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The internationality of football clubs in Europe

Marieke Peterson Marieke.peterson@rug.nl

s1689959

University of Groningen Faculty of Economics and Business

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Abstract and key results

Large companies, operating on the world market, use international resources to produce their goods. Professional football clubs also operate increasingly across borders. Although a lot is spoken about internationalization of the football industry, the degree of internationality of the football industry in Europe is never examined. Therefore, the internationality of the different factors of production are analyzed, and compared to the internationality of other industries.

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List of acronyms

MNC Multinational Corporation TNC Transnational Corporation

DOI Degree of internationality

FDI Foreign Direct Investment

FSTS Percentage of foreign sales to total sales FATA Percentage of foreign assets to total assets

OSTS Percentage of overseas subsidiaries to total subsidiaries FOTO Percentage of foreign offices to total offices

FETE Percentage of foreign employees to total employees TMIE Top managers’ international experience

PDIO Psychic dispersion of the international operations of a firm

GDP Gross Domestic Product

GDFCF Gross Domestic Fixed Capital Formation

TNI Transnationality index

SSSL model Spectators-Subsidies-Sponsors-Local model

MCMMG model Media-Corporations-Merchandising-Markets model

Sp Sponsor revenues

Br Broadcasting revenues

Md Matchday revenues

OC Other Commercial revenues

UNCTAD United Nations Conference on Trade and Development

FA Football Association

FIFA Fédération Internationale de Football Association UEFA Union of European Football Associations

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1. Introduction

The concept of multinationality still gains considerable interest in the international business literature. In the modern business environment, firms increasingly operate across national borders. Exporting and importing raw materials and intermediate or finished products; employing foreign capital, people and processes; and organizing, coordinating, and controlling resources globally are all part of the internationalization process (Aggarwal et al., 2011). The largest firms all take part in the internationalization process.

Globalization; is it a serious phenomenon, or is it still in its infancy? Friedman (journalist) and Ghemawat (economist) both have different views on the extent of globalization. Where Friedman states that the world is flat (Friedman, 2005), and globalization is really happening, Ghemawat (2007a) has a different opinion. He explains by means of numbers that the world is still not flat at all. He says only 7% of directors of S&P 500 companies are foreigners, and “most types of economic activity that could be conducted either within or across borders turn out to still be quite domestically concentrated”. On the contrary, seventy percent of world trade is controlled by just 500 of the largest industrial corporations, and in 2002, the top 200 had combined sales equivalent to 28% of world GDP. However, these 200 corporations only employed 0.82% of the global work force.1

Hirst and Thompson (1996) argue that multinational corporations (MNCs) still have large ties to the home market, stating “International businesses are still largely confined to their home territory in terms of their overall business activity; they remain heavily 'nationally embedded'”.

The debate about globalization is also happening in the sports and football industry. Andreff (2008) elaborates on different aspects of the globalization of sports (worldwide trade of sport goods, increasingly global TV audience market, and sport sponsorship by MNCs). He says: “The question is to know whether or not, becoming MNCs, professional clubs are already organized and managed as such.” Giulianotti and Robertson (2004) examine the broad cultural, social, economic and political questions concerning the globalization of football. Although professional football clubs retain key symbolic ties to “home” (home stadium, branding, name, headquarters, local support), marketing possibilities in other continents are existent. Manchester United established marketing outlets in Asia and North America. A research performed by the firm Ipsos MORI says that Manchester United possesses 8 million fans in China, and 50 million worldwide2. Mullin, Hardy, & Sutton (2007) state that sport has globalized in the last decade due to more professional football leagues focusing on international markets.

It is indeed visible, that the football sector in Europe experienced an enormous change over the last decades. The professional football club transformed from a leisure institute towards a business, with millions of euro’s circulating in the football industry. The European football market is important for the economy; despite the economic crisis it showed resistance to wider economic pressures by keeping growing. Collective revenues more than doubled since 1999/2000, reaching a level of €16.9 billion in 2010/2011. The top 20 clubs generated combined revenues of over €4.4 billion in the season 2010/2011 (Football Money League, Deloitte 2012). Despite the seemingly height

1 www.stwr.org/multinational-corporations/key-facts.html.

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of this number, Unilever (a Dutch MNC operating in the consumer goods industry) reports a revenue of €46.467 billion in 20113

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Together with the change of a leisure institute towards a business, the focus of a purely domestic scope towards a more international scope emerged. The opening of the international labor market within Europe since 1995 led to an acceleration of the migration of football players in the top leagues in Europe. This increased labor migration within the top professional leagues in Europe is often linked with globalization (Magee and Sugden, 2002; Frick, 2009).

International leagues are established, such as the Champions League, the Europa Cup, European Championship and the World Cup (World Cup already since 1930). The UEFA European Championship, as well as the FIFA world cup, are watched by millions of people. Also the UEFA Champions League and the UEFA Europa Cup get more and more viewers every year4. The payments of the UEFA for participation to the UEFA European Championship increased over the last years (UEFA Financial reports 2003/2004 – 2010/2011). Andreff (2000) states that: “The ultimate objective of major European (for instance football) clubs is to qualify as regularly as possible for international (European) contests and this has transformed them into real multinational businesses or companies.”

Although a lot is spoken about globalization and internationalization, no consensus is reached yet on the optimal measurement of the degree of internationalization (DOI) of a firm. In determining the global scale of a MNC, different measures can be calculated. There is some literature about how to measure the DOI, but most of the research on the DOI is about establishing the interrelationship between financial performance and the DOI (see e.g., Daniels and Bracker, 1989; Geringer et al., 1989; Capar and Kotabe, 2003 and LiPuma, 2011). Research on the relationship between the financial performance and the DOI of a firm is mainly conducted on the manufacturing industry, although Contractor et al. (2003) and Capar and Kotabe (2003) are linking multinationality and performance in the service sector. However, an industry that is increasingly focused on (see e.g. Frick, Andreff, Robertson), but not in the area of internationalization combined with assessing the degree of internationality, is the football industry.

Andreff (2008) questions whether or not, becoming MNCs, a professional club is already organized and managed as such. Before answering this question, a clear assessment of the professional club needs to be done. Is there really a globalization of football happening, or does the professional football club in Europe still have large ties to the domestic market? Can we compare the internationality of MNCs with the internationality of football clubs? Authors writing about globalization and football (e.g. Andreff, 2008; Giulianotti and Robertson, 2004; and Mullin et al., 2007) use a descriptive analysis. This thesis will be different, since a numerical analysis is added to the discussion.

