As someone who has had a career in three distinct sectors – 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 standardised and can be overlaid on to the specific product expertise required.
My career has coincided with and been significantly influenced by the impact of technology and how it enhances a business’s ability to prioritise what customers want and need. In football, I have noticed there are some distinct differences that appear to make the sport an exception to these rules.
First (and most perversely), clubs outside a few in the Premier League are not judged primarily by financial results and do not have a “profit motive” as a primary objective, illustrated in 2021-21 by the fact the EFL Championship had cumulative losses of £361m. Instead, they tend to emphasise 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 argues that a club’s objective is to “maximise the number of wins while adhering to a break-even constraint, in other words, not incurring financial losses”. Clubs can increase their equity value as they become more successful and better managed; however, this increase has a weaker correlation with financial fundamentals.
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Generally, a company’s success can be evaluated by customers’ engagement with its products and its ability to generate future cashflows from that engagement. Financial performance is typically assessed and published annually for private companies and quarterly for public companies. In football, as the traditional financial measure of success is largely set aside, judgment is often based on each performance of the “product” – the team or athletes – from game to game.
The level and frequency of scrutiny and the intensity of commentary in the world of sports are often highly emotional and reactive, a dynamic that other businesses rarely encounter on a daily basis. The unique nature of sports is designed to elicit tribalism and cultivate an emotional connection to clubs or teams that people would never have in relation to a brand of dog food or their insurance provider.
The second anomaly is that people would agree that commenting on the intricate workings of a business requires a certain level of insight or expertise. For instance, I don’t know the CEO of the company that produces my favourite frozen lasagne or manufactured my car. Supporting a team often feels less like a choice and more like an inheritance rooted in familial or geographical serendipity. It becomes more of a lifelong commitment than a simple choice, involving an investment of time and money that may span generations. This deep-rooted connection gives people a right to have opinions on all aspects of how a club is managed, in a way that a purely transactional relationship wouldn’t justify.
The range of emotions experienced in sports is heightened and more profound. Although I’ve felt delight when we’ve closed business deals or disappointment when someone has left a company, these emotions have never come close to the elation of a 5-4 victory at Wrexham or the despair of the 6-1 loss to Walsall this season. Our relationships with football clubs go far beyond that of other businesses; it is an integral part of our identity and provides a profound sense of meaning. This perspective makes the notion of us being mere customers seem trivial and misplaced.
Finally, in a normal business context it’s uncommon for a leader to prioritise the terms of an inevitable exit when joining a business. This approach makes sense from a manager’s perspective, given the average tenure in European football, as reported by Uefa, is 16 months, but it underscores the challenge of having a significant positive effect on an organisation in such a short time. The most successful teams attribute success on the pitch to a clear strategy derived from a club-wide system or process, rather than relying solely on the decisions of one individual. The head coach’s role should be to continuously improve the available resources, but all too often they are unfairly singled out when things go awry. Although the head coach has an outsized influence day to day, responsibility for the team’s performance is shared by the board and CEO, who should establish and define the overall strategy.
This peculiar difference around contracts also extends to the way players are traded and move between clubs, a practice that has no parallel for employees outside sport. It is difficult to imagine any other profession where there is such readily available data and evidence of an individual’s performance and where different organisations negotiate fees to transfer that individual’s contract, often in the hopethe individual will change the near-term performance of their business.
Although businesses are constantly seeking 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 their consent is remarkable, especially when clubs wish to part ways with players who no longer fit their plans. As illustrated in the recent David Beckham documentary, it was nearly possible for him to be sold to Barcelona without his consent during his famous fallout with Sir Alex Ferguson. While it is sometimes easy to berate the role of less scrupulous agents in the game, it feels important that players have some representation in the important decisions about their short careers.
These are just a few of the ways that football seems to be a rule unto itself, influenced by an irrational financial landscape, week-to-week emotional performance judgments and short-term strategic decisions. While difficult, the ability to acknowledge and understand these forces without becoming beholden to them should create a greater likelihood of achieving success, both on the field and in terms of creating equity value.
Jason Stockwood is the chair of Grimsby Town.
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