Heroes of a modern religion
Can success be bought?
MARCO LEIJENAAR
Faculty of Management and Organization University of Groningen
P.O. Box 800 9700 AV Groningen
The Netherlands Tel: +31-50-3633453 Fax: +31-503633850 m.leijenaar@bdk.rug.nl
Title: Heroes of a modern religion Can success be bought?
Student: Marco Leijenaar Student number: 1440381
Course: Master Thesis Supervisors: dr. Theo Postma
prof. dr. Ruud Koning Place, Data: Groningen, 06-10-2005 Version: Final Version
ABSTRACT
Soccer is the most popular sport in the world. All over the world many people are interested in playing and/or watching soccer. Due to the increasing interest of the media and of other organizations over the years, the professional soccer industry became a multi-billion-dollar industry. The popularity of soccer also attracted the attention of scientific researchers, which resulted in a significant amount of literature in this field. In this paper I analyze the relationship between clubs having superstars under contract and the success of clubs in the European soccer industry. The most interesting results of the study are that there are positive relationship between Rich Clubs and the number of superstars under contract and between Rich List clubs or superstars and success in the Champions League. Rich List clubs have a high chance of qualifying for a European tournament and a high chance of being successful in the Champions League. Success is however not per definition for sale.
It is not a fact that the one with the most money or superstars will always be the most successful. This is also the charm of the game of soccer and keeps it interesting for everybody who loves the biggest religion in the world!
Key words: Competition, Professional European soccer, European soccer clubs, superstar, success.
ACKNOWLEDGEMENTS
As soccer is playing an important role in my life I always tried to perform a study on soccer.
This master thesis finally created a good opportunity for me to perform a study on soccer. In other words, it was the perfect combination of study and hobby. I would like to thank dr.Theo Postma of the University of Groningen for his useful comments and suggestions. I would also like to thank prof. dr. Ruud Koning of the University of Groningen for inviting me to the W orkshop Sports Economics, for providing useful literature and for his useful comments and suggestions. The author of this paper is responsible for errors and omissions.
CONTENT
1. INTRODUCTION ...4
1.1.EUROPEAN SOCCER...4
1.2.EUROPEAN SOCCER RESEARCH AND THE ROLE OF SUPERSTARS...5
1.2.1. Research Objective ... 5
1.2.2. Main Research Question ... 5
1.3.THE RESEARCH MODEL...6
1.4.RESEARCH APPROACH AND RESEARCH SETTING...7
1.4.1. Quantitative Data ... 7
1.4.2. Statistical Techniques used ... 13
2. COMPETITION ... 14
2.1.CLASSIFYING COMPETITION... 14
2.2.THE COMPETITIVE PROCESS... 14
2.2.1. The framework of relationship among competitors ... 15
2.2.2. The framework of the selection system... 16
2.3.THE ROLE OF INNOVATION IN THE COMPETITIVE PROCESS... 16
3. COMPETITIVE PROCESS IN EUROPEAN SOCCER ... 20
3.1.THE EUROPEAN SOCCER INDUSTRY... 20
3.1.1. Levels of soccer ... 20
3.1.2. Stakeholders ... 23
3.2.THE ROLE OF CLUBS IN SOCCER... 24
3.3.CLUBS AND THE COMPETITIVE PROCESS... 27
3.3.1. Fans interest ... 27
3.3.2. Club investment... 28
3.4.SUPERSTARS... 31
3.5.PROPOSITIONS... 32
4. EUROPEAN SOCCER – RESULTS ... 34
4.1.REVENUES AND THE CHAMPIONS LEAGUE... 34
4.1.1. Rich List clubs, the Champions League and the other European tournaments ... 34
4.1.2. Rich List clubs and the success in the Champions League ... 45
4.2.BUYING SUCCESS IN THE CHAMPIONS LEAGUE... 49
4.2.1. The higher the revenue of a European soccer club, the higher the number of superstars under contract. ... 49
4.2.2. The higher the number of superstars under contract, the higher the performance on the pitch... 52
5. SUMMARY, CONCLUSIONS AND RECOMMENDATIONS ... 55
BIBLIOGRAPHY ... 60
1. Introduction
1.1. European Soccer
Soccer, a sport played on a rectangular field on which two teams of eleven players try to score one or more goals into the other team’s goal in order to win, grew out into the world’s most popular sport (Matheson, 2003: p.1). Nowadays, 205 associations are affiliated to the Federation International Football Association (FIFA), world’s soccer governing body (www.fifa.com). W orldwide, there are more than 200 million FIFA-registered soccer players (www.yourlawyer.com). Europe is the birthplace of modern soccer. European Football is where all the world’s top players compete, where increasingly the eyes of the world look to see the highest quality of club competition (Deloitte, 2004: p.14). The top professional soccer leagues in Europe are, according to the annual UEFA-rankings, the English
“Premiership”, the German “Bundesliga”, the Italian “Serie A” and the Spanish “Primera Division”. These leagues contain both the richest soccer clubs and the richest players, but they also contain soccer clubs with huge debts. Of the Deloitte (2004) world top twenty richest clubs of the 2002/2003 season, seventeen clubs are participating in the top professional soccer leagues in Europe (See Appendix 1). The other three clubs are the French soccer club Olympique Lyonnais, the Scottish club Celtic F.C. and the English club Leeds United which relegated in the season 2003/2004 from the English top league.
Manchester United is the world richest club generating 251.5 million in revenue, second on the list is Juventus with total revenue of 218.3 million and third on the list is AC Milan with total revenue of 192.6 million (Deloitte, 2004: p.5-6). According to the Forbes 2004 list of the top ten top-paid soccer players (www.forbes.com), Real Madrid player David Beckham is the best paid soccer player in the world with an annual earning of $ 30 million ( 22.2 million). Next on the list is Real Madrid player Zinedine Zidane with an annual earning of $ 19 million ( 14.05 million) and third on the list is Bologna FC player Hidetoshi Nakata with an annual earning of $ 16 million ( 11.8 million). The earnings include salary, bonuses and sponsorship deals. The Forbes 2004 list of top ten top-paid soccer players only consisted of players from the top professional leagues (See Appendix 2). As can be seen from the information given above, soccer is big business nowadays.
1.2. European Soccer Research and the role of Superstars
As mentioned earlier soccer is the most popular sport in the world. Even in the field of science soccer is getting a significant amount of attention. This attention has led to a significant amount of literature which has been created in this field.
1.2.1. Research Objective
As superstars are important actors for soccer clubs and soccer in general by attracting attention from fans, the media and sponsors resulting in generating financial resources, I have chosen to perform a study on superstars in European soccer. The main objective of this study is to create an understanding of the role of superstars in the success of European soccer clubs on the pitch.