The questions from the preceding paragraph are captured by one research question, with sub questions. First, the question “Can one compare the professional football clubs with MNCs, or what aspects are comparable?” needs to be answered. After this is done, the main research question can be answered: “How international is the

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football industry in Europe?” I will answer this question by looking at the internationality of the different inputs and outputs of the professional football industry (labor, capital and sales) compared to other industries. These different inputs and outputs are specified per league, including the Premier League (England), Serie A (Italy), La Liga (Spain), the Bundesliga (Germany), Ligue 1 (France) and the Eredivisie (The Netherlands). When the inputs and outputs are assessed, the leagues can be compared. I will try to combine the information into one index, and compare the number found for the professional football club with the numbers for the ‘normal’ MNC. The professional football club and the football industry are used intertwined in this thesis. The percentages that are used are on industry level. The industry level values represent neither the top level clubs, nor the lowest ranked clubs, but the average clubs. Therefore, no comparison between the large and small clubs can be performed. An example: if a value of 50% is found for foreign players in the Premier League, on average 50% of the players at a football club in the Premier League is foreign.

Over the last years, quantitative information in the football industry became more important. Clubs use statistics to analyze their opponents, but also their own performance. It is important for football clubs to know to what scope their operational market is defined. When the football industry is considered to be international, teams must have an international focus in determining their mission, vision and strategy. Also for sponsors, investors and policy makers, it is good to know to what extent the football industry in Europe is operating across national borders, and which markets it affects. Can policy makers compare professional football clubs with MNCs, and treat them accordingly when deciding on their policies?

This thesis will first indicate the characteristics of a MNC, and define their motives to internationalize in section 2. A comparison on different aspects of the MNC and the professional football club will be performed. Section 3 provides an assessment of the academic literature on how to measure the degree of internationality. The sections thereafter will develop the theory and describe the data. The internationality of the players, coaches, capital and sales will be assessed in sections 6 to 9. In section 10, another estimator for the DOI is presented, the so-called Transnationality Index. Section 11 looks shortly on the relationship between performance and internationalization, and section 12 concludes.

2. The ‘normal’ multinational company versus the professional football club

First of all, the definition for internationalization used in this thesis needs to be clear. Welch & Luostarinen (1988) define internationalization as “A process of increasing involvement of enterprises in international markets”, and this definition is used. Although internationalization and globalization are often used interchangeably, this paper will use the term internationalization mainly. Globalization is a broader process, where societies, economies and cultures integrate. Internationalization refers more often to specific, economic activities.

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(TNC) generally refers to a corporation with affiliated business operations in more than one country. The term MNC is used mostly, but the term TNC is also used.

MNCs can invest directly in foreign markets (Foreign Direct Investment (FDI)), sign contract agreements or export to foreign markets. Here FDI represents the highest degree of internationality, and exports the lowest DOI. A remarkable fact about the distribution of FDI is that despite the enormous flows of FDI, most FDI involving MNCs is regionally distributed (Petri, 1994).

There is a host of different motives to internationalize. It is not possible to produce a single and clear-cut explanation, but in this section some aspects are explained. Several authors make a classification into "push” and “pull" factors (e.g. Kacker, 1985; Treadgold and Davies, 1988). Push factors are factors that are unfavorable at the home market; they “push” the company to other markets. Pull factors make a foreign market attractive, pulling the company towards the foreign market. A macroeconomic approach looks at the theory of new international division of labor (relocation to developing countries with lower wages) and the circuits of capital (international firms must be understood in term of the internationalization of capital and the accumulation of capital). The firm-based approach includes the theory of product life cycle of Vernon (1966) and Dunning’s eclectic paradigm (1980). This product life cycle theory is based on four stages. At the introduction stage, a product is introduced to the market and the growth rate of sales is low. The second phase is the growth phase, where the acceptance of the innovation in the market occurs. Profits are generated. The maturity stage is the end stage of the growth rate and sales slow down. New firms start to compete, by producing innovative new models of the product. In the last phase the sales of the product declines even further, the product is considered old and may not be in demand anymore (Vernon, 1966).

Dunnings eclectic paradigm (1980) (the OLI framework) is based on three aspects: ownership-specific advantage (O), location-specific advantage (L) and internalization advantage (I). Ownership advantages are company assets used to obtain market power. Ownership advantages are the firm’s belief to be fit, in terms of skill or assets or both, to survive and compete in the foreign market. Location advantages describe the attractiveness of a foreign country to a company. Internalization advantages relate to the advantage a firm has by using FDI and controlling their own assets, or contracting to a third party.

Derived from the OLI framework, Dunning (1994) came up with an explanation of the different objectives of FDI:

o Market seeking: penetrating the local markets of host countries, usually connected with market size and per capita income, market growth, access to regional and global markets, consumer preferences and structure of domestic market,

o Resource seeking: seek and secure natural resources (raw materials, labor, physical infrastructure and the level of technology),

o Efficiency seeking: creating new sources of competitiveness for firms and it goes where the costs of production are lower,

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These are objectives of foreign direct investment, where options to invest in foreign markets are existent.

Although there are certainly other ultimate goals, maximizing profit is often the main goal of a company. It is argued that the performance of the international firm is superior to the performance of the domestic firm. There is a large literature base on the relationship between performance and the degree of internationality, but no definitive conclusion emerges (See e.g., Vernon, 1971; Ruigrok & Wagner, 2003; Sullivan, 1994). The motives to internationalize for companies are described, but are those motives comparable to those of the professional football club? Vampley noticed already in 1982 that professional football clubs might not have the goal of profit maximizing. The concept of utility maximization is more stressed in Europe, whereas in North-America the profit maximization assumption is still the most common. The main difference between European and North-American professional sport clubs is that European clubs hardly make consistent profits, North-American teams do. Long-term operating losses are frequently occurring, especially in the UK. Some features that North-American teams have, and European teams have not: increases in stadium subsidies lead to movement of the team from city to city; ending lowest in the league does not cause relegation to the next lower level; with a larger population base there is more money at stake in the market. The movement towards another stadium because of increased costs is an argument in favor of profit maximization. When teams do not have to win matches to avoid relegation towards a lower level, making profits instead of winning is a more obvious motive. Also when the market is bigger and offers more prospective for future profits, it is more attractive to start selling your product in this larger market (Sandy et al., 2004).

