‘House Full’ signs littered the approach to almost every Premier League ground last weekend as the new top-flight season opened to a predictably thunderous fanfare.
In truth, excluding the testimonial-paced matches played at Manchester City and Chelsea, the rest of the league’s duels were lightning-fast affairs, contested by teams anxious to get their respective campaigns off to a flying start.
Unfortunately, none of the three newly-promoted sides made much of an impression last weekend, but what of the other new boys, BT Sport?
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Figures released earlier this week were hardly conclusive, although there was relief that the company’s new sports channel attracted an audience comparable with those of ESPN and Setanta when this now forgotten broadcasting duo attempted to challenge Sky’s footballing hegemony.
Last Saturday’s lunchtime kick-off involving Liverpool and Stoke drew a peak BT Sport audience of 764,000, whereas Sky’s opener, a considerably more attractive-looking game between Swansea and Manchester United, attracted a fairly standard 3.1 million viewers.
Sky has little need to worry for now, although BT Sport’s three-year wholesale deal with Virgin Media, announced towards the end of last week, does give it access to Virgin’s 3.8 million customers.
The agreement will enable Virgin Media to provide BT Sport to customers who already subscribe to their XL package at no additional charge.
The deal also enables Virgin to offer the channels as a stand-alone premium service to TV customers who do not already subscribe to the XL package.
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BT Sport remains on the lookout for similar wholesale deals, but we can expect continued promotion of its ‘no charge to broadband customers’ message to dominate its marketing thrust for the next few years.
The company is approaching broadcast sport with a completely different business model, ie offering premium-quality sport at no cost.
So could this be the start of something new, a fresh way of attracting customers to an established business? And could that approach have implications for the football industry as a whole?
In fact, something very similar took place a decade ago at the start of the 2003 horse racing season when the management at the Lord Hesketh-owned Towcester racecourse took the decision to scrap the basic entry price during construction of the £5.8million Empress Stand.
Since then, average attendances at the 16 annual fixtures have soared by more than 55 per cent as turnover has risen almost four-fold. The financial benefits include a surge in conference and corporate income, while commission from food and drink outlets has risen by more than 200 per cent.
Towcester’s management is under no illusions and readily admit they host decent, run-of-the-mill races rather than grade one meetings, but as a means of putting bums on seats and showcasing the course’s other facilities, letting punters come through the door for free has proved spectacularly successful.
In fact, earlier this year, the course was awarded a ‘Certificate of Excellence’ by the online holiday website TripAdvisor, so pleased were the site’s critics at their free day out at the races.
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Could football adapt a similar business model to that employed to good effect by Towcester and BTSport?
That might sound like a crazy notion, but it’s not quite as daft as it first appears.
For a start, football clubs across the land could generate enormously positive publicity for letting fans into at least part of their stadia for free during what remains economically straightened times, despite a flurry of indicators and statistics which suggest that matters are slowly improving.
Of course, it could be argued – and with considerable volition – that clubs don’t need to open their gates for free. As this column pointed out a couple of weeks ago, most clubs enjoy average attendances nearing 95 per cent of capacity, although frankly, gate receipts are becoming a less important part of total income than they once were.
Even as recently as five years ago, gate receipts and matchday income accounted for approximately one third of a football club’s total revenue.
However, according to the latest complete annual accounts to 31 August 2012 for 14 of the Premier League’s existing clubs (I have omitted half a dozen either relegated or promoted), gate receipts and other matchday revenue generates an average of just 20.4 per cent of a club’s income. For half a dozen clubs, the figure is less than 14 per cent.
By contrast, television and broadcast income now accounts for an average of 52.9 per cent of Premier League clubs’ income – in West Brom’s case, that figure exceeds 70 per cent.
Furthermore, as the latest three-year television deal is worth more than £3.2 billion to top-flight outfits, even if we allow for generous parachute payments to relegated clubs, the new contract should see almost all clubs receive between £