1.2.2. Main Research Question
In order to deal with the research objective the following research question has been developed:
“What is the role of superstars in the success of European soccer clubs on the pitch?”
To answer this main research question first relevant literature is studied and next a quantitative data study is performed on European soccer.
For an overview of frequently used terms and abbreviations see appendix 8.
1.3. The Research Model
The research model below shows the different stages of the research.
Figure 1. 3. Research Model
Figure 1.3. shows the research model, which consists of three parts. The theoretical building block is the first part. In the theoretical building block, theory on the competitive process in European soccer, on superstars and the effect of superstars on soccer clubs are introduced and discussed (Chapter 2). This results in the development and formulation of propositions. The second part consists of the empirical building block. In the empirical building block, first a description and justification of the research approach and the methods of gathering and analyzing empirical data are given (§ 1.4). Subsequently, the results from the quantitative data study on European soccer and these results in relation to the propositions are discussed (Chapter 4). The final part of this study consists of the conclusions and recommendations, which can be derived from the theoretical and empirical building blocks. In this final part the most interesting results are discussed and suggestions for future research are offered.
Conclusions and Recommendations Empirical Building Block Theoretical Building Block
Research method and research setting
Results out of data on European soccer Competitive Process
in European soccer
Superstars Effect on a soccer clubs
1.4. Research Approach and Research Setting
In this research is chosen for a deductive approach. The deductive approach focuses on theory-based predictions (Ketchen et al., 1993: p.1278). The deductive approach consists of the development of a theory, a related hypothesis or related hypotheses, a conceptual model and the design of a research strategy in order to test the hypothesis or hypotheses (Saunders et al., 2003: p.85). The purpose of this research is to understand the role of superstars in the success of soccer clubs on the pitch. Chapter 2 discusses literature on the concept of the competitive process, on European soccer and superstars. This ends with the formulation of three propositions and these propositions are tested with quantitative data on European soccer. This is the reason for choosing the deductive approach.
Chapter 3 presents the results from the quantitative data study. In order to arrive at the results, secondary data is collected by performing a study on European soccer. The main secondary data sources are the Rich Lists of Deloitte, the website of the UEFA and information from the well known Dutch soccer magazine Voetbal International. Next to these main secondary data sources, other secondary data sources have been used. For a complete overview of the sources see bibliography.
1.4.1. Quantitative Data
Three aspects are playing an important role in the main research question; “What is the role of superstars in the success of European soccer clubs on the pitch?” The first aspect is superstars, the second aspect is success of European soccer clubs on the pitch and the third aspect is revenue. The third aspect revenue can not directly be found in the main research question but is of great importance. Chapter 3 shows that if clubs in soccer want to perform at the highest level of competition, clubs should invest in players, staff and facilities in order to produce the highest possible level of competition on the pitch. Subsequently, a firm should gather or create extraordinary assets in order to outperform competition. For example, staff of extraordinary quality, players of extraordinary quality and/or facilities of extraordinary quality. Clubs that have large revenues can invest in the extraordinary assets and create a high quality product on the pitch.
This research focuses on three relationships. These relationships are the relationship between revenue and success of European soccer clubs on the pitch, the
relationship between revenue and superstars and the relationship between superstars and success of European soccer clubs on the pitch. The quantitative data that is used to test these relationships will be discussed in order of appearance in the research results part of the paper (Chapter 4).
Rich List and non-Rich List Clubs
Chapter 4 starts very descriptive by presenting data on Rich List clubs and non-Rich List clubs and their participation in the European tournaments and success in the Champions League. The Deloite Rich List (Deloitte, 2004: p.14) of the 1996/1997 to 2003/2004 seasons is used as a starting point. The Deloitte Rich List is a list which profiles the twenty richest clubs in the soccer industry. This list is based on turnover of clubs in the industry. The data from a Rich List season is the starting point for looking at next season’s participation of Rich List clubs in the European tournaments and the success of Rich List clubs in next season’s Champions League. The Champions League is chosen as the platform to study as this tournament is the highest and most prestigious platform for a club in the European football industry to participate in. Data from the Deloitte Rich List together with data from the UEFA website about the different European tournaments (the UEFA Champions League;
www.uefa.com, the UEFA Cup; www.uefa.com, the UEFA Cup Winners´ Cup;www.uefa.com
and the Intertoto Cup; www.uefa.com) are used to create the following data:
o Data on participants Champions League for the seasons 1997/1998 (table 5).
o Data on Rich List countries and Champions League participation (table 6).
o Data on Rich List clubs that did not qualify for the Champions League but qualified for any
of the other European tournaments (table 7).
o Data on Rich List clubs and participation per European tournament (table 8).
o Data on Rich List clubs participating in any of the European tournaments (table 9).
o Data on the chances of success, where reaching at least the quarter finals of the Champions League is taken as being successful in the Champions League, of Rich List clubs in the Champions League (table 10).
o Data on the chances of success, where reaching at least the quarter finals of the
Champions League is taken as being successful in the Champions League, of non-Rich List clubs in the Champions League (table 11).
o Data on the percentage of quarter finals places, semi finals places and final places taken
by Rich List clubs and the number of times that a Rich List club has won the Champions League.
The data presented above creates a good description of the chances of Rich List clubs to participate in the different European tournaments and the chances of success of Rich List clubs in the Champions League. These data, however, were not sufficient to test the propositions. The variables created in order to test the different hypotheses will be discussed.
Variable RL
The variable RL, which stands for Rich List, is a variable which is used to measure the relationship between revenue and success and the relationship between revenue and the amount of superstars under contract. The value of the variable RL is based on the points system which Deloitte (Deloitte, 2004: p.14) used to come to the ranking of Rich List clubs.
This means that for each season a club is awarded with twenty points for reaching the first position, nineteen for reaching the second position down to one point for reaching the twentieth position.
Variable S
The variable S, which stands for Success in the Champions League, is a variable which is used to measure the relationship between revenue and success and the relationship between the amount of superstars under contract and success. Per season has been seen if a Rich List club reached the quarter-finals, semi-finals, finals or if they were the winner of the champions League. A club received the letter W if they were the winner of the Champions League, the letter F when reaching the final but did not win that final, the letter S when reaching the semi-finals, the letter Q for reaching the quarter-finals and a – for not
being successful which means reaching a round earlier then the quarter-finals or not participating in the Champions League at all. On the basis of these letters a club was awarded with points. W inning the Champions League (W) is awarded with 1 point, reaching the final but not winning that final (F) is awarded with 0,75 points, reaching the semi-final (S) is awarded with 0,5 points, reaching the quarter-finals is awarded with 0,25 points and not being successful in the Champions League (-) is awarded with 0 points.