In Europe, league ownership and team ownership are usually separated. The league decides on structural changes, such as the number of teams in the league. League motives are different than club motives. The league as an entity has no interest in the total number of wins; every win within the league is also a loss for one of its teams. A high level of competition (meaning uncertainty of the outcome of a match) increases attendances and revenues of the competition overall. The selling of the broadcasting rights is often pursued with the goal of getting the maximum amount of revenue, but other motives such as improving the quality of football, or stimulating the growth of the football sector are also motives of the leagues. Therefore, league motives are different than team motives (Sandy et al., 2004).

Since the ultimate output goal of a football club is not determined, and there are multiple motives at stake, it is hard to look at the motives for internationalization on an industry level. Also, the output of a football club (matches) is largely restricted to the domestic market. There is some scope for determining their foreign markets (where to play practice matches, where to seek sponsors, where to promote/sell their merchandising), but a football club remains very limited in the decision where to play the match (sell the output). The objectives of FDI of Dunning (1994) are only for a very small part applicable to the football club. Therefore, the football club clearly different motives compared to MNCs, who can determine which foreign market to entry and how to enter a market. That is why I will use another approach.

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order to produce the “best” output, wherever this output might be sold. Seeking foreign capital, employing foreign labor and acquiring technology is done on a global scope. The global market is also used to sell the output; MNCs can decide which markets to enter; where to raise revenues, gain market share and increase sales.

Football clubs also try to optimize the set of inputs, in order to produce the desired output. The inputs of a football club are the players, coaches and managers (labor), and owners (capital). The output the football club produces is the match. This match is “sold” in order to generate revenues. In a way, sponsors are the buyers of the match, since they buy a part of this specific match with their advertisements. Also, the matches are sold to the broadcasting companies and to spectators. The output of the football club, the match, is largely restricted to the domestic market. There is one way how a football club can chose its foreign market; by deciding where to play practice games. For example, FC Groningen from the Netherlands chose to practice in South-Korea. Suk, a South-Korean player, who is part of the first team of FC Groningen, was chosen to be captain during the tournament. This increased their popularity in South-Korea. So there are ways to enter foreign markets, but very limited.

Since football clubs and “normal” MNCs face different internationalization motives, the degree of internationalization of the inputs and outputs are assessed. Both the MNC and the football club need inputs to produce, leading to an output; the product to be sold. These inputs and outputs can be compared, as well as their subsequent internationality.

In the next section the literature about how to assess the degree of internationality is explored. After this is done, the best applicable option for the football industry is chosen.

3. Assessing the degree of internationality

There exists an extensive literature on how to measure the degree of internationality. Some literature is devoted to the development of indexes or indices to measure the DOI, but a large part of the literature tries to relate internationality to performance.

3.1 Degree of internationality indexes

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Table 1: Degree of internationality indicators

Attribute Indicator

Performance Export sales/Total sales Foreign profits/Total profit Foreign sales/Total sales (FSTS) Research and Development Intensity Advertising Intensity

Structural Foreign assets/Total assets (FATA) Number of foreign subsidiaries

Overseas subsidiaries/Total subsidiaries (OSTS) Foreign offices/Total offices (FOTO)

Number of countries a company is active in Foreign employees/Total employees (FETE)

Number of stock markets on which a company is listed Amount or proportion of shares owned by foreigners

Number or proportion of non-nationals on the board of directors Number or proportion of pre-tax income home/abroad

Attitudinal Top managers’ international experience (TMIE)

Psychic dispersion of the international operations of a firm (PDIO) Macro level Export or import as percentage of GDP

Foreign Direct Investment (inward or outward) as percentage of GDP Foreign Direct Investment (inward or outward) as percentage of GDFCF (gross domestic fixed capital formation)

Performance indicators: The degree of export activity discriminates the relative

internationalization of firms. Sullivan and Bauerschmidt (1989) use this number to look at the relative internationalization of European and American firms. Eppink and Van Rhijin (1988) suggest estimating the DOI with foreign profits to total profits.

The ratio of foreign sales to total sales (FSTS) is a common index used in the academic literature. Authors such as Geringer et al. (1989), Ruigrok and Wagner (2003), Capar and Kotabe (2003) and LiPuma (2011) use this index to research the relationship between financial performance and the DOI. Sullivan (1994) includes the Research and Development Intensity in his analysis, based on the finding of Franko (1989): “research and development intensity is perhaps the principal means of gaining market share in global competition”. Caves (1982) states the firm’s international involvement can also be explained by the advertising intensity.

Structural indicators: To estimate the material international character of a firm,

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the number/proportion of non-nationals on the board of directors (also UNCTAD (2007)) includes the nationality composition of managers) are other indicators that Dörrenbächer (2000) includes in his analysis. The ratio of foreign pre-tax income to total pre-tax income is used by Chen et al. (1997).

Attitudinal indicators: Sullivan (1994) introduces the idea that the top

managers’ international experience (TMIE) and the internationality of the firm are positively linked. TMIE is measured as the cumulative duration of the years’ top managers spend working abroad weighted by the total years of their working experience. The other attitudinal attribute is the physical dispersion of the international operations of a firm (PDIO). The PDIO is used, because the scope of interaction between home and host nationals (in terms of the psychic distance) is positively related to the internationalization of the firm (Johanson and Vahlne, 1977). Sullivan (1994) comes up with an indicator based on ten psychic zones of the world, measuring the number of zones with different cognitive maps relating to management principles in which a company is active (out of a total of 10 zones worldwide).

Macro level indicators: The variables indicated above are all capturing the

degree of internationality on the firm level. Also identified by Ietto-Gillies (2009), there are internationalization indices on both macro (country) level and firm level. Macro level indicators that are named in the literature are imports or exports as percentage of GDP, inward or outward FDI as percentage of GDP or FDI as percentage of GDFCF (gross domestic fixed capital formation) (UNCTAD; Ietto-Gillies, 2009). There are also authors who use a combination of macro and firm level indicators (Fisch and Oesterle, 2003). Indicators and indices on the firm and macro level are existent in the literature, but specific industry indicators are not examined. The analyses about the degree of internationalization on industry level are mainly estimations on the firm level, grouped and analyzed by industry. According to Ietto-Gillies (2002) there are ways to estimate the DOI at industry level (value of activities abroad/the activity in the domestic economy; value of activities abroad/the activity in total (domestic plus foreign)).

