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An Examination of how Monetary Power within Football impacts Product Prices

Forschungsarbeit 2014 37 Seiten

BWL - Investition und Finanzierung


Table of Contents

Background research
1.1 Introduction
1.2 Research Objectives
1.3 Methodology
1.4 Analysis and Reporting
1.5 Evaluation Criteria
1.6 Time Plan
1.7 Research Specification Benefit
1.8 Code of Ethics
1.9 Summary

Literature Review
2.1 Introduction
2.2 The influence of excessive spending on ticket prices
2.3 The impact of sponsorship deals on jersey prices
2.4 The impact of signing world-class foreign players on product demand
2.5 Summary

3.1 Introduction
3.2 Frequency Table
3.3 Gender Pie-Chart
3.4 Employment Status
3.5 Age Group
3.6 Football Teams

4.1 Introduction
4.2 Primary Research
4.3 What has influenced rising ticket prices?
4.4 What is the major factor that affects jersey prices?
4.5 The impact of signing world-class foreign players on product demand

5.1 Introduction
5.2 Evaluation
5.3 Recommendations
5.4 Further Research



Background research

1.1 Introduction

Recently there has been a significant increase in multi-millionaires purchasing English Premier League teams since it has become a big business in terms of sponsorship deals, ticket prices, and transfer deals. Primarily the research topic focuses on the ‘top 5’ clubs in the league which are: Arsenal, Chelsea, Liverpool, Manchester United, and Manchester City. I decided on my chosen research area since it is an interest of mine therefore it will guarantee my constant motivation on the topic also my initial thoughts on the topic is that I do believe that fans are being exploited by the monetary power of multi-millionaire owners hence they have to pay an excess amount for merchandise and tickets.

1.2 Research Objectives

The research topic will entail three specific objectives one of which is to identify how excessive spending by the ‘top 5’ has impacted ticket prices; this will see whether millionaire ownership has resulted in higher prices for fans. The second objective is to identify whether sponsorship deals have impacted the prices of football jerseys and whether branding has been a major factor in jersey pricing. The last objective for the research topic is to identify whether the acquisition of world-class players has affected product demand since millionaire owners aim to purchase the best players in the world to win trophies and increase the club’s profitability and global reputation.

All of the three research objectives will ensure that I am able to assess the financial impact of monetary power on product prices since world-class players can impact product demand, sponsorship deals increase profitability for clubs as they are given millions to use brands on their clothing, and with excessive spending and demand ticket prices rise (supply + demand of economics).

1.3 Methodology

I will be using two methods of primary research which are conducting questionnaires and sampling. The reason I decided to conduct questionnaires is because it will enable me to ask the fans regarding their views whether there have been a rise in ticket and jersey prices as well as whether they have bought products because of the signing of a world-class player. Therefore I will be able to answer the three sub-questions from the perspective of the fans furthermore with sampling I can monitor the response in demand on football jerseys in terms of the acquisition of world-class players and the impact on merchandise affiliated to the player.

The questionnaires will have a confidentiality section stating that any personal and contact information provided by the interviewee then they will be aware that their information will be kept in confidence and not sold to third parties.

The two types of secondary research that I will use will be data collected by the Football Association and academic abstracts regarding the financial impacts of football. This will ensure that I have credible information to support my investigation which can support my hypothesis and provide an insight as to whether the conclusions and findings made by academic abstracts support the views and findings achieved from the primary research.

1.4 Analysis and Reporting

In terms of analysis the data obtained from the methods of primary research will be collected by use of spreadsheets and databases to record the answers and responses collected from the questionnaire and sampling method. The data will be analysed by grouping the same answers together and totalling them to indentify how many respondents agreed with each other on specific answers and what percentage of the sample supported my hypothesis based on their answer. Furthermore the data will be presented in graphs and charts for instance a bar graph will be able to show how many respondents agreed with each other certain questions whilst the pie chart would show the overall view of the sample population as to whether they believe there has been a rise in ticket and jersey prices as well as their interest in merchandise attributed to world-class players.

Whilst analysing the questionnaires I will ensure that the integrity of the evidence is credible by viewing the relationship the interviewee has on football such as if an interviewee is an employee for a football club then they will have more ‘loyalty’ towards their team and would provide a biased answer. Furthermore I will ensure the names and contact information of the participants are kept secret so that the confidentiality agreement made with the participant in the questionnaire is not violated. Also I will analyse my findings with my critical literature review to see whether there are any similarities and differences from my secondary sources and I will be able to ‘see’ what route my answer is taking (perspective of the sources i.e. supporting the claims of my research objectives).

