International Marketing Prof. Bohumir Štědroň

Nov. 27th, 2014

Ashley Wouters

Charles University

Table of Contents
I.
II. Importance in Belgium ......................................................... 1 History ............................................................................ 1

III. Organisation ...................................................................... 1 IV. Sponsors and partners .......................................................... 2 V. Marketing efforts ................................................................ 3 VI. The competition ................................................................. 3 VII. Economic and financial structure ............................................. 4 VIII. Distribution of revenues ........................................................ 7 IX. International financial comparison ........................................... 8 X. Case study ....................................................................... 12 XI. Bibliography ..................................................................... 18

List of figures
Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure Figure 1 - First division ........................................................................ 3 2 - Market value of the Jupiler Pro League......................................... 6 3 - Evolution of finances of the Jupiler Pro League ............................... 6 4 - Average revenue of European clubs ............................................. 9 5 - Profits/losses of European clubs ................................................. 9 6 - Brand value of European Leagues.............................................. 11 7 - Evolution KRC Genk .............................................................. 12 8 - Evolution Club Brugge ........................................................... 13 9 - Evolution RSC Anderlecht ....................................................... 14 10 - Evolution SK Lierse ............................................................. 15 11 - Evolution Westerlo .............................................................. 16 12 - Evolution Mouscron-Péruwelz ................................................. 17

List of tables
Table Table Table Table Table Table Table Table Table Table Table Table 1 - Broadcasting deals .................................................................. 5 2 - Finances of the Jupiler Pro League .............................................. 6 3 - Market values of Belgian clubs .................................................... 7 4 - Revenues of leagues ................................................................ 8 5 - Market value of European Leagues ............................................. 10 6 - Other variables .................................................................... 11 7 - Finances KRC Genk ................................................................ 12 8 - Finances Club Brugge ............................................................. 13 9 - Finances RSC Anderlecht ......................................................... 14 10 - Finances SK Lierse ............................................................... 15 11 - Finances Westerlo ............................................................... 16 12 - Finances Mouscron-Péruwelz .................................................. 17

I.

Importance in Belgium

As in many other countries, football is a very popular sport amongst the Belgian population. It is in fact, together with cycling the national sport. People love to watch and play it. Most people take their children to go play, or even play it themselves. You will probably find a football team in even the smallest of villages. Football in Belgium has the highest participation: this means that many people play the game, but also go watch it, and thus are involved. This consequently leads to the fact that it brings the highest economic contribution to our country, has the highest media coverage, and has the widest social reach. (Gammelsaeter & Senaux, 2011)

II.

History

When looking at the history of football in Belgium, we can see that it is first mentioned in 1863. First an Irish student introduced it at his school. Later on Belgian students adopted the game and some English immigrants brought it into the harbour. Around the 1880s the first football clubs and leagues were set up. Because the Catholic Church and the worker’s unions were opposed to professionalism, the first introduction of a professional league only came 100 years later, in 1974. Then 20 years later, in 1895, the first championship was held. (Gammelsaeter & Senaux, 2011)

III.

Organisation

When looking at the organisation of the Jupiler Pro League, we can see that the National Football Association is defined by the federalisation of Belgium. Belgium is divided into three parts: Flanders, Wallonia and the German part. As the years go by, Belgium is becoming more and more divided and is now going from federalism to confederalism. The opposition 1

is mainly between Wallonia, where they speak French, and Flanders, where they speak Dutch. This is also reflected in the Football Association which now has both Walloon and Flanders branches. The Jupiler Pro league unites all the professional clubs in the highest division and was actually founded as an employer’s organization for professional football clubs. Today it is a part of the Football Association and does several things: → sets fixtures for the league → negotiates sponsorships → vouches for security arrangements → manages centralized ticketing services → negotiates broadcasting deals → negotiates collective labour agreements with trade unions (Gammelsaeter & Senaux, 2011)

IV.

Sponsors and partners → Obviously the beer brand Jupiler: it is the most popular beer in Belgium → EA sports which is the official and excusive holder of the Pro League license of football games

The main sponsors of the league are the following ones:

→ Panini, who is the oldest partner/sponsor → Select, who delivers every game ball in the League → Unibet (Jupiler Pro League)

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V.