3.2 Degree of internationality indices

Next to DOI indicators, DOI indices, which are also called composite indicators, exist. Those are formed by combining individual indicators (most common attributes used are foreign sales, subsidiaries and assets (Aggarwal et al., 2011)) into a single index. Dörrenbächer (2000) elaborates on the reasons why the use of indices could be a better estimator of internationalization than the use of single indicators:

1. With the use of indicators, only one part of the whole internationalization process is represented. But internationalization is often a multidimensional phenomenon.

2. Because of this, contradictory results could show up (single transactions are captured by the indicators, and internationalization is a multidimensional phenomenon).

3. With the use of individual indicators, measurement errors, contingent influences (such as exchange rate fluctuations), and transfer pricing (when internalized transactions between related units of an MNC are not calculated on the “arm’s length principle”, this may distort the geographic distribution of performance indicators such as turnover and especially income) may occur.

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Table 2: Degree of internationality indices

Indices Description

1. The transnationality index (TNI)

2. The transnational activity spread index 3. The degree of internationalization scale

Average of foreign sales to total sales, foreign assets to total assets, and foreign employment to total employment.

Combination of transnationality index and network spread index.

The ratio of foreign sales to total sales, foreign assets to total assets and foreign subsidiaries to total subsidiaries, the international experience of top managers and the psychic dispersion of international operations; all weighted by the factor one.

The transnationality index is developed by UNCTAD, with the aim of fully capturing the extent of involvement of Transnational Corporations in the world economy (UNCTAD, 1995). It is composed by taking the average of foreign sales to total sales, foreign assets to total assets, and foreign employment to total employment. If the ratio of the foreign to domestic activities is high, the company is considered to be very international. Companies from small countries such as the Netherlands are more likely to have a larger share of their activities abroad, since their domestic market is small.

The transnational activity spread index, following Ietto-Gillies (1998), is calculated as follows: the transnationality index is multiplied by the number of foreign countries a company is active in as a proportion of the total number of countries where foreign direct investment has occurred, minus one (the home country). The two indices are combined to be able to capture the spread of foreign activities and the share of activities abroad. By only using the transnationality index it is not taken into account whether foreign activities take place in multiple foreign countries or in a single foreign country.

The degree of internationalization scale is proposed by Sullivan (1994), based on the single indicators explained in table 1. The indicators specified in table 2 are all weighted by the factor one, with values between zero and one, resulting in a DOI scale of a number between zero and five.

Asmussen et al. (2007) come up with another way of measuring internationalization. They develop an index that measures to which extent the locations of different segments of the value chain are international. They use a global specialization index of a single firm, on an interval [0,1], based on the international division of labor. If all activities are duplicated in exactly the same proportion, it has a value of 0. If there is a complete division of labor (duplication is eliminated and each activity performed in only one geographical area), the value is 1.

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spread of foreign activities is not captured. The larger the amount of foreign revenues does not imply automatically a higher the degree of internationalization. A firm from the US with 50% sales in Canada will be regarded just as international as a firm from the US with 50% sales in different countries in Europe. Therefore, the size of the national market might be taken into account. In the next section, we will explain the characteristics of a professional football club, and assign a measure of DOI that is applicable to the football industry.

4. Theory development

The measures discussed in the previous section have been applied to manufacturing mainly. In the manufacturing industry, a good is sold to a consumer or buyer based on a mutually agreed price. Services are fundamentally different from manufacturing, in terms of relative intangibility, perishability, simultaneity of production and consumption, and customization (Boddewyn et al., 1986).

The service sector faces other development routes compared to the manufacturing sector. Manufacturing companies move forward by developing their products into better or cheaper products. Selling a service means combining a tangible product together with a set of services. But those services have become so embedded in the market, that developing and moving further is not possible. Therefore, service companies try to move beyond services, into experiences or entertainments (Levitt, 1983).

The characteristics of the football industry have been getting closer to the entertainment or service sector, since one can decide whether to go to the cinema, casino, theme park or a stadium to watch a football match. Although development routes are different, there is little research on the growth and internationalization of service firms. The research that has been performed on the internationalization of service firms mainly uses the same framework and analysis that is used for the manufacturing industry.

For example, Contractor et al. (2003) are linking multinationality and performance in the service sector, using FSTS, FETE, and FOTO as index for the degree of internationality. Capar and Kotabe (2003) only use FSTS in their study on the relationship between internationalization and performance in the service sector. The banking sector can also be considered a service sector, and Hejazi and Santor (2005) analyze the relationship between internationalization and performance of Canadian banks, using FATA.

Previous studies have argued that people are the most important assets of an organization and affect organizational performance (e.g., Huselid, 1998; Schneider, 1987). Especially in the service sector, people are even more important. In the manufacturing sector, part of the value is captured in tangible assets, but in the service sector, the value (knowledge) is mostly captured by people. Many corporations spend a large amount of money recruiting people to their organization, and often the search process is international in scope (Popper, 2001).

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coaches, is a critical competency of an effective organization (Ratten, 2011). Also O’Sullivan (2007) says that players are regarded as assets, and their fitness and abilities are worth millions to the club. Therefore, getting players in their optimal condition is of huge importance for the club. Careful treatment when players are injured, a specific diet, the development of specific training programs for young players all indicate how clubs value their core assets; the player. Institutions and dietitian are focusing on the optimal condition of the player5. Where “normal” MNCs carefully cope with their (foreign) assets, professional football clubs carefully threat their players. Therefore, the definition of assets is assigned to the players.

The coaches of the football clubs have a large influence on the performance of the team, and the performance depends again on revenue generated (a well performing club attracts more spectators, gains price money, gets a larger share of broadcasting revenues, gets participation contributions from the UEFA). Although the coaches are very important, a team can win matches without a coach. Theoretically, a team is able to play a match, attract spectators, and even win matches, without a coach. Therefore the players are considered to be the most important assets of the club, and the definition of employee is assigned to the coach. To provide a complete analysis of the employees of a football club, training staff, physiotherapists, security during the matches and employees working in the catering should be included. But guards and catering would mainly be domestic employees, since it would not make sense to employ foreigners who have to travel for jobs that can be easily done by natives. Also, natives have the advantage of speaking the language. Since the spectators are mainly native inhabitants, the communication with spectators is easier. Those jobs do not require specific skills, so there is no need to seek employees with certain skills from abroad. Also, the wages of security and catering employees are relatively low compared to the wages of the coaches. Therefore, the inclusion of other employees of the football club is not of the first importance. Next to that, it would be very hard, if not impossible, to obtain data on the nationality of every employee working at a professional football club in Europe. Therefore, the nationality of the coaches is used to determine the ratio of foreign employees to total employees (FETE). The players are not counted as employees, since the definition of assets is already assigned to them.