1.5 Evaluation Criteria

I intend to evaluate my research topic regarding whether it was suitable for me to conduct and answer with the investigation I executed. Furthermore I will decide at the end of the investigation whether my chosen research objectives were suitable by deciding whether the answers of the objectives helped me answer my overall topic. In terms of the methodology the findings I obtain would be the major part of my investigation as they will be answers to my hypothesis and whether my chosen topic was suitable. The analysis and reporting will be evaluated by reviewing the findings that will be presented in graphical format which would be within the report to show the answers obtained from primary sources and if they support the hypothesis.

Furthermore from the findings I will be able to deduce whether I was able to meet and answer my research objectives and whether I acquired a sufficient amount of information from my primary research to answer not only my research objectives but also my research topic. This would enable me to decide whether my research was successful or not and what areas I should have improved on to ensure I was able to successfully complete and answer the project area. Also I will evaluate whether my 2 chosen primary research methods (questionnaires and interviews) were appropriate for me to retrieve the answer to my topic and if not what I could have conducted instead to make my research more

1.6 Time Plan

The main issue I will face when conducting my research investigation is time. Therefore I have decided to make a GAANT chart which ensures that I am able to monitor my progress from the beginning to the end of my research whilst setting specific deadlines to ensure I am able to complete the research investigation within the agreed timeframe.

Furthermore with a GAANT chart one can add the dates and months of the beginning to the end of the programme thus I can monitor my daily progress and whether I am on course to meeting my agreed deadline. Also each activity can be broken down into sections thus enabling me to monitor the progress of every aspect of my research for example I can set out the date I want to begin and end my research which will continually motivate me to complete the task.

The Gantt chart above depicts the tasks I will be doing over the course of the research project and how long I will take to complete the task. As shown many of my tasks overlap together and are expected to be completed within the dates listed at the top of the chart to ensure I do not submit my work late.

1.7 Research Specification Benefit

I believe that this research specification will work due to the fact that the topic area focuses on a specific aspect of football and the topic is supported by three sub-questions which enable me to delve deeper into the financial and business features of the English Premier League. Furthermore with a properly constructed Gantt chart I am able to continually monitor my progress and ensure that I spend an equal and appropriate amount of time on each phase of the research thus enabling me to submit my report within the agreed deadline date. Also with a highly organised methodology I believe I will be able to obtain the necessary information from my primary research to answer the research objectives as well my overall topic thus enabling me to present the findings and give my views on the findings.

1.8 Code of Ethics

The first ethical consideration that will be taken into account when conducting my primary research is the privacy and data protection rights of the interviewees. The questionnaires which will be conducted ask for the contact information of the interviewee such as their name, address, and phone number which is sensitive information thus a disclaimer has been added at the end of the questionnaire.

The disclaimer in question mentions that the information which is provided by the interviewee will be kept in strict confidence and will not be offered or given to third parties and will only be disclosed between the interviewer and the project assessor for the statistical purposes of the research project.

The second ethical consideration I will take into account when conducting my primary research is to not influence the decisions of the interviewees in anyway whatsoever. The interview questions will be styled in such a manner that the interviewee can express their views without limiting their answers for instance an unbiased question that may be used is the following: What type of impact have multi-millionaires owner have had on football? This type of question permits the answerer to give a positive, negative or a neutral stance on the subject without the question ‘leaning’ towards a specific view.

Through the use of this consideration it means the answers and statistics are reliable since the answerers have not been influenced in any way. Therefore the results and data obtained can be trusted since they are genuine and will not be biased and the information can support my hypothesis or disclaim it or even conclude to different point of view I did not anticipate.

1.9 Summary

In conclusion the research to be undertaken by myself will include a variety of primary and secondary research techniques which will be collected and analysed to answer the sub-questions and the overall question of my chosen topic. Furthermore with the help of a time plan such as a GAANT chart I will be able to monitor the development of my research thus ensuring that I meet the agreed deadline and produce the findings of my investigation punctually.

Literature Review

2.1 Introduction

Several hypothesises have been advocated to elucidate as to whether monetary power of football clubs affect merchandise and ticket prices. Despite the fact that the literature incorporates an extensive array of such hypothesises, this critique centres upon three key topics which surface continually for the duration of the literature reviewed. The above mentioned topics are: the influence of excessive spending on ticket prices, the impact of sponsorship deals on jerseys, and whether signing foreign world-class players impacts product demand. Even though the literature depicts these topics in a range of substances, this critique principally converges on their impact on the pricing of products.

2.2 The influence of excessive spending on ticket prices

Recently the English Premier League has seen an influx of foreign owners who use their financial power to spend millions on buying players. Considering the excessive spending of foreign owned football clubs, Barros and Leach (2006) conducted a study in London which found that English Premier League clubs like Arsenal, Chelsea, Manchester Utd, and Liverpool have spent significant sums of money on buying and signing players which has forced them to increase their ticket prices to stay ‘in profit’. Parallel conclusions were conveyed by Guzman and Morrow (2007) who had concluded that ‘football clubs have become inherently concerned with financial matters’.

