Photo: Toby Melville/Reuters
As someone who has had a career in three different industries – travel, dating and insurance – I have always believed that the general characteristics of businesses remain the same regardless of the industry. The application of finance, marketing, HR, strategy, technology and other aspects are fairly standardized and can be linked to the specific product expertise required.
My career has coincided with and been significantly influenced by the impact of technology and how it increases a company’s ability to prioritize what customers want and need. In football, I have noticed that there are some distinct differences that seem to make the sport an exception to these rules.
Firstly (and most perversely) clubs outside a few in the Premier League are not primarily judged on financial results and do not have a ‘profit motive’ as their main objective, which in 2021-2021 is illustrated by the fact that the EFL Championship has cumulative losses knew. of £361 million. Instead, they tend to emphasize financial sustainability as a goal. Prof. Stefan Szymanski, an economist at the University of Michigan (and a Scunthorpe fan), quotes Prof. Stefan Kesenne in his book Money and Soccer, and states that the goal of a club is to “maximize the number of wins while establishing maintain a break-even situation. limitation, in other words, not incurring financial losses”. Clubs can increase their share value as they become more successful and better managed; However, this increase has a weaker correlation with financial fundamentals.
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In general, a company’s success can be judged by its customer engagement with its products and its ability to generate future cash flows from that engagement. Financial performance is typically reviewed and published annually for private companies and quarterly for public companies. Because in football the traditional financial measure of success is largely cast aside, judgment is often based on each performance of the ‘product’ – the team or athletes – from match to match.
The level and frequency of scrutiny and intensity of commentary in the sports world is often highly emotional and reactive, a dynamic that other companies rarely encounter on a daily basis. The unique nature of sports is designed to provoke tribalism and cultivate an emotional bond with clubs or teams that people would never have in relation to a brand of dog food or their insurance company.
The second anomaly is that people agree that commenting on the intricacies of a business requires a certain level of insight or expertise. For example, I don’t know the CEO of the company that produces my favorite frozen lasagna or manufactures my car. Supporting a team often feels less like a choice and more like a legacy rooted in familial or geographic serendipity. It becomes more of a lifelong commitment than a simple choice, involving an investment of time and money that can span generations. This deep-rooted connection gives people the right to have an opinion on all aspects of the way a club is run, in a way that a purely transactional relationship would not justify.
The range of emotions experienced in sport is greater and more profound. Although I have felt elation when we have closed business deals or disappointment when someone has left a company, these emotions have never come close to the elation of a 5-4 win at Wrexham or the despair of the 6-1 loss to Walsall . this season. Our relationships with football clubs go far beyond those of other companies; it is an integral part of our identity and provides a deep sense of meaning. This perspective makes the idea that we are merely customers seem trivial and misplaced.
Finally, in a normal business context, it is unusual for a leader to prioritize the conditions of an inevitable departure when he or she joins a company. This approach makes sense from a manager’s perspective, given the average tenure in European football, as reported by UEFA, is sixteen months, but it underlines the challenge of making a significant positive impact on an organization in such a short time. to have. The most successful teams attribute on-field success to a clear strategy derived from a club-wide system or process, rather than relying solely on the decisions of one individual. The role of the head coach should be to continually improve the resources available, but too often they are unfairly singled out when things go wrong. While the head coach has major influence on a day-to-day basis, responsibility for the team’s performance is shared between the board and CEO, who must set and define the overall strategy.
This curious difference around contracts also extends to the way players are traded and move between clubs, a practice that has no parallel for employees outside of sport. It is difficult to imagine another profession where there is such readily available data and evidence about an individual’s performance and where various organizations negotiate fees to transfer that individual’s contract, often in the hope that it individual will change the performance of his company in the short term.
While companies are constantly looking for top talent, the concept of paying a fee, essentially buying someone’s registration to work, is unheard of. The ability to sell a player’s contract without his consent is notable, especially when clubs want to part with players who no longer fit into their plans. As illustrated in David Beckham’s recent documentary, it was almost possible that he was sold to Barcelona without his consent during his famous feud with Sir Alex Ferguson. While it’s sometimes easy to berate the role of less scrupulous agents in the game, it feels important that players have some say in the important decisions about their short careers.
These are just some of the ways in which football seems to be a rule unto itself, influenced by an irrational financial landscape, emotional week-to-week performance reviews and short-term strategic decisions. Although difficult, the ability to recognize and understand these forces without becoming tied to them should create a greater likelihood of success, both on the field and in terms of creating stock value.
Jason Stockwood is the Chairman of Grimsby Town.