The proposed index by Sullivan (1994), TMIE, measuring the top manager’s international experience, can give insights in the degree of internationalization at the top management level. The prior experience of the top management influences the decision of entry into foreign markets (Daily et al., 2000). This can be done by measuring the cumulative duration of the year’s top managers spend working abroad weighted by the total years of their working experience. Appointing the definition of top managers to the coaches would not be correct. Coaches do not have the power to determine the tactics (long-term and short-term) for the club, whereas managers do. Coaches only have the power to train the team. Also, the coach may be involved in team selection, but he is not the one making the final decision. Managers also have responsibility outside the pitch, being responsible for the whole club, coaches do not. The players and coaches operate on a different level than the management of the club. The nationality of the managers is not included in the analysis, this would be an option for further research.

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Together with the players and the coaches, capital is the last input factor of the football club. Also MNCs use capital as input factor, both domestic and foreign capital. Over the last years, a clear trend of foreign ownership in European football clubs is visible. American, Russian or Qatari millionaires invest in European football (see section 8). Those investors can run clubs as a business, trying to gain the largest profits out of their investments. The investments in transfer fees and wages improve the quality of the team, making it possible for every team to compete at the highest level. The promise of the instant short-term success has also a negative side; financial instability when the investor loses his interest. An example is Malaga FC, playing in La Liga, which experienced such problems during the summer of 2012.6 The level of foreign capital in an industry is an indication of the attractiveness of that industry to foreign investors. The foreign ownership share is therefore also included in the analysis.

Since assets usually presents the capital of the MNC, there are two forms of capital at stake here (players and owners). Both sources of capital are important for the club. Therefore, I will analyze both sources independently.

The output of a football club is different than the output of a manufacturing MNC. Football clubs do not produce real tangible goods. The products a professional football club sells are the matches played. This delivers entertainment of watching matches in the stadium and entertainment of watching matches on television. This output generates the revenues for the football club. The Football Money League (Deloitte, 2012), gives insights in the revenue streams from a football club. They assess financial performance by splitting revenue into three categories – being revenue derived from matchday, broadcast and commercial sources (merchandising and sponsor revenues). This report shows that broadcasting is the most dominant source for the large share of the top 20 clubs7, and this amount mostly increased compared to the previous season.

Next to the FATA and FETE, the FSTS is a commonly used measure of assessing the DOI of a firm. The revenue generated by manufacturing and service firms is raised by the selling of their products, both in domestic and foreign markets. The sales of a football club are composed of sponsorship fee, matchday revenue and broadcasting revenue. Together the shares of revenue derived from sponsorship, matchday and broadcasting form the total revenue (sales) of the football club. With these percentages, the total FSTS can be calculated, as well as the foreign share.

First, the single values found for FSTS, FETE and two forms of FATA are presented. As indicated in section 3.2: DOI indices, there are some limitations with the use of single indicators. With the numbers used in this paper for FATA and FETE, there are no problems with contingent influences (exchange rate fluctuations) or transfer-pricing manipulations. Only with the broadcasting rights we use currency numbers, but the calculation results in a percentage. Therefore exchange rate fluctuations do not affect the analysis. With the numbers for FSTS, FETE and FATA, the transnationality index (TNI) developed by the UNCTAD can be calculated. This index is the weighted average of the single indicators.

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soccernet.espn.go.com/news/story/_/id/1129169/malaga-owner-'has-not-refused-investment'?cc=5739. 7 Real Madrid, FC Barelona, Manchester United, Bayern Munich, Arsenal, Chelsea, AC Milan,

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There is no option to include a geographical scope in the analysis. Football clubs do not have subsidiaries in other countries; differently from MNCs football clubs are very limited in seeking other markets. The foreign assets they have are the international players; the foreign employees are the foreign coaches. If the data shows a clear concentration of foreign players or coaches from a team or league from one specific region, this can be an indication of a concentrated geographical scope. Applying a geographical scope to foreign sales will not be possible, since sales data on broadcasting is probably not specified per geographical location.

The size of the national market also affects the single variables. For example, US MNCs will have a lower degree of internationalization (because of the large domestic market) than Dutch MNCs, who trade much more outside the borders of the Netherlands, because of the small Dutch market. Since England, France, Italy, Spain and Germany have a comparable national market, the calculations are not likely to show large mistakes. Only the Netherlands has a relative small national market, therefore the numbers found for the Eredivisie are likely to be at the high end.

5. Data

Data is obtained about the German (Bundesliga), Spanish (La Liga), Italian (Serie A), French (Ligue 1), English (Premier League), and Dutch (Eredivisie) competition. The first five leagues represent the big-5 leagues in Europe; the Eredivisie is added because of personal interest.

Per season, information about the nationality of the first team players, the nationality of the trainers and owners of the clubs, and information about the location of headquarter of the principal sponsor is found. Also, data on broadcasting rights is collected. There was no dataset available, so the data consists of different sources. The dataset for the origin of players in Europe ranges from the season 2006-07 until 2011-12, therefore this is the time range analyzed. Per subsequent section and/or the accompanying appendix, a detailed description of the data is given.

The Annual review of Football Finance from Deloitte provides clear insights; this source will be used regularly. Other sources are explained per subsequent section.

One specific case is explained beforehand; Swansea City playing in the Premier League. Swansea City is originally located in Wales, but performing in the Premier League. Having a Welsh coach, Welsh employees, or Welsh owner, is considered to be a foreign aspect. Although this might not be the best option, Swansea City chose to perform in another league than its “national” league, the Welsh Premier League. Therefore, it is also a sign of internationalization.

Another important thing to note, is that only the big 5 leagues and the Eredivisie are included in the analysis. The conclusion can therefore not be applied to the overall European football industry. Data for the small leagues is not available; therefore the 6 leagues described are analyzed.

6. Players

6.1 Player mobility

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Before the Bosman ruling, the mobility of football players across Europe was limited. Teams were restricted in the number of foreign players they could field. In 1995, the European Court of Justice decided that restrictions were not in line with the freedom of movement for workers, and so those restrictions were abandoned.

Two rules were of particular importance for the market of football players.

1. The three player rule: this stated that no more than three foreign players were allowed to appear in a particular match.

2. The transfer free rule: even if the contract with the player had ended, clubs were allowed to require a transfer fee when a player wanted to move to another club. So players who were out-of-contract, could not move freely to another club, they had to wait until clubs agreed on a transfer fee (Kleven et al., 2009 and Antonioni and Cubbin, 2000).