Variable SCat
The variable SCat, which stands for Superstar Category, is a variable which is used to measure the relationship between revenue and the amount of superstars under contract and the relationship between the amount of superstars under contract and success. The criteria to define superstar status were goals and awards. Assists is not used as criteria to define superstar status due to the lack of data. Due to avoiding the loss of data four superstar categories were created:
o Superstar Category 1
- Top 10 FIFA World Player of the Year - Nominees European Player of the Year - Top scorers Champions League o Superstar Category 2
- Top 10 FIFA World Player of the Year - Nominees European Player of the Year - Top scorers Champions League
- Top scorers Top 3 countries UEFA Ranking o Superstar Category 3
- All players in the FIFA World Player of the Year ranking - Nominees European Player of the Year
- Top scorers Champions League o Superstar Category 4
- All players in the FIFA World Player of the Year ranking - Nominees European Player of the Year
- Top scorers Champions League
- Top scorers Top 3 countries UEFA Ranking
Data on the (top 10) FIFA W orld Player of the Year award is gathered from the Dutch soccer magazine Voetbal International. As the ranking, which can be found in the Voetbal Internationals magazines, differs in size two different options were chosen. The first option
consists of the top 10 as all rankings at least show the top 10. The second option consists of all available data on the FIFA W orld Player of the Year ranking. The FIFA W orld Player of the Year award is based on the top three choices of best players of the world by the coaches of the national teams and just recently also most of the captains of the national teams. A first place is awarded with five points, a second place is awarded with three points and a third place is awarded with one point. Based on the total points awarded a ranking is created and the number one of this ranking is awarded as FIFA World Player of the Year.
Data on the nominees of the European Player of the Year award is gathered from the website www.rsssf.com. Fifty players were nominated by journalists of France Football magazine for France Football magazines prestigious Golden Ball award for European Player of the Year. A jury of European soccer journalists from fifty-two countries choose their top 5 wherein the number one is awarded 5 points, the number two is awarded 4 points to the number five being awarded with one point. Based on this system a ranking is created and the number one is awarded as European Player of the Year.
Data on the top scorers of the Champions League is gathered from the rankings in the Dutch soccer magazine Voetbal International and the website http://euro.futbal.org. The minimum amount of goals is based on the total amount of matches from the (first) group stage to the quarter-finals. For example, the 2002/2003 Champions League season consisted of two group stages before the quarter finals. W hen playing at least the two group stages a player can play twelve matches. Lucifora & Simmons used a rate of 0.4 goals per match in order to define the superstar goal scorers. In the example it would mean that (12 x 0.4 = 4.8) five goals is the minimum amount of goals. A superstar top scorer should in this example score at least 5 goals and have a scoring rate of 0.4 or higher. The scoring rate results from dividing the total minutes played by 90 minutes and than divide the total amount of goals by the previous output. Minutes played includes extra time and own goals did not count as a goal. In order to check if the data from the rankings in the Dutch soccer magazine Voetbal International and the website http://euro.futbal.org were correct, all the goal scorers and their goals in the Champions League were insert in a spreadsheet. The Dutch magazine Voetbal International is used as it presents per match all the goal scorers.
Of the goal scorers who scored at least the minimum amount of goals, the scoring rate has
been measured. The Dutch magazine Voetbal International is used to gather the data on minutes played by all the goal scorers who scored at least the minimum amount of goals.
The Dutch magazine Voetbal International presents per match which players were replaced by whom and in which minute. The Group-stages and the first matches of the different knock-out stages consist of 90 minutes. The second matches of the knock-out stages can consist of more than 90 minutes due to the fact that a match can end without a winner after 90 minutes played (equal score). Extra time and even penalties can be necessary to decide the winner of a match. If there is no winner after 90 minutes, two periods of 15 minutes extra time will be played (from the 1996/1997 season the golden goal rule, goal scored match finished, applied and from the start of the 2003/2004 season the silver goal rule, goal scored finish extra time of that period, in the Champions League applied).
Data on the top scorers of the top 3 countries, the best countries in European soccer, is gathered from the websites http://www.xs4all.nl/~kassiesa/bert/uefa/data/, http://statfoot.ifrance.com/cham1996.htm and the website of the Dutch soccer magazine Voetbal International. The first website is used to gather data on the top three countries per season from the UEFA country ranking. The other two websites were used to gather data on the goal scorers ranking per country per season. The superstar top scorers of the top three countries in Europe are based on the 0.4 scoring rate of Lucifora & Simmons.
Based on these criteria, a list of superstar players has been created. The next step was to determine the clubs of the players as well as the clubs they played for in the next season as the superstars of a season will be used as data for the next season. Of every Rich List club studied, the total amount of superstars under contract per season was counted.
Example:
For the season 2004/2005, the number of superstars is based on superstar goal scorers in the Champions League and superstar goal scorers of the top three countries in the UEFA country ranking of the 2003/2004 season, the FIFA World Player of the Year top 10 or all of 2004 and the nominees for the European Player of the Year 2004. When a player is transferred during the season, the player is added to the number of the club where the
player has played for in a European tournament as players are not eligible to play in a European tournament when they have already played in a European tournament that season for their former club. When a player was transferred to another club and did not play in a European tournament at all it was added to the amount of superstars of their former club.
Variables SCatGKD, SCatM and SCatA
The Variables SCatGKD, ScatM and SCatA stands for the different lines in a soccer team.
GKD stands for goalkeepers and defenders, M stands for midfielders and A stands for attackers. The superstars were divided among the lines in order to see if a relationship exists between revenues and the different lines in a soccer team and between the different lines in a soccer team and success in the champions League. Different sources were used in order to determine the positions of the superstars. The sources can be found in the Bibliography and the data can be found in appendix 7.
1.4.2. Statistical Techniques used
The testing of the propositions starts with an overview of descriptive data presenting the frequencies, the minimum values, the maximum values, the means and the standard deviations. Subsequently, the relationships are tested by measuring the correlation coefficient. The type of correlation that is used is Spearman Rank. The reason for choosing Spearman Rank is that Spearman Rank is designed for ranked data. There is also chosen for a one-tailed significance test as the propositions which are tested are making predictions about the direction of effect between the variables. The final technique which is used is linear Regression. Regression is used to analyse the effect of one or more predictor variables on an outcome variable.
2. Competition
Everywhere around the world people and/or firms compete in order to survive or become successful in what they do or in their industry. According to Easton (1988: p.31) a firm can only be successful if its products and services have a competitive edge over its rivals. In other words, it has to outperform its rivals.