Marketing efforts

The Jupiler Pro league also makes some marketing efforts. For example they recently just made a deal with Sports Alliance to develop a Supporter Marketing Platform. Sports Alliance will be delivering the platform and help them to develop and implement a supporter marketing policy. Via this effort the league tries to get to know its supporters and customize their adds/further marketing efforts. Another example is their Christmas action. The supporters can bid on jerseys of their favourite players. With this marketing stunt they also help a good cause. (Jupiler Pro League, 2014)

VI.

The competition

When looking at the competition, we can see that there are 16 teams in the first division. We can see the current ranking below. The top three consists of Anderlecht, AA Gent and Club Brugge. These are the biggest clubs in the league. Cercle Brugge, Lierse SK and Zulte Waregem are at the bottom.

Figure 1 - First division

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What is unique about the Belgian competition is the Play-Off System. The main argument behind this format is that it would increase the sporting quality of the Belgian teams and that it would increase their performances at a European level. Furthermore it has the advantage that the teams would play each other more than twice in one season, and that the excitement and suspense of the sports would last longer. This is also a marketing trick to keep the supporters more and longer involved by delivering more top matches. Finally, the underlying idea was that the clubs had reached their maximum financial potential in the previous system. By setting up the PlayOff system, the clubs could increase their turnover and profit. (Gammelsaeter & Senaux, 2011) The play-off system is a very difficult format. Simply and briefly explained it works like this: I. II. First we have the regular competition with 30 matches: so the teams play each other twice. Then we have the Championship Play-Off where the top six teams compete for the title and for a Champions League qualification place. They start this small competition with half the points they earned in the regular competition. III. After that we have the Europa League Play-Offs where the teams ranked 7th until 14th from the regular competition meet the team ranked 4th in the first play-off. They compete for the last UEFA European league ticket. IV. Lastly we have the Relegation Play-Off where the teams ranked 1st until 3rd in the second division go head to head with the last team from the first division, for a place in first division.

VII.

Economic and financial structure

The main objective once was to provide entertainment while remaining solvent without making any profit. Nowadays this is not the case anymore, but it is the reason why most of the clubs are still non-profit organisations. 4

This means that it is sometimes hard to find detailed financial information. On top of that they did not even need public bookkeeping before 2006. Now, only 4 out of 16 clubs in first division are limited companies. (Gammelsaeter & Senaux, 2011) When looking at the finances from the Pro League and the individual football clubs, we can see that after 2000 the turnover increased a lot. Mainly thanks to the revenues of the Champions League (and thus UEFA) and the broadcasting deals. When looking at these broadcasting deals (see table 1), we can see that it went from 3 million euros in 1993 to 46 million euros in 2011. It is clear that the management and organisation went from a Spectator-Subsidies-Sponsors-Local model to a Media-CorporationsMerchandising-Markets-Global model. In this model the financial side of the sport is more important than the entertainment side. (Decroos & Denys, 2010) Finally we can see that despite the small debts of some clubs, most of the Belgian teams in first division are considered to be quite healthy financially.

Table 1 - Broadcasting deals

Below we can see some financial data. Figure 2 shows that the total market value of the Jupiler Pro League is 433 million euros (Transfermarkt, 2014). Table 2 shows that the turnover of 2012 is around 5 million euros and its equity is around 1,5 million euros. We can see that in 2012 the league did not make any profit but made a small loss. The evolution of the turnover and profit is shown in the graph (figure 3). (Finactum, 2014)

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Figure 2 - Market value of the Jupiler Pro League

Turnover Gross margin Net profit Equity
Table 2 - Finances of the Jupiler Pro League

€ 5,155,203.38 € 393,491.75 € -756.89 € 1,430,113.26

Figure 3 - Evolution of finances of the Jupiler Pro League

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Table 3 - Market values of Belgian clubs

When looking at the market values of the clubs (table 3) we can see that Anderlecht is the club with the most market value and Cercle Brugge has the lowest. Later we will see that in comparison with some other big European clubs, these numbers are very small. (Transfermarkt, 2014)

VIII.