The abolishment of the Bosman ruling led to the opening up of the European player market. Now, only non-European players playing in European clubs are facing foreign player quotas.

6.2 Foreign player restrictions

Despite the Bosman ruling, there are still player mobility restrictions in place. The large share of foreign players in European football teams resulted in a new rule created by the UEFA, the so called "homegrown rule”. The UEFA believes that the large share of foreign players could have detrimental effects on "competitive balance in the national leagues, the training and development of young players and the quality of, and competition between national teams." Since the definition of capital is assigned to the players, the restrictions on player mobility can be seen as capital restrictions.

Since the start of the season 2008-2009, eight locally trained players with at least four club-trained players are required per club. This applies to all football clubs taking part in UEFA club competitions. Here a locally trained player is “either a club-trained player or an association-trained player”. A club-trained player is “a player who, regardless of his nationality or age, has been registered with his current club for a period of three entire seasons between the age of 15 and 21”.

European players playing in Europe can move freely, but non-European players playing in Europe do face regulations. Most countries have those regulations in place, because of the assumption that there are enough ‘local’ players available from within the realm of the EU. Every country can decide what restrictions to put in place, but a valid work permit is needed everywhere.

In The Netherlands, young non-EU players (age 18-20) should receive a minimum salary of 75% of the average salary of (premier or second) league players. Non-EU players over 20 years old should receive a minimum salary of 150% of the average salary, including premiums. The result of the soccer team in last years' competition will be taken into consideration with regard to the calculation of the actual salary requirement. With regard to credentials of the foreign player, evidence is needed that the athlete played in a similar foreign league or competition, before the intended start of his soccer career in the Netherlands8.

In the Premier League, for a long period the following rules applied:

- The player must have played at least 75 percent of its competitive ‘A’ team matches for which he was available for selection during the previous two years,

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- Additionally, an average of at least the 70th place in the official FIFA world rankings over the previous two years must be reached by the country of his birth,

- An exception is made if it is believed that the player is a special talent, and is able to contribute significantly to the development of the game at the top level in the UK9. From the season 2010-2011, new rules apply. At least eight 'home-grown' players (out of a team up to 25 players) need to be registered at the end of each transfer window. Hereby, homegrown players are defined as those who "irrespective of nationality or age, have been affiliated to the FA or Welsh FA for a period of three seasons or 36 months prior to 21st birthday". The rest of the team can be filled with an unlimited number of players under the age of 2110.

In the Bundesliga, since 2006, a certain number of locally produced players must be enrolled at each club. For the 2006-07 season, this was at least four such players, for the 2007-08 season six players and for the 2008-09 season eight such players. A locally produced player is a player who, during the age of 15-21 years, was licensed to play for the club for three different seasons or years11.

In Italy, from 2002 to 2007, only one non-EU player was allowed to be signed during the summer transfer window. In 2008 a new regulation was created, where three non-EU players could play in a team. It gradually emerged to the ruling that Serie A clubs with more than two non-EU players can not sign an additional non-EU player. In that case, only non-EU players can be replaced by another non-EU player12.

Ligue 1 allows clubs to have a maximum of 4 non-EU players assigned, where African ex-French colonies do not count as foreign.

In La Liga clubs are allowed to have a maximum of 4 non-EU players registered. After five years of playing in Spain, Spanish citizenship can be claimed. Also, players can claim citizenship from the nation their ancestors came from. The countries in Africa, the Pacific and Caribbean are not counted against non-EU quotas.

The long list of facts about player restrictions shows that, despite the Bosman ruling, the labor market is still not completely free. The Bosman ruling led to an increase in player mobility, but over the last years new restrictions are raised. Especially for non-EU players, severe rules apply.

6.3 Foreign players in the EU

Frick (2007) devotes his research to the labor market of football players in the EU. He shows how the percentage of German-born players in the Bundesliga changed over the past four decades. It appears that at the beginning of the new millennium the share has dropped below 50% (Figure 1), whereas it used to be a much higher percentage.

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Figure 1.

Percentage of German-born players in the Bundesliga, 1963/1964–2005/2006. Upper line, weighted by number of appearances; lower line, unweighted. Source: Frick, 2007

Frick (2009) looks at the percentage of players on national teams playing abroad, over the period 1976 to 2006. There is a sharp rise visible in the percentage of players on national teams playing abroad, from only 10.0% during the European Championship in 1976 to 44.3% during the European Championship in 2004. This dataset is based on the 25 nominations a head coach can make, with the accompanying name of the club for which the player had been active at the time of the nomination.

Wilson and Ying (2003) analyze the average number of appearances per club by various nationalities, between 1997 and 2000. They obtained the data from the European Football Yearbooks from 1996/1997 through 1999/2000. The data shows that each league hires more domestic players than non-domestic players. Also, English clubs hire the most non-domestic EU players, compared to the other four leagues.

For the period 1996-2000, the average percentage of expatriates over the period 1997-2000 can be calculated, by dividing the amount of non-domestic players by the total number of players. An expatriate is a player who plays outside the national association in which he grew up, from where he departed following recruitment by a club overseas.

Table 3 gives the results.

Table 3: Percentages expatriates over the period 1996/1997 to 1999/2000, data Wilson and Ying (2003)

All England France Germany Italy Spain

% expatriates 36.69 49.63 22.22 37.11 31.28 42.99

The Demographic study 2012, performed by the CIES Football Observatory (Council for International Exchange of Scholars), also gives insights to the number of foreign football players in Europe. For the season 2011/2012, the following numbers are found:

- In Europe, expatriates represent 34.9% of team members (-0.4% compared to previous the season 2010/2011).

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- In England, France, Spain and Germany, the relative number of expatriates decreased. Only in Italy imported footballers account for 48.7% of Serie A players (+6.7% since 2009/10). This figure is only 27.2% in French Ligue 1.

- The most significant changes in country of origin of expatriates in Europe (change from 2010/2011 to 2011/2012) are visible in Brazil (-39%), Serbia (+19%), Argentina (-23%) and Czech Republic (+18%). Serbia joined the European Union in March 2012; this can be an explanation of the rise of expatriates from Serbia. Czech already joined in 2004. - Another major change compared to last season is the player turnover, or the number of footballers signed by European clubs. Despite the economic recession, player turnover increased sharply. On average, the 500 teams surveyed have recruited 10 players from other senior clubs (+7.7% compared to 2010 and +16.6% since 2009). If football players from youth academies are also included, the average number of new players per club is 11.1 (44.8% of all team players).