Nauright and Ramfjord (2010) reinforce this perspective by analysing the ‘big teams’ owned by Americans which are Arsenal, Liverpool, and Manchester Utd and conclude that all 3 have seen a rise in ticket prices since being taken over. Nevertheless, what is conspicuous is that the journal focuses on American ownership and since both the authors are American they are providing an unbiased view because America focuses primarily on baseball with a limited perspective on ‘soccer’ as suggested by Szymanski and Zimbalist (2005) therefore there are no ‘loyalties’ to specific football teams and the research is purely academic.

However Forrest and Simmons (2006) argue that the reason why ticket prices are increasing is because of the rise of inflation and not necessarily the transfer activities of football teams. Walsh (2013) supports this claim stating that the since 1989 the average ticket price has risen by 716% and supporter’s income has risen by 186% and inflation has risen by 77%. Both sources can be trusted since government statistical data supports both of their claims regarding inflation.

Nilon (2010) states an article by The Sun conducted a survey which asked readers how much they paid for football tickets over recent years and determined that there was a 35% rise which equated to £106.21 per game from inflation. This source is not credible as the Sun is known for providing nonsensical information also there was no mention of the paper in the bibliography.

One can conclude that excessive spending has impacted the prices of tickets since football teams increase their prices after spending huge sums of money albeit they also rise when the rate of inflation increases hence ticket prices are affected not only by the club’s spending but also from the selling prices of rival teams as well.

2.3 The impact of sponsorship deals on jersey prices

An investigation by Rosson (2001) found sponsorship affects jersey pricing since ‘SEGA agreed an annual £2m sponsorship deal’ with Arsenal for their football shirts and were priced £40 each. Chadwick and Arthur (2007) support this as they state Manchester Utd agreed a £303m sponsorship deal with Nike; leading them to consistently generate the highest income ‘£51m compared with Chelsea’s £42.5m during the 2005/06 season’. The research conducted by Philip Rosson can be trusted as it was conducted for an academic journal for Dalhousie University and the findings of Chadwick and Arthur (2007) used reputable sources (Deloitte) to support their claims.

Bühler (2006) advocates that sponsorship deals affect jersey prices since sponsors can help teams and itself by providing its brand image to increase demand for merchandise and awareness of its own trademark to the football community as he found that the ‘EPL has strong links with Asia and the U.S. which are major markets’. Bühler does provide an in-depth analysis of sponsorship in the EPL however he has not provided any empirical data to support his thesis.

Harris (2012) disputes this as he declares the average Premier League shirt is cheaper than its Spanish counterpart (€49.80 vs. €64.38) even though the Premier League has a higher sponsorship agreement in 2011 of €109.7m to Spain’s €77.5m. The article of Nick Harris can be trusted as the research was executed by Sports researching company Repucom. Hanke and Kirchler (2013) suggest team performance affect prices since in the World Cup teams that lost games had ‘negative excess returns’ which decreased prices and when playing against teams with similar suppliers ‘had positive excess returns’; increasing demand and price. Although Hanke and Kirchler are academics their findings cannot be relied upon as they based their investigation on national and not domestic teams.

Crompton and Howard (2003) suggest that sponsorship only generates demand and does not impact the price of jerseys since football teams tend to keep the same price range of their merchandise regardless of who their products are sponsored by. The research is reputable however there was no sufficient evidence of the price history of football merchandise to support their findings. Furthermore Birring (2006) agrees that sponsorship influences the decision-making of football viewers however the price is not impacted since with product placement the fans will want the brand they associate an interest with whilst disregarding the price of the merchandise itself. This is a credible source as it is a dissertation for a MBA in business which consisted of credible sources.

To summarize sponsorships do affect jersey prices of football teams since they generate demand from branding however the prices of the merchandise tend to stay at the same rate for a certain period of time since they are dependent on the length of the sponsorship agreement.

2.4 The impact of signing world-class foreign players on product demand

Recently EPL teams have utilized their spending powers to sign the best players in the world. In a widespread study regarding the purchase of foreign based footballers, Taylor (2007) noted that from 498 players who were in the starting line-up of football games only 38% were English. Similar findings were announced in a study carried out to compare the jersey sales of two ‘world-class’ players; German Mesut Özil signed by Arsenal and Welshman Gareth Bale of Real Madrid and was reported by Arrowsmith (2013) that shirt sales of Özil exceeded Bale’s 5:1. The findings of Taylor (2007) are credible since the information was collected on behalf of the Football Association also Arrowsmith (2013) is reputable since the study was carried out by a marketing agency on his behalf.



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Titel: An Examination of how Monetary Power within Football impacts Product Prices