in troubling times. So taking an introspective look, there are some lessons from my time that while different, unearth some common business sense in keeping afloat in difficult circumstances.
After hearing my lofty objectives, I was undeterred and unearthed opportunity. Fox Leisure, the clubs new branded leisurewear, was first key to this, giving something for fans to buy into, taking £10,000 in its first week and an annual turnover of almost £2m by the turn of the millennium. Next, we transformed the hospitality side of the business from a food offering even school kids would turn a nose to, to a banqueting, catering and conferencing powerhouse, with a £3m turnover with £0.5m in profit. We also transformed reserve team football, taking a bleak and bleary, one man and his dog event to a family attraction, which, at its height, secured more fans than the first team games.
In all of this, fan and business interaction was crucial. In the current environment, that is taken away to some extent, but I would encourage all football club owner’s and marketing departments to be creative in that sense. We’ve already seen many of the top Premiership teams transforming seats into advertising opportunities. LED banners, hoarding – these are the aspects which can help clubs drive some revenue while gate receipts are amiss.
Incentive is also an asset. If we are driving fans to the website for retail offerings, it is time to push promotions and loyalty programmes to their highest. I understand it is a difficult period, but we must understand that fans are loyal. Just last month, it was reported that football officials have been stunned by the generosity of fans in not asking for season ticket refunds. This is the kind of loyalty that should be rewarded, whether it be a discounted next season ticket, hospitality match day offering or discounts in store, fans come first.
From a business sense however, clubs must be clever with their spending. It is like planning and upkeeping a house – operate within your means day-to-day, but always plan for future upgrades, renovations, and in the worst scenario, disaster. When I was at Leicester, we had a best, mid-range and worst case plan, each accounting for elements such as relegation, promotion and operational success.
If you are gaining money now for next season’s tickets, keep that money in a pot for next season. It may be attractive now to fill in this season’s shortcomings, but you’ll only be setting a precedent for a loss-making entity if you keep papering the cracks of bygone seasons.
On the playing side of the game, there is also a business case in COVID-19 times. Chopping and changing managers has always been costly, most certainly financially, and can go one way or another affecting matters on the pitch.
Certainly we’ve seen less spending overall from Premiership clubs in this transfer window, with £890m in 2020 to £270m this year.
This is indicative of the climate we live in, but I also think it has ben a great opportunity for clubs to look within and focus more on their current assets. The current crop of Leicester City players has some fantastic young men out there – Barnes, Maddison, Justin – each has excelled this season, and is testament to the excellent work Rodgers and his team are doing behind the scenes.
Plan for the long-term, you have to. Of course there will be times when unfortunately, events on the pitch dictate a change at manager level, but at the same time they can’t be a five minute wonder. In my time, we had some fantastic managers – firstly Little, who did magic – he brought in players like Colin Hill, Jimmy Willis, Brian Carey and David Lowe – on peanuts and turned them into superstars, contributing vitally to the club’s success, with three Wembley playoff visits and a Premiership promotion.
The we had O’Neill, who spent more, but had the funds to do so given our growing success. Again, he brought in players to build a team around – Savage, Izzet, Lennon – players that were to be the core for long-term growth. And as we know, the approach paid off massively, with two Football League cup victories and sustained success in the Premiership.
As we head into a period of more optimism, I would encourage clubs to stick close to the stakeholders that matter the most. Today, we lived in a fragmented football landscape – podcasts, forums, supporters’ groups – there is a lot of fan opinions to keep track of out there.
Do what you can with e-shots, advertising and social media in these tough times, but make a concerted push on face-to-face fan forums and feedback sessions when possible. We all know what happens when chief executives remain aloof and away from community engagement with fans. Only by staying on a ground level, can owners begin to understand the desires of its fanbase, and for fans, the requirements of football as a business.
This was posted in Bdaily's Members' News section by Barrie Pierpoint .