Table 4 shows the amount of expatriates playing in the big 5 leagues, and additionally the Netherlands, over the period 2006-2012. The data is obtained from the CIES Football Observatory. These numbers are the numbers used for FATA.

Table 4: Foreign assets as a percentage of total assets (FATA) of the 6 leagues 2006-2011

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Premier League 53.77 58.84 56.68 59.45 58.34 54.60 Bundesliga 51.64 51.99 54.51 51.70 42.84 44.80 La Liga 38.97 39.80 36.80 35.90 39.56 37.70 Ligue 1 32.85 31.87 30.90 31.39 30.08 27.20 Serie A 26.91 33.56 39.35 41.40 46.41 48.70 Eredivisie 36.70 39.70 39.80 35.20

The sample includes all players who played during the season, or, if not, also first team players that played in adult leagues during each of the two preceding seasons. The figures are about the situation on the 1st of October of each season. The notion of expatriate defines players who play outside the national association in which they grew up, from where they departed following recruitment by a club overseas. For the Eredivisie, the numbers of 2006-07 and 2007-08 are not available.

Another way of looking at the nationality of the player force is looking at the captain of every single team. The captain is often considered as the ‘heart’ of the team;

renowned worldwide, but personifying the local or national particularities of the club and its fans (Giulianotti and Robertson, 2004). Giulianotti and Robertson argue that football clubs give symbolic local or national figures status, and additionally recruit foreign players from culturally similar nations. That is why looking at the captains of the first league teams could say something about the internationalization of the football industry.

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29% of total assets for Canadian banks. The top 100 TNCs have an average of 63% of foreign assets to total assets (UNCTAD, 2012).

When the numbers of the FATA for the premier leagues are compared to the numbers of the studies performed on MNCs, the football industry has a high level of foreign assets to total assets. The average of Europe overall for the season 2010-11 is 34.9%, higher than the percentage found for large companies. The average of the big 5 leagues for the season 2010-11 is 43.45%. On this very aspect, professional football in Europe is international, but not comparable to the largest TNCs.

Another way of looking at the labor mobility in European football is determining the amount of players of the national team, which actually play in their home country. So how many players from the Dutch national team play in the Eredivisie? Probably national team players from a weak country competition move more easily to stronger competitions. The top Spanish players do not feel the necessity to move to another country, since La Liga has enough opportunities. Dutch players, playing for the national team, probably move more often to stronger competitions, since the Eredivisie has less potential to offer. This is an indication of the mobility of the top players, since it only includes players playing on the top level (the national teams).

During the World Cup 2014 qualifiers, the teams are analyzed. Only the first 11 players are included. The matches are played either on 12 October, or 16 October 2012. For a detailed description of the teams, check Appendix 1. The amounts of national team players, playing in the ‘home’ country competition, are listed in table 5.

Table 5: Number of national team players, playing in their ‘home’ country competition.

Netherlands Germany France Italy Spain England

4 8 5 10 11 11

In England, Spain and Italy, the best players usually play in the country where they are born. Compared to the numbers in table 4, top player mobility is limited in the strong competitions. For Spain, England and Italy, over 90% of the best players are playing in the country where they are born. Less than 10% are therefore playing in foreign countries. But for the Netherlands, only 36% of the best players are playing in the Eredivisie. Foreign countries with stronger competitions are attractive to Dutch top players, resulting in 64% of the players of the first 11 of the national team playing abroad.

7. Coaches

The data for the nationalities of the coaches is mostly obtained from the Voetbal International Jaarboeken (VI), 2008-2012. For the missing years (2006-07 and 2012-13) www.wikipedia.com is used. This means for 2 seasons, over 6 leagues, Wikipedia is consulted.

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the list of coaches of the specific league, and often also the managerial changes are listed. With those two lists, the coach employed at the beginning of the season can be obtained.

Coach dismissals are a quite frequent phenomenon in soccer. Paola and Scoppa (2008) find that in the Serie A, for the seasons 2003-04 to 2007-08, on average 41% of teams have changed of coach during a given season. Tena and Forrest (2007) find 22 within seasonal changes for the seasons 2002-03 to 2004-05, in the Spanish Football League. Dobson and Goddard (2001, p. 275) find for the Premier League 156 terminations for the period 1971-72 to 1998-99, with an average of 5.8 per season. For the Eredivisie (Dutch premier league), Koning (2003) finds an average of 5.6 dismissals per season for the period 1993/94 to 1997/98. These findings show that within seasonal coach dismissals occur frequently. For the Eredivisie (18 teams playing in this league), with an average of 5.6 dismissals per season, this would mean more than 31% of the teams changed of manager during the season.

A better dataset would cover every coach that managed a first division club in one of the 6 leagues for the seasons 2006-2013. Then the total number of foreign coaches would be divided by the total number of coaches employed during that very season. If a dataset is created, and coaches switch teams within the same league during the season, their name would appear twice in the dataset. Foreign coaches are more likely to choose another club (and clubs choose the coaches) in the same league where they have worked before, because of the experience and the language. When this option to calculate the FETE is chosen, the number of foreign coaches to total coaches would probably be lower. In this thesis, the VI Jaarboeken are used as main source, because of the reliability of those books. Therefore, this option is chosen, and there is no elaboration about this option (including every coach that managed a first division club during the season).

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Figure 2: Coaches born in another country as a Figure 3: Foreign coaches who do not speak the percentage of total coaches. national language as a percentage of total coaches

Source: Voetbal International Jaarboeken 2008-2012, wikipedia

To be able to perform a comparison between the FETE in the football industry and other industries, first other research needs to be examined. Asmussen et al. (2007) state that the share of foreign employees to total employees is low if their average is only 28.3%. The World Investment Report of UNCTAD (2012) reports an average of 59% of foreign employees as percentage of total employees, of the 100 largest TNCs.

Looking at the football coaches, the Premier League hosts on average about 60% foreign coaches to total coaches, whereas the other leagues show an average from 0% to 40%. When the coaches that do speak the national language are excluded (for example an Argentinian coach in Spain), the average reduces by about 50%. In this case, the average number for FETE is only 12.2% (of all the leagues combined). When the Premier League is excluded, only 9.21% of the coaches are foreign. So looking only at the country where the coach is born, the Premier League is comparable to the largest TNCs, the other leagues lag behind. The average of the leagues combined rose from 14% to 27%. When coaches that do speak the national language are excluded, the level of FETE drops significantly. In this case, none of the leagues is comparable to the largest TNCs.