Distribution of revenues

When looking at the distribution of the revenues we can see that nowadays 25 à 30% is thanks to the ticket sale. Before 2000 this was a lot more. 20% comes from broadcasting deals, another 20% of sponsorships, 15% is commercial income, and 15% comes from other income like subsidies. (Gammelsaeter & Senaux, 2011)

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IX.

International financial comparison

When comparing the Jupiler Pro League to the other leagues in the world, we can see that it is in fact a little brother based upon revenues and turnover. The turnover increased from 226 to 325 million euros in 2014. To give some insight on that number, it is the same amount as the turnover from Chelsea in one year. So when comparing these numbers, it is clear that the Pro League does not have big budgets etc. The reason for this is mainly historical. Some time ago the Football Association implemented a rule that stated that the Belgian clubs could not go into debt, whereas other European clubs could.

Table 4 - Revenues of leagues

In figure 4 we can see the average revenues from the European Leagues. Belgium comes in at the eleventh place, which is quite okay. As said before, the Belgian league is a financial healthy one. This graph below (figure 5) demonstrates that. We can see that Belgium is one of the few countries to make profits. Most of the other leagues are in debt. (Sefton Perry for UEFA, 2012)

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Figure 4 - Average revenue of European clubs

Figure 5 - Profits/losses of European clubs

When looking at the market value (table 5), we can see that the Jupiler Pro League again comes in at the eleventh place. The big leagues like the English, Spanish, Italian and German ones, come in first. As said before, the Pro League does not have that much budget so it is normal that the market value is lower. (Transfermarkt, 2014)

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Table 5 - Market value of European Leagues

It is the same story when you look at brand value (figure 6). Again the pro league is somewhere in de middle, at 12th place. (Statista, 2012)

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Figure 6 - Brand value of European Leagues

Again when looking at other variables like stadium capacity and EUFA ranking. Belgium comes in at the 12th place (Compare the leagues, 2014).

Table 6 - Other variables

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X.

Case study

Now I am going to talk about 6 Belgian clubs. The first three are considered the biggest and financial most stable ones. The last three are the smallest and financially not that healthy ones. The tables with financial data are based upon the book year 2013. An important note: as said before, most of the Belgian football clubs are non-profit organisations. This is the reason why there is not always detailed financial data available. As you will see, there is not always data available on turnover.

KRC GENK First we have Racing Genk, which is now considered the richest club in the league. When looking at the figures we can see that they had a turnover of 26 million euros and a profit of 2 million euros (table 7). When looking at the graph though, we can see that 2012 was a better year. They had more profit en turnover. This was thanks to some transfer deals and a good Championship League campaign. After this financial good year, the management decided to lower the price of the tickets and subscriptions. They also made some investments. This explains the reduced profit and turnover (Het Nieuwsblad, 2013). Turnover Net profit Equity
Table 7 - Finances KRC Genk

€ 25,903,410.22 € 2,198,135.90 € 40,344,038.50

Figure 7 - Evolution KRC Genk

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Club Brugge

Secondly we have Club Brugge. Another big and healthy football club. They have a gross margin of 27 million euros, which is pretty good. But when looking at profit alone, they made a loss of about 7 million euros (table 8). We can see in the graph that their gross margin increased since 2012. No data available on turnover. The reason for this loss is that they invested in infrastructure and made a transfer deal that finished too late for book year 2013. (Het Nieuwsblad, 2013) Gross margin Net profit Equity
Table 8 - Finances Club Brugge

€ 26,947,314.90 € -6,915,152.53 € 9,058,068.00

Figure 8 - Evolution Club Brugge

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RSC Anderlecht

Third we have Anderlecht. This is considered the biggest club in the league and has also won the most titles. We can see that Anderlecht was not doing so well in 2013. They made a small loss (table 9). When looking at previous years though, this is not so bad. In 2012 they made a first profit since 2007. Over the years they made some big investments in new players, their stadium, and built a new training facility. Because of these investments there was an increase in labour costs. According to some analysts, the Belgian football clubs rely on some good transfer deals to make any profits. (Purple Spirit, 2013) Gross margin Net profit Equity
Table 9 - Finances RSC Anderlecht