2.1. Classifying Competition
In the scientific literature different types of classifications of competition can be found.
According to Easton (1988: p.35) the rivals or competitors of a firm differ in terms of the extent of their activities. He mentions two different types of competitors depending on activities in any industry. First, there are firms with large market share that have their products bought by a large number of customers, do more promotional activities and are generally more visible. Second, there are small market-share competitors that undertake less visible activity. Another way is to assign firms to strategic groups. According to McGee and Thomas (1986: p.150) this can be done by looking at the characteristics of the strategy of a firm. Subsequently, the firm will join a group with firms displaying similar strategies. A very well-known way of classifying competition is the classification by Porter (1980: p.35).
Porter (1980: p.35) distinguishes three competitive strategies firms can choose: overall cost leadership, differentiation and focus. The cost leadership strategy consists of a firm being the low cost producer in an industry for a given level of quality. This means the firm sells it products at average prices to profit more than its rivals or below average prices in order to gain market share. The differentiation strategy refers to the development of a product or service with unique attributes which customers qualify as better or different than the products of the rivals. With the focus strategy is meant that a firm focuses on a narrow segment and within that segment the firm either tries to achieve a cost advantage or differentiation. Section 3.2. classifies the European Soccer Industry clubs in three different groups
2.2. The Competitive Process
Different frameworks were developed to describe and analyze the competitive process. Two frameworks will be discussed. First, the framework developed by Easton (1990) and Easton
and Araujo (1986) will be discussed. Second, the framework developed by Debackere et al (1994), W ijnberg (1995) and Wijnberg and Gemser (2000) will be discussed. The reason for choosing these frameworks is that the former is more focused on the relationship among competitors while the latter focuses more on the competitive process as a selection system, where one group of actors compete for recognition and the other group of actors will make decisions that will influence the outcome of the competitive process.
2.2.1. The framework of relationship among competitors
The framework developed by Easton (1990) and Easton and Araujo (1986) focuses on the relationship among competitors. According to this framework, five modes of behaviour can be distinguished: conflict, competition, coexistence, co-operation and collusion. The first category of behaviour is conflict. In the strongest form of conflict, firms seek to destroy competitors or at least drive them out of direct competition. In a weaker form of conflict, firms base most of their strategic behaviour on competitors' current actions and likely responses. The second form of modal behaviour is competition. With competition, competitors are both aiming for the same, often mutually exclusive, objective. The main difference between competition and conflict is that the primary orientation is the object rather than the competitor. Coexistence is the third form of modal behaviour. Coexistence involves competitors behaving independently from other competitors. Three forms of co- existential behaviour can be identified. The first form consists of competitors that are simply unaware of each other's existence. The second form of co-existence consists of competitors that recognise other competitors, but choose to ignore their actions. The third form of co- existence consists of peaceful co-existence. Firms recognise the "territorial rights" of other competitors in particular dimensions and do not attempt to compete in those dimensions.
The fourth mode of behaviour is co-operation. Co-operation can be seen as joint action in pursuit of interdependent goals. Goals may be more easily achieved by joint, rather than single, action. The fifth mode of behaviour is collusion. Collusion is co-operation among competitors aimed at damaging a third party. The third parties will usually be customers or other competitors, though it could be employees or third parties, such as unions. Competition, as defined above, is a major, if not the dominant, mode of behaviour of firms in the European soccer industry. Cooperation is the second major mode of behaviour of firms
in the European soccer industry. These two modes of behaviour will be discussed further on in this paper.
2.2.2. The framework of the selection system
The framework of the selection system (Debackere et al., 1994: W ijnberg, 1995, 1997:
Wijnberg & Gemser, 2000) can be used to describe and analyze the competitive process.
Wijnberg & Gemser (2000: p.324) state that the selection system specifies the essential characteristics of the selected, consisting of actors that are competing with each other for recognition; and the selectors, consisting of actors whose decisions will influence the outcome of the competitive process. This means that the product or service which is offered needs to have value in the eyes of the selectors. This could mean when referring to soccer that the service a club offers should have value in the eyes of the selectors.
2.3. The role of innovation in the competitive process
Creating value can be achieved through producing high quality products and high quality service but also through innovation. W ijnberg (2004: p.7) defines an innovation as: An innovation is something new which is presented in such a way that the value will be determined by the selectors. Wijnberg (2004: p.10) also states that the importance of an innovation, often qualified as radical or incremental, is the extent to which the innovation is connected with changes in the relative valuations of products satisfying the same set of preferences, of the set of preferences, of the composition of the set of selectors or of the characteristics of the selection system itself. W ijnberg (2004: p.10) states that an incremental innovation is an innovation where selectors need to reconsider the relative value of products satisfying the same set of preferences. An incremental innovation can therefore be seen as an innovation of the smallest importance. A more radical innovation is an innovation where the selectors need to rethink the preferences themselves or which changes the selection system itself. A radical innovation can therefore be seen as an innovation of more importance. The importance of an innovation can differ from firm to firm.
This means that the same innovation can be radical to one firm but incremental to another firm. Not only can innovations differ in importance, there are also different types of innovations which can be distinguished.
Two types of innovation can be distinguished. The two types of innovations are product and process innovations. According to the Ministry of Economics, Finances and Industry of France (2002: p.2), which based its definitions of product innovation and process innovation on the international definitions on innovation by the organisation for Economic Co-operation and Development, a product innovation is the market introduction of a product (goods or services) that is new or significantly changed in terms of core characteristics, technical specifications, built-in software or any other immaterial component or the intended use or ease of use. A process innovation, according to the Ministry of Economics, Finances and Industry of France (2002: p.2), comprises the introduction of a new or significantly changed production process, service supply method or product delivery method into the company. The result must have a significant impact on the level of production, the product quality or the production and distribution costs. As can be seen in the definition by the Ministry of Economics, Finances and Industry of France, there is a distinction in product innovation between goods and services. A good is probably well-known but what is an innovation in services? Menor (2002: p.138) defines an innovation in services as an offering not previously available to a firm’s customers resulting from additions to or changes in the service concept. Van der Aa and Elfring (2002: p.157) define an innovation in services as encompassing ideas, practices or objects which are new to the organisation and to the relevant environment, that is to say to the reference groups of that innovator. Innovations in services differ from manufacturing industries. According to the OECD report (2000), service innovation is not limited to changes in the product’s characteristics. It usually involves changes in the delivery process and client interface as well. In service industries, innovations are often non-technological and mostly involve small and incremental changes in processes and procedures (de Jong et al., 2003: p.16). Many service innovations are not very radical and have often already been implemented in or by other service organisations (de Jong et al., 2003: p.16). Another difference is that service innovations are easier to imitate (Atuahene-Gima, 1996: p.46-47) and this is probably also one of the reasons why service firms spend less money on buying patents and licences (Brouwer, 1997: p16).
