There was no champagne and no City fat cats, just a wild cat - or at least a
man dressed up in a mascot suit - and a rain-sodden knot of rugby league
fans wondering how they managed to become the victims of feckless
millionaires an ocean away from their West Yorkshire homes.
The 100 or so supporters of the Wakefield Wildcats engage Super League team
stood on the soaking steps of their town hall last week to protest at the
decision to scrap plans for a £60 million stadium, where their team would
have been anchor tenants. Now the Wildcats could be homeless.
Across the Pennines, Fylde rugby union club have told their team that if they
want to play they will have to foot the bill for their travelling expenses
because petrol costs were busting the budget. Speedway fans in Reading are
likely to have no club to support at the end of this month after plans to
relocate to a new stadium collapsed and, in Scotland, Ayr United are
desperate to revive plans for a new ground after Barratt Homes, Britain's
biggest house-builder, pulled out of the scheme.
Snapshots from a sporting credit crunch. If the City has had its boom, so has
sport, which has enjoyed easy credit, big paydays and the generosity of
sponsors with money to burn as they fed their egos on getting close to the
sporting superstars who fill the screens of television companies, greedily
grabbing the biggest talent. Now the City is bust and everyone waits to see
whether sport will be, too. The Olympics, the latest Anfield stadium delay
or the sale of Manchester City to the Arabs grab the headlines, but the
ripples of the credit crunch are reaching every nook and cranny of sport.
John Taylor, chairman of Sports Impact, a sponsorship consultancy whose
clients include the Xchanging Boat Race, said: “It is not a question of
whether the credit crunch will hit sport, just when, where and how hard.
“The ripples will be felt everywhere. A lot of sports will be in the middle of
contracts now, which is why we have not seen the effects on any great scale.
But wait and see what happens when they come up for renegotiation or when
new events want sponsors. That will be the day of reckoning.”
There is not much mega at West Ham United's megastore these days, where the
club are restocking replica shirts, thanks to the demise of XL, the holiday
company. A £2 million-a-year sponsor deal is reduced to a clearance sale,
where you can buy a shirt printed with the hapless XL logo for £10.
The loss of a shirt sponsor is small beer in football, though. Deloitte's Annual
Review of Football Finance was ringing alarm bells in May, pointing out
that the Barclays Premier League is up to its collective neck in debt to the
tune of almost £2.5 billion, with another £289 million of tick in the
Coca-Cola Championship. Things are fine when clubs have a multibillionaire
Arab owner, but clubs relying on ticket sales, corporate hospitality and
sponsorship to pay the bills will be up against it sooner or later.
Empty seats at grounds over the weekend showed that fans with mortgages and
credit cards to pay cannot be milked for ever and the stupendous growth in
commercial activity, which has led income from corporate boxes and
merchandising to leap in the Premier League from a paltry £73 million in
1991 to £410 million last season, will, at the very least, slow down, if not
hit the buffers.
“We could see a huge polarisation in football between the independently
wealthy clubs, who don't need to care about debt, and those relying on
ticket sales and sponsorship,” Geoff Mesher, head of the forensic sports
disputes team at KPMG, the auditors, said. “Some clubs will be in the middle
of finance deals but what happens in 18 months or so when they want to
renegotiate and the banks don't want to know?”
Of course, football's income has been turbo-charged by the desperation of
television to claim Britain's most-watched sport. The Premier League is
distributing a mighty £2.7 billion, mainly fuelled by BSkyB, in which News
Corporation, parent company of The Times, owns a 39.1 per cent stake,
among its 20 clubs and the Football Association is taking £425 million from
ITV and Setanta. They are record numbers and likely to remain so, with
advertising revenues plummeting at ITV and Sky, the BBC under constant
scrutiny and Setanta not yet an established force in the marketplace.
“People will be thinking about some of the big contracts as early as next year
and you have to think that sort of money will not be around again,” Mesher
said.
But it is not just football that could suffer. Golf, cricket, horse racing,
athletics - every sport will feel the pinch. Eddie Reid is watching the
chain of events unfold from TGI Golf, his business supplying equipment to
golf professionals. “We hear that the Americans have deserted the courses in
Ireland and the rest of Europe,” he said. “They are already struggling, as
are golf equipment manufacturers.”
Golf, a high-spend, international sport even for amateurs, could be among the
worst hit. Dr Andrea Sartori, an expert in the golf economy, said: “An
industry has been built around selling second homes at golf resorts in
places like Spain, Portugal and Dubai and that will dry up.”
The sunlit courses go quiet and the roar of Formula One engines could be
muted, too. The most dollar-fuelled sport on earth is tightening its belt
after realising that spending on ever more esoteric technology has to end.
It may have some of the most prominent names in banking on its cars - the
Royal Bank of Scotland and Santander, of Spain - but this season alone, the
Super Aguri team have gone to the wall, Scuderia Toro Rosso is up for sale
and the FIA, the governing body, has ordered rigorous cost-cutting for next
season.
Some teams have already had the wake-up call: hours after Adam Parr, the chief
executive of the Williams team, admitted that Formula One team budgets were
“a lot of money that can be addressed with one swish of the red pen”, he
discovered that the Icelandic Baugur Group - one of the team's biggest
sponsors, with the logos of Hamleys, the toy store, All Saints and
Mydiamonds.com on the Williams cars - was struggling to dig itself out of
the mire.
Each tick of the clock seems to bring a new victim. Some are household names,
such as JJB Sports, Wigan Athletic's leading sponsor, which is shutting
stores and slashing jobs, while others, such as Baugur, are unknown, but
their fates are crucial to the survival of a club or sport. Only time will
tell but for some, time could be running out.
Dash for cash: how the business end of sport made its millions
- The Premier League's first sponsor was Carling, the brewer, which paid £3
million a season from 1993; Barclays pays about £22 million a season for its
sponsorship deal up until 2010.
- Formula One was the first sport to exploit corporate entertaining with its
Paddock Club, founded in 1984 as a champagne extravaganza that is copied
around the world. Tickets sell for up to £2,000 a plate.
- Stanley Matthews, one of England's first marketable football superstars, was
paid a magnificent £20 a week to wear boots sold by the CWS Co-op Group;
David Beckham's boots deal with adidas is worth £3 million a year.
- Shirt sponsorship was slow to take off in English football until Liverpool
signed with Hitachi in 1978, although lowly Kettering Town lay claim to
being the first team with sponsors after the mercurial Derek Doogan, the
former Wolverhampton Wanderers player, put the name of Kettering Tyres on
the team's shirts in 1976, causing a storm at the FA.
- Replica shirts are big business, nowhere more so than in football. Newcastle
United made £250,000 in sales on the day that Alan Shearer signed for the
club in 1996.
- Formula One plunged into the search for sponsors as early as 1968 when Lotus
shocked the sports world by painting its car in the colours of the Gold Leaf
tobacco brand. The idea soon caught on and the sport is estimated to rake in
£1 billion a year from sponsors.
- Television companies are the biggest paymasters in sport: NBC paid $3.5
billion (about £2 billion) for the broadcast rights to five Olympic Games,
summer and winter, from 2000 until the Beijing Games in August. The Premier
League has broadcasting contracts worth £2.7 billion, the biggest single
deal, with Sky, worth £1.3 billion.