€ - 695 € - 13,876 € 17,382

Figure 9 - Evolution RSC Anderlecht

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SK Lierse

Lierse is one of the smallest clubs in the first division. We can see that they made a loss of 5,5 million euros and that their equity is in the red as well (table 10). According to the owner and chairman, the club has nothing to worry about. He made some big investments in players trying to compete in the Champions League. Now he is hoping to cut back on the salary of the players and employees. (Charles, 2014) Turnover Net profit Equity
Table 10 - Finances SK Lierse

€ 6,202,310.26 € - 5,606,450.76 € - 5,207,417.98

Figure 10 - Evolution SK Lierse

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Westerlo

Westerlo also made a loss of 1,5 million euros. They do better equity wise though (table 11). In the graph we can see that 2013 is a bad year for the club. As we can see in the table and the graph, there is no data available on turnover. Gross margin Net profit Equity
Table 11 - Finances Westerlo

€ 1,266,075.14 € - 1,457,129.65 € 2,010,156.82

Figure 11 - Evolution Westerlo

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Mouscron-Péruwelz

Mouscron-Péruwelz made a loss of 1 million euro in 2013. Their equity is in the red too (table 12). In the graph you can see that there is only data available from 2011. This is because they merged with another club. As we can see in the table and graph, there is no data available on turnover. Gross margin Net profit Equity
Table 12 - Finances Mouscron-Péruwelz

€ 1,420,525.14 € - 1,005,014,41 € - 1,889,181,35

Figure 12 - Evolution Mouscron-Péruwelz

All financial data from the six Belgian football clubs was found in the database of the website www.finactum.be

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Bibliography Charles, D. (2014, July 18). Schuldenberg Lierse 37 miljoen euro. Retrieved at October 28, 2014, from Voetbal België: http://www.voetbalbelgie.be/nl/article.php?id=82695 Compare the leagues. (2014). Top 50 European Football Leagues 2011/2012. Retrieved at October 24, 2014, from Compare European Football Leagues: http://comparetheleagues.com/ Decroos, J., & Denys, N. (2010). Analyse van de financierings- en organisatiestructuur van een voetbalorganisatie in de Belgische eerste klasse en de impact hiervan op de performantie en investeringen. Leuven: KU Leuven. Finactum. (2014). Jupiler Pro League. Retrieved at October 22, 2014, from Finactum: http://www.finactum.be/company/BE0417473251 Gammelsaeter, H., & Senaux, B. (2011). The Organisation and Governance of Top Football Across Europe. New York: Routledge. Het Nieuwsblad. (2013, March 6). Belgische eersteklassers hebben 185 miljoen euro schulden. Het Nieuwsblad , p. 1. Jupiler Pro League. (2014, June 17). Jupiler Pro League Persberichten. Retrieved 108_NL.pdf Jupiler Pro League. (sd). Partners. Retrieved at October 22, 2014, from Jupiler Pro League: http://www.sport.be/nl/jupilerproleague/proleague/partners/ Purple Spirit. (2013, January 2). Recordinkomsten van 68 miljoen euro voor Anderlecht. Retrieved at October 28, 2014, from Purple Spirit: http://www.purplespirit.be/?node=article&id=17493 at October 22, 2014, from Sport.be: http://www.sport.be/nl/jupilerproleague/proleague/persberichten/ProPers

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Sefton Perry for UEFA. (2012). The European Club Footballing Landscape. Nyon: UEFA. Statista. (2012). European Football League Brand Values 2012. Retrieved at October brand-value/ Transfermarkt. (2014). Jupiler Pro League. Retrieved at October 22, 2014, from Transfermarkt: http://www.transfermarkt.com/jupiler-proleague/startseite/wettbewerb/BE1 18, 2014, from Statista: http://www.statista.com/statistics/235797/football-leagues-in-europe-by-

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