Brouwer (1997: p.16) also states that service innovations do not require much R&D and firms also tend to invest less in fixed assets to support innovations.
Another main distinction in innovation is between technological and non- technological innovations. According to the OECD (1996: p.9), a technological product innovation is the implementation/commercialisation of a product with improved performance characteristics such as to deliver objectively new or improved services to the consumer. A technological process innovation is the implementation/adoption of new or significantly improved production or delivery methods. It may involve changes in equipment, human resources, working methods or a combination of these changes mentioned. A non- technological innovation or stylistic innovation is a product, or a characteristic of a product, which is recognized by the relevant selectors as a new and legitimate response to a set of preferences which the selectors can not specify in such a way that other actors could perform the actual determination of how far the product satisfies those preferences, and the value of which consists of the very differences the selectors perceive between the product under consideration and earlier and other products from the same category (W ijnberg, 2004:
p.15).
In order to innovate, a firm needs to garner resources. Two groups of resources can be distinguished: ordinary assets and extraordinary assets. Mol and Wijnberg (2004: p.9) define ordinary assets as those assets with which a firm produces the product- characteristics that have value according to the set of criteria as defined by the relevant selectors. In order for the value created by these ordinary assets to be appropriated in the marketplace, two conditions have to be met. One of the conditions is that firms need to get the product acknowledged by the relevant selectors so that it can be rated on the basis of the relevant criteria (Mol & W ijnberg, 2004: p.9). The other condition is that once the relevant selectors have acknowledged the product, the firm needs to secure resources that inhibit competitive imitation of the particular product-characteristics that yield high scores on the defined criteria (Mol & W ijnberg, 2004: p.9-10). In other words, next to creating value a producer of a firm should also capture and protect the value. Extraordinary assets complement ordinary assets in order to meet the conditions given above. There are extraordinary assets that are used before the start of the competitive process (for example contracts with exclusive suppliers of scarce resources or a high starting capital), and extraordinary assets that are used after the start of the competitive process (stocks of
patents that offer possibilities of counterclaims to mitigate claims of imitation or assets that help to increase causal ambiguity or reputational capital). The first type is ex ante extraordinary assets. Mol and W ijnberg (2004: p.11) define ex ante extraordinary assets as those assets that can be used by a producer to effectively enter a particular selection system as one of the selected or prevent rivals from doing so. The second type is ex post extraordinary assets and Mol and W ijnberg (2004: p.12) define ex post extraordinary assets as those assets that enable a firm to effectively prevent rivals or allow itself to engage in competitive imitation of the product characteristics for which the relevant selectors have defined a set of criteria. In other words, a firm uses ordinary assets to create value, while a firm uses extraordinary assets to establish and maintain its competitive position (Mol &
Wijnberg, 2004: p.12).
The concepts which were discussed in chapter 2 will be described for the European Soccer industry in the following chapter.
3. Competitive Process in European Soccer
3.1. The European Soccer industry
The European soccer industry or football industry is defined by Ducrey et al. (2003: p.16) as the group of legal entities acting in the facility dependent sports services, specifically within the boundaries of the spectacle and hybrid sport category in the territory covered by the fifty two member associations of UEFA. As this definition will not be clear to everybody, the terms facility dependent sports services, spectacle sport and hybrid sport will be made clear. Ducrey et al (2003: p.15) mean in their definition of the European football industry with facility dependent sport services organisations offering sport as their end product be it as spectacle (matches, competitions) or as access to participation. Spectacle sport and hybrid sport are together with participant sport the three segments of facility dependent sports services. Spectacle sports are professional sports where organisations have the ability to generate substantial revenues directly or indirectly from spectators (Ducrey et al., 2003: p.16). As an example Ducrey et al. mention Manchester United, Juventus and the English Premiership. Hybrid sports are a category of sports where organisations offer a mix of spectacle and participant sport, a segment of sport providing opportunities for people to engage in sporting activities, usually on a non-professional basis (Ducrey et al., 2003:
p.17). Ducrey at al. provide another definition as well which is in my opinion much better. A football industry is the group of legal entities whose commercial activities are rooted in the game of football (Ducrey et al., 2003: p.14). As it is today, European soccer is big business.
According to a study performed by Deloitte & Touche (www.deloitte.com), the size of the European soccer industry is estimated in the season 2002/2003 as 10.8 billion.
3.1.1. Levels of soccer
The European soccer industry can be divided in two levels: soccer on club level and soccer on national team level. These two levels are highly related as they for instance share top- level players, spectatorship, and calendar time (Ducrey et al., 2003: p.16). Soccer on national team level is not of importance in this research and will therefore not be dealt with.
In European club soccer on professional level, two levels of competition can be found. On the one hand is the national level, which involves competition in the national
leagues and competition in the different national cup tournaments. Professional club soccer in the Netherlands for example consists of two leagues (Holland Casino Eredivisie and de Gouden Gids divisie), the national cup tournament (Amstel Cup) where an amount of top amateur teams also participate in and the Dutch supercup (Johan Cruijff Schaal), a match between the Dutch top league champion and the winner of the national cup (www.knvb.nl).
English professional club soccer differs from professional club soccer in the Netherlands.
Professional club soccer in England consists of five leagues (The Premiership, The Championship, League One, League Two and The Football Conference), two national cup tournaments (The FA Cup and the League Cup) and the English supercup (The FA Community Shield) a match between the English top league champion and the winner of the FA Cup (www.thefa.com). The league structure in European soccer is open, which means that the league structure consist of a promotion and relegation system. Top performing teams in lower divisions are rewarded with promotion into the top divisions while, on the other hand, teams that perform badly in the top divisions are relegated to the lower divisions (Matheson, 2003: p.18). This suggests that there is a great deal of mobility of teams between divisions. According to a study in English soccer by Noll (2002) this is indeed the case. Noll (2002) found a great deal of mobility of teams between divisions in English soccer. He also found that this did not apply to the very top teams such as Manchester United, Arsenal, and Liverpool. These teams can all be found in the Deloitte (2004) world top twenty richest clubs list from the 1996/1997 season to the 2002/2003 season. Does this actually mean that success can be bought? An interesting finding in this sense is that, according to a study by Szymanski and Valletti (2003: p4, p7, p.12) on promotion and relegation in sporting contests, open leagues encourage teams at the highest level of competition to invest and produce the highest possible level of competition. This finding states that in order to compete at the highest possible level of competition, which in European soccer means the top national soccer, clubs must invest.