8. Capital

Capital is another important input factor for the professional football club. Clubs with capital funds available have the possibility to buy expensive players, whereas clubs with limited resources do not have this option. Capital from football clubs used to be generated from domestic sources, but the last years a rise in foreign capital in the premier leagues is prevalent. Andreff (2000, p 265) says that entrepreneurs and corporations are entering the sports business. Administration is taken over by professional managers, resulting in financial stability. But the promise of the instant short-term success has also a

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negative side; financial instability when the investor loses his interest (for example Malaga FC, during the summer of 201213).

This section looks at the extent of foreign capital in the 6 premier leagues in Europe. The definition of foreign ownership in this thesis is when a foreign individual or entity owes more than 50% of the shares of the club.

Looking at England, foreign private investors are very common. The three largest owners of Arsenal, holding together 97.39% of the shares of the club, are from the USA, Rusland and Iran. Aston Villa has an American owner, Chelsea an owner from Russia. Everton, Tottenham Hotspur, Wigan Athletic, Newcastle United, West Bromwich Albion and Stoke City are the only clubs with English owners. Swansea City is owned by Welsh and Norwich City is owned by a combination of English and Welsh owners. Out of 20 clubs, only 7 clubs have an English ownership, according to the definition used. When owners from Wales are considered domestic, 9 clubs have domestic ownership14.

In the Serie A, Thomas Di Benedetto did become the first foreign owner, in 2011, of an Italian football club (AS Roma). Di Benedetto is now succeeded by another American. This US private equity investor also has interests in Liverpool FC15.

In Germany, at least fifty percent plus one share of each club must be controlled by members of the club, the so-called 50+1 rule. This prevents individuals from having the overall control of the club, but still allows for investment opportunities for private businesses. Therefore, in Germany, no foreign ownership of over 50% is existent16.

In Spain, 4 clubs have a foreign owner: Malaga CF, Racing Satander, Getafe CF and Granada CF. Granada CF is owned by an Italian17, Getafe CF is owned by the Royal Emirates Group, since 2011. Málaga Club de Fútbol’s is owned by Qatari Sheikh Abdullah Al-Thani, who bought the club in 2010. Racing Satander is owned by an Indian, Ahsan Ali Syed18.

In Ligue 1, only Paris Saint-Germain is non-French. The Qatar Investment Authority bought in 2011 the majority of the shares of PSG from the previous owner, Colony Capital, a firm based in California.19 Colony Capital had a controlling stake in PSG since 200620.

In the Netherlands, there is one club that has a foreign owner (from Georgia, Merab Jordania), Vitesse. Vitesse was bought in the summer of 2010.21

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clubs who changed to a foreign ownership after January are not included in that specific year. The results are presented in table 6.

Table 6: Number of foreign owners with a controlling stake (50% of the shares or more).

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 Premier League 7 10 10 12 12 12 13 Bundesliga 0 0 0 0 0 0 0 La Liga 0 0 0 1 2 4 4 Serie A 0 0 0 0 0 1 1 Ligue 1 1 1 1 1 1 1 1 Eredivisie 0 0 0 0 1 1 1

Huizinga and Nicodeme (2003) present consistent estimates of the degree of foreign ownership of firms for a large set of European countries. The foreign ownership share in Western-Europe is estimated to be in the 19-22% range in the year 2000, based on different definitions (also including 50% share or more). The football industry in England shows a higher share of foreign ownership than the Western-European average, with an average of 54%. La Liga equals the Western-European ownership share over the last seasons, with an average of 20% in the seasons 2011-12 and 2012-13. The other European premier leagues are still largely owned by domestic investors.

Also for FDI, a reference number has been proposed. Javorcik (2004) sets a threshold of 10% foreign capital of total capital; below 10% it is considered a domestic firm, above an international firm. According to this definition, the Premier League and a part of La Liga have a foreign capital share defined as being an international business, but the other leagues lag behind.

9. Sales

Over the last decades, the financing of professional football clubs changed. The broadcasting revenues have not always been the major contributor to the income stream of the football club. Andreff and Staudohar (2000) identify two models of financing. From the 1980s and before, the SSSL model (Spectators-Subsidies-Sponsors-Local) used to be the prevalent model. Revenues were largely obtained from the spectators (gate receipts), subsidies and sponsors of local origin.

Nowadays, the MCMMG (Media-Corporations-Merchandising-Markets) model of finance is more relevant, where the most significant source of financing is TV revenues. Also merchandising and incomes drawn from corporations (entrepreneurs, oligarchs, etc.) are important.

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Table 7: Shares of revenue generated with sponsorship (Sp), broadcasting (Br), matchday (Md) and other commercial revenue (OC) respectively.

* 2010-11 and 2011-12 England; forecast from the Annual review of Football Finance, Deloitte 2011. From the Annual Football Review of Deloitte, the information in table 7 is obtained. It shows that in England, in the season 2006-07 only 39% of the revenues of the Premier League are generated from broadcasting, but in 2010-11 this share increased to 52%. Since the shares do not show a trend, and the forecast of Deloitte for the Premier League is nearly the same as for the years preceding 2010-11 and 2011-12, it is estimated that the shares for the other leagues did not change considerably. Therefore, the numbers (in italics) for 2010-11 and 2011-12 for the other leagues are similar to 2009-10.

The Eredivisie shows a different picture. Sponsorship is still more important in the Eredivisie than broadcasting revenues, conform the old SSSL model described by Andreff and Staudohar (2000). This might change in the coming years, since the broadcasting rights of the Eredivisie are sold to FOX international, probably generating more broadcasting revenues for the clubs (See also section 9.2, Broadcasting).

If each single component (Sp, Br, Md, OC) is multiplied by the amount of foreign sales divided by the total sales of that specific component, the total FSTS of a football club is obtained. 9.1 (Inter)nationality of sponsors

Sponsors used to be geographically located close to the club they were sponsoring. Also Andreff & Staudohar (2000) say that in the traditional professional sports model, corporate sponsorship was typically in situations where the companies were geographically located close to the club.

Nowadays, sport sponsorship is not necessarily domestically oriented anymore. Global sport events are sponsored by global companies. Famous MNCs -such as Coco Cola, Pepsi, Visa, Mastercard, McDonald’s, Mars, Kodak, Philips, Canon- and of course MNCs involved in the sports goods industry such as Nike, Adidas, Puma, Asics and so on (Andreff, 2008).

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