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Intangible Balls

How important are intangibles to a football club?

By Deli Yang and Mahmut Sonmez . 01 June 2005

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Football is bigger business than ever. The richest 20 football clubs in the world are set to break £2 billion in income in 2005. One of the keys to this financial success is the UEFA Champions League, the most prestigious football club competition in Europe, which attracts the attention of football fans worldwide. Clubs earn large revenues from Champions League TV deals, sales of memorabilia, spectator tickets, income from UEFA for winning and/or drawing in a match – and significantly, but less well recognised, revenue from the reputation of their clubs.


Despite being associated with entertainment, a football club is no different from any other large, successful company, in terms of assets construction. A club consists of tangible, financial and intangible assets. Intangibles, by their very nature, are hard to measure. But the high values involved in football makes it an imperative to identify just how important they are.


Football clubs possess valuable human assets (famous footballers and household name managers), market assets (the reputation to attract sponsors and media broadcast), structural assets (the ways of managing their clubs and promoting club associated businesses) and intellectual property (the registration of trademarks).


There are also a number of symbolic intangibles in football clubs. The gap between market value and book value across clubs is very diverse. This indicates that firms have very different emphases on intangibles – which also directly influence their associated business activities.


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Several elements make up the intangible package, including sponsorship, memorabilia, the value of players and the media.


Human assets are the core property of a football club. The players are undoubtedly the most important intangible. They directly influence the chance of winning a match, thereby impacting on the fan base and associated commercial activities. The presence of a famous player may substantially increase the reputation of a club – this is probably the rationale behind the amount of money football clubs are willing to spend to poach outstanding players from other clubs.


And managers are key to increasing the prowess of players and game winning opportunities for a club. Famous managers such as Sir Alex Ferguson, Jose Mourinho and Sven Goran Eriksson are feted and coveted. Why are clubs so interested in particular individuals? The answer is, because a manager isn’t just a manager. The above names resonate powerfully – they are strong intangibles.


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