On the other hand there is the international level of competition. This level involves the UEFA Intertoto Cup, the UEFA Cup, the UEFA Champions League, the European Super Cup and the FIFA World Club Championship. The UEFA Intertoto Cup is UEFA’s summer competition for clubs which did not qualify for the UEFA Champions League or UEFA Cup.
In this competition, the final three clubs win a place in the UEFA Cup tournament. The UEFA Cup is UEFA’s competition open to teams finishing in leading positions behind the champions in the domestic top divisions, winners of the national cup, winners of League Cup competitions in certain countries, three winners of the UEFA Intertoto Cup, and three clubs from UEFA’s annual Fair Play assessment. These participants are expanded with certain national champion clubs which finished third in the group stage of the UEFA Champions League in the same season and do not qualify for the knock-out stages of the UEFA Champions League in the same season. At the end of the group stage of the UEFA Cup, the eight third-placed clubs at the end of the UEFA Champions League group stage revert to the UEFA Cup. The club which wins the final match wins the UEFA Cup.
Participation in the UEFA Cup and the entry point in the UEFA Cup competition depend on the association’s position in UEFA’s coefficient ranking list. The UEFA Champions League is UEFA’s competition open to each national association’s domestic champions, as well as clubs which finish just behind the domestic champions. Participation in the UEFA Champions League and the entry point in the UEFA Champions League depend on the association’s position in UEFA’s coefficient ranking list. Over the years the UEFA Champions League continuously evolved. The format for the 2003/2004 season consisted of three qualifying rounds, followed by a 32-team group stage and finally a knock-out stage with 16 teams. In the group stage the eight third-placed teams move to the UEFA Cup third round and the eight fourth-placed teams will be eliminated. The group winners and the runners up (2nd place) qualify for the knock-out stage. The team that wins the final knock- out stage wins the UEFA Champions League. The UEFA Super Cup evolved over the years into the format established in 2000. Since 2000, the winner of the UEFA Champions League and the winner of the UEFA Cup from the previous season participate in a single match at the beginning of the new season. The winner of this match wins the European Super Cup (www.uefa.com). Finally there is the FIFA W orld Club Championship also known as the European/South American Cup or the Intercontinental Cup. Since the early 1980s, the FIFA World Club Championship consists of a single match between the winner of the UEFA Champions League and the winner of the South American Copa Libertadores. This match determines the No. 1 club side in the world. The match is held in Tokyo Japan and the
winner of the match wins the Toyota Cup (www.japantoday.com). The FIFA has plans to change the format. For more details and schematic overviews on the structure of the international tournaments and the UEFA association coefficient rankings see appendices 3 and 4.
3.1.2. Stakeholders
Ducrey et al. (2003: p.23) have created a model with all the stakeholders of the European Soccer industry. The stakeholders in the European Soccer industry are: Clubs, UEFA, FIFA, Media, Sponsors, Press, National Associations, National Leagues, Players, European Union, G-14, Stock Market, Club Patrons, Municipalities and Fans/Spectators. See figure 3.1.2. for an overview of the stakeholders interests, power and pressures see appendix 6.
Figure 3.1.2. Stakeholders European Football Industry
** Source: Ducrey et al., 2003: p.23.
For this study it is not important to discuss all the stakeholders. Only the key stakeholders are of importance. In the European Soccer industry there are five key stakeholders: the clubs, players, UEFA, national leagues and the national associations. According to Ducrey et al. (2003: p.101-102) clubs are the basis of football economically and socially. They also indicate that without the players there is no club and therefore no spectators and ultimately no professional football industry. The UEFA is the governing body of European soccer. The national leagues are considered as key stakeholders as they provide the stage and organise the domestic competition for clubs. The national associations are considered as the firmament of the UEFA and therefore considered as key stakeholders.
3.2. The role of clubs in soccer
Clubs are playing a fundamental role in soccer. According to Ducrey et al. (2003: p.12), the main objective of top professional soccer clubs is to offer the spectacle of the game and all the attached psychological, emotional and social benefits for the fans. Clubs are not only important to fans but fans are also important to clubs. Fans provide for instance financial resources in the form of membership fees, season tickets, gate receipts, the purchase of licensed merchandise as well as emotional association, support, loyalty and exposure.
Ducrey et al. (2003: p.54) classify clubs in professional soccer in the following way:
See table 1 Club Classification.
Table 1 Club Classification
** Source: Ducrey et al., 2003: p.54.
(-116 We define International competitions as to include both the UEFA Champions League and UEFA Cup.
-117 Supporter-base represented by elements such as organised fan clubs, international tours by the club)
As can be seen under criteria the categories of clubs differ on level of performance and on market appeal. Although these clubs differ from each other they all have the same primary objective which is pursuing the best sporting performance (Ducrey et al., 2003: p.55). Clubs are in other words focussed on winning matches. The ultimate sporting performance is winning prizes like championships and cups. According to Matheson (2003: p.18), success
can be bought. Matheson states that in order for a city to gain a top division team it should provide a positive economic environment generating resources for a soccer club which can result in a successful product on the field. This means that when a club generates financial resources it can invest in players, staff and good facilities. The investment can lead to a better product on the pitch, which could lead to better results. Dobson & Goddard (1998:
p.482) found that investment in human capital is highly related to on-field success. On-field success can then again lead to more attention from the media, which can make the club commercially attractive to third parties. The attractiveness to third parties can then again lead to generating more resources. This circle of increasing returns is also called a virtuous circle (Garud & Kumaraswamy, 2005: p.10). The generation of resources/revenues are the off the pitch results of a soccer club. Clubs generate these resources/revenues from gate receipts, broadcasting revenues, sponsorship, merchandising, stock market, catering, stadium and facility management and non-soccer event management (Ducrey et al., 2003:
p.56). Clubs can garner resources from all these activities but not all activities apply to all clubs. See table 2 Resource Generation.
Table 2 Resource Generation
** Source: Ducrey et al., 2003: p.56.
-1 (not on picture): Information from club websites and presentations during CIES visits
-2 Currently French Law does not allow for French football clubs to be floated on the stock market.
This may change soon as there is growing pressure from clubs to have this option available. A recent article in France Football revealed that 15 clubs in the French 1s t division were favourable to this.
-3 Juventus currently manages the Mondo Juve complex and is currently restructuring its stadium and will, after construction, have restaurant and hospitality.
-4 Includes the DeVere Whites Hotel in the Reebok Stadium.
-5 FC Nantes Atlantique engages in activities such as Equestrian competitions, Weekend travel packages and Concerts while Bolton organises conferences in the Reebok Stadium, houses the Reebok European Design Department and runs school programmes with local schools.
