Football ‘muddling through’ in face of growing ‘tensions’, says Boston Consulting Group
Football is in danger of eating itself unless the sport comes together to address growing inequalities, the consultancy hired by the Independent Football Regulator has warned.
Boston Consulting Group, which is working with the IFR to produce the State of the Game report that will shape the regulator’s approach to English football, has today published a report highlighting several areas of “tension” in the sport.
Central to it is the rapid growth of football, which has seen competitions expand and a handful of teams transformed from local businesses into global powerhouses by rocketing media and sponsorship revenues.
“The reason we wrote the report is because all of these trends have happened over time, and what they’re leading towards is ever greater tensions in the game,” Jean-Paul Petranca, global co-head of Boston Consulting Group’s sports practice, told City PM.
“It’s an appeal to everybody to work together more, from the Fifa level to Uefa to the FAs in the countries to the leagues. We need a collective solution to some of these things.
“The system could muddle through in the way it’s doing at the moment, but we are getting to a point where it’s very difficult to see the muddling through being the optimal outcome.”
Football’s wealth gap ‘will destroy integrity of leagues’
The report by BCG, which worked on the US, Canada and Mexico’s successful bid for the current World Cup, says that football’s extraordinary growth is placing increasing strain on players and argues it may end up overwhelming consumers if allowed to continue unchecked.
Perhaps most significantly, given its ongoing work with the IFR, it also highlights the growing wealth gap at the top of the game and the need to keep the ecosystem competitive – with BCG citing the Premier League as an example of good practice.
“If you let this income inequality go too far, you destroy the structural integrity of competitions,” Petranca added. “You don’t need it to be totally equal. But you do need each team each week to have a chance at beating the other team.
“You want Leicester City to have a chance of winning the Premier League, and you definitely want Crystal Palace to have a chance of beating any of the other clubs in the division any given weekend.
“The Premier League is not a totally even league, and it doesn’t need to be, but it has a ratio of income from top to bottom of about six to one. There are other leagues in Europe where the ratio of income from top to bottom is about 19 to one.
“When the ratio of income between two clubs goes above about four to one, it becomes 80 per cent likely that the team with the higher income will win.
“I don’t know if it will be gradual progress, I don’t know if there will be a big moment, but I think the issues are becoming clear to many.”
Parachute payments are ‘least worst solution’
The IFR’s State of the Game report will inform the sort of financial redistribution system it could impose on the Premier League if talks with the EFL continue to stall.
Petranca said parachute payments were not an ideal solution as they only partly mitigate the financial hit of relegation, while still affording teams an advantage over their peers.
“I think in this area there are no simple and easy solutions. The hypothetical ideal would be that you have smoother income from the Premier League down to the bottom of the Championship to allow an easier progression, but that’s very expensive,” he said. “Parachute payments are probably at the moment the sort of least worst solution.
“I think it’s important also to recognise that the Premier League has become an enormous source of revenue for all of English football. And if redistribution is too high, then you give the Premier League a structural disadvantage versus other leagues in Europe, and you endanger this amazing export that has been created.”