-6 Includes Chelsea Village Hotel.
A study by Szymanski & Smith (1997: p.138) and Szymanski & Kuypers (1999: p.165) shows that a relation exists between win percentage and payroll. Exceptions in performance like over- or underperformance is caused by management efficiency or a lack of management efficiency. Dawson & Dobson (2002: p.478) found that managers with an affiliation/history with the club are performing better as coaches, which means more successful with the team on the pitch compared managers without an affiliation/history with the club. Not only is adequate management important for on the pitch performance it is also important of the pitch. Generating resources is not enough. A club should also install a healthy financial management. The chance of long-time sporting success can not be reached without healthy finances and healthy financial management (Ducrey et al., 2003:
p.57). An example of a club which is having a financial difficulty is Germany’s soccer club Borussia Dortmund. Borussia Dortmund was unlucky with buying forward Marcio Amoroso in 2001 for 25.56 million who got severely injured to his knee and was released from the club in April 2004. Borussia also failed to qualify for the UEFA Champions League in the season 2002/2003 and lost early in the UEFA Cup which resulted in a loss of extra revenues from television rights. This caused sales to fall 38% and eventually resulted in a loss of 27 million (Ewing & Cohn, 2004: p.47). The club is still financially struggling. This is what is called the downside. The downside is that if a club’s sportive results decrease it can also cause a decrease in media attention, commercial attractiveness and eventually in the generating financial resources. A circle of negative outcomes can become into a vicious circle (Masuch, 1985: p.15-16). A vicious circle is a circle which develops when mutual causal processes lock into one another and results in progressively negative outcomes (Garud & Kumaraswamy 2005: p.10, Maruyama 1963: p.164, p.176-177, Masuch 1985:
p.15-16, Senge 1990: p.81-83, Weick 1969: p.82-85).
3.3. Clubs and the competitive process
When referring to the framework of the relationship among competitors, two modes of behaviour play an important role in the European Soccer industry: competition and cooperation. In soccer, clubs compete with each other in the leagues, domestic cup tournaments and the international tournaments (Ducrey et al., 2003: p.26). Next to this, clubs can also compete in for instance signing players and in attracting fans and sponsors.
Next to this clubs also need to cooperate for the joint production of the game. According to Ducrey et al. (2003: p.19), the game of soccer need to be kept interesting and the quality of the competition, measured in the quality of teams taking part in that competition and in the level of competitive balance, is one of the most important drivers of demand for football. The main factor in keeping the game interesting is the fan. Other examples of cooperation of clubs are for example the exchange of players (on a loan basis), supporting all kind of foundations, stadium sharing (Ac Milan and Internazionale), shared youth academy (FC Twente and Heracles in the Netherlands) etc.
3.3.1. Fans interest
Ducrey et al. (2003: p.20) state that the larger the fan base and the larger its identification with the sport, the higher the probability that this sport will attract the interest of TV and sponsors. For the fans quality of the game, uncertainty of outcome and success of own team are the three most important factors driving fan interest for football.
- The quality of the game refers to the entertainment and spectacle, the aesthetic pleasure of watching the game, the quality of the visiting team.
- Uncertainty of outcome means that the closer the result of the match, the more attractive the game will be to fans.
- Success of the fan’s own team means that supporters that identify with a winning team achieve satisfaction.
(Ducrey et al., 2003: p.20)
The third factor, success of the fan’s own team, is playing an important role in this research.
As already has been mentioned earlier, if a club can generate resources, it can invest in
players, staff and facilities. The investment in staff, facilities but players in general can lead to a better product on the field, which could lead to better results.
3.3.2. Club investment
Earlier in the paper could be read that according to a study by Szymanski and Valletti (2003: p.4, p.7, p.12) on promotion and relegation in sporting contests, open leagues encourage teams at the highest level of competition to invest and produce the highest possible level of competition. The investment would mean an investment in players, staff and facilities as these are directly related to the game of soccer and the management of players. W ith investment in facilities is meant creating an environment wherein a soccer player can come to an optimal level of performance. This could mean a stadium which conforms to the highest level of the FIFA Stadium regulations, high quality training facilities, high quality medical facilities etc. W ith investment in staff is meant creating a good organisation with high quality people. This does not only mean the people who are directly involved with the main team but it means that the right person should be on the right place in the entire organization in order to come to an optimal level of performance. Investment in players is common in soccer. Investment in people in general is very important. Bassi and McMurrer (2004: p.18) state that managers always claim that people are their most important assets. In the soccer industry, next to staff, the players of a club in soccer are indeed the most important assets. In European soccer, teams change on a continuous basis. This is due to the fact that the trading of players between clubs is common in European soccer. Of big influence on the trading of players has been the Bosman-case. In 1995, the transfer fee laws in Europe changed dramatically due to the Bosman ruling, which denied clubs of the right to transfer payments for players whose contract expired (Matheson, 2003: p.13). According to Ericson (2000), the Bosman ruling will result in a player investment decrease and lead to a more unbalanced competition as large clubs take advantage of signing on talent developed by smaller clubs for free. In highly competitive leagues, clubs highly compete on signing the most talented soccer players either national or foreign. In order for soccer clubs to invest in players, soccer clubs need to generate financial resources. The richest clubs in the world have, due to their financial resources, the
best chance of signing the most talented soccer players. The richest clubs can be found in the top leagues like for instance England, Spain and Italy. The top league clubs in England, Spain, and Italy are bidding for the world’s top talent against one another and with clubs in Germany, France and even Turkey (Matheson, 2003: p.9). According to a study by Carmichael and Thomas (1993: p.5), the skills of the player lead to the payment of higher transfer fees and a greater bargaining power of the player’s current club. This applies when the player is not yet in his final year of contract where he can leave a club for free under the Bosman ruling. The current club can ask any price they want, unless there is a minimal fee release clause, if other clubs are interested in signing the player. The higher the skills and importance of the player, the higher the transfer fee can be. This study also suggest that rich and successful teams have less bargaining power due to higher team profits, attendances, winning margin and rank in the standings. Clubs which negotiate over selling a player with rich clubs can or will ask a high price because they know the rich club is rich and can pay high transfer fees for a player. Lower league teams can also have less bargaining power when buying a player. This applies when a lower league team has to compete with a higher league team. For a player, playing in a higher league is an important factor in choosing a team. The salaries paid for top players went sky high in Europe due to an increased demand for top players, which also had an upwards effect on the salary demands by mediocre players at average teams (Koning, 1999: p.1). As the top players can only be afforded by the European top league rich clubs, numerous amounts of European clubs are competing for mediocre players and midlevel talent (Matheson, 2003: p.9). Huge salaries can be paid, because there is no salary cap for either teams or individuals in European soccer. According to a study by Lucifora & Simmons (2003: p.48-51), strong positive predictors of player salary in the Italian Serie A are goals scored, minutes played, and appearances on all-star or national teams. Matheson (2003: p.16) states that player salaries are often based on player or team performance. For star players I can only assume, due to finding no theoretical evidence, that next to player or team performance the salary is also based on the commercial value of a star player. Clubs can profit from the commercial value of a player with for example the sale of merchandise, sponsor activities, and other commercial activities.
Examples of innovation in soccer can be new rules, new regulations, new stadiums, innovation in sport equipment, medical innovations, and other. Although team changes can not be seen as an innovation in the definition of W ijnberg (2004: p.7) of innovation it does have some similarities with the theory on innovation mentioned earlier.
Team changes mean that new players are added and removed. This means that the team or part of it is new to the organisation and also to the relevant environment. Small team changes can be seen as incremental. Changing some players, which are not playing an important role, will not immediately mean a big change. But changing a lot of players or the most important players of the team can be seen as big changes or in other words radical changes. These changes to the team mean that the core product is presented in a different way to the selectors. The selectors in the soccer industry should then determine the value.
For instance, fans deciding to buy a season ticket, organisations deciding to sponsor the team or not etc. According to literature about the framework of the selection system, the winners from the competitive process are those firms or producers whose products or services have been selected by most selectors or the most important selectors. Referring to soccer, this could mean that the winners in the industry are those clubs which have been of interest to most fans. As already mentioned earlier, the larger the fan base and the larger it’s identification with the sport, the higher the probability that this sport will attract the interest of TV and sponsors. This will generate more resources which then again can be used to invest in players, staff and facilities in order to lead to a better product on the field, which could lead to better results.
Also mentioned earlier is that in order to innovate a firm needs to garner resources.
This relates to the fact that in order for clubs in soccer to perform at the highest level of competition, clubs should invest in players, staff and facilities in order to produce the highest possible level of competition on the pitch. This also applies to clubs who seek promotion or avoid relegation. The theory on assets by Mol and W ijnberg (2004: p.12) stated that in order to outperform competition, a firm should gather or create extraordinary assets. This could mean that in order to compete at the highest possible level of competition, which in European soccer means the top national leagues and the international tournaments like the UEFA Champions League and the UEFA Cup, European soccer clubs
must invest in extraordinary assets. For instance, in managers of extraordinary quality who can have a positive influence in the process of buying players. There are players who choose to play for a certain team due to the fact that a manager of high quality is managing the team. A club can also invest in developing high quality facilities, which can create a positive and efficient working environment. But when referring to the players as one of the most important assets, European soccer clubs should invest in players of extraordinary quality. Players of extraordinary quality are the superstars of soccer.
3.4. Superstars
In soccer fans worship their superstars. Dennis Bergkamp even got the nickname god from the fans of English soccer club Arsenal after the 1997/1998 season when he scored 22 goals in 39 matches, became player of the year in England, scored the goal of the season, won the national league and won the FA Cup. The position of superstar can only be reached by a small amount of players. According to Rosen (1981: p.847), superstars in principle reach their position due to being more talented than the people who are less successful.
However, the difference in success is according to Rosen (1981: p.852) far greater than the differences in talent. The most talented people also obtain a disproportionate share of the financial returns, in other words the “superstar effect”. Adler (1985: p.211), therefore, believes that the stars are most of the time not really more talented, but reach their position due to the need of consumers for a common culture. Adler (1985) describes that in the emerging process of becoming a star, with four people of equal quality, the one who is most selected by the consumers becomes the most popular and has an advantage in becoming a superstar as other consumers will switch to the popular artist as well. This is called the
“bandwagon effect” (Leibenstein, 1950). According to MacDonald (1988: p.11), the difference in talent between people is not in the quality of good or bad performance as such but in the probability that a particular performance will be good. The probability is based partly on the track record and partly on expectations based on the quality or talent of the player. But what defines a person to be a sporting star? According to Blackham & Chapman (2004: p.3), there are two ways to define star-status. The first way is by selecting individual players on a personal judgement based on the publics profile of a player and on historical performances. This approach looks at the relationship between star-status and increases in
individual earnings. A study by Lucifora & Simmons (2003) is an example of this approach.
Lucifora & Simmons (2003) found significant positive sports-star effects on individual earnings in the Italian Soccer League. Lucifora & Simmons discovered that goals and assists were useful criteria for defining superstar status. The other way is by looking if a player has won awards or reached a measurable level of performance. This approach looks at the relationship between sporting stars and awards and a measurable level on performance based on a certain amount of goals scored, a certain amount of assists or the amount of appearances in the national team or all-star teams.
A model is created based on the theory given above. This model consists of the cycle of a soccer club in the European soccer industry and can be found in appendix 5.
From all the information given above can be concluded that if a European soccer club wants to compete at the highest possible level of competition, which in European soccer means the top national leagues and the international tournaments like the UEFA Champions League and the UEFA Cup, European soccer clubs must invest in superstar players. This could mean that when a club in the European soccer industry is able to sign superstars or able to turn players into superstars it can profit off the pitch as well as on the pitch. This would mean that the clubs that have superstars under contract have a bigger chance of being successful and of winning prizes. In other words, based on the literature I propose that success can be bought!
3.5. Propositions
According to the literature given above various propositions are developed in relation to the main research question. By linking the results from the quantitative study on the European Soccer industry to the propositions and by interpretation of the outcomes, an answer to the main research question will be derived.
Proposition 1:
The higher the revenue of a European soccer club, the higher the performance on the pitch.
Proposition 2:
The higher the revenue of a European soccer club, the higher the number of superstars under contract.
Proposition 3:
The higher the number of superstars under contract, the higher the performance on the pitch.
Figure 3.5. Conceptual Model
The conceptual model given above consists of three relations which will be studied. The first relation is the relation between financial revenues and success on the pitch. As can be seen from proposition one, it is expected that the higher the revenues of a European club will be the higher the performance will be. The second relation is the relation between financial revenues and superstars. As can be seen from proposition two, it is expected that the higher the revenues of a European club will be the higher the number of superstars under contract will be. Finally there is the relation between superstars and success on the pitch.
As can be seen from proposition three, it is expected that the higher the number of superstars under contract will be the higher the success on the pitch will be.
In chapter 4 the study will be presented and the results will be linked to the propositions. Finally, Chapter 5 consists of the conclusions and recommendations.
Success on the pitch
Superstars Financial
revenues
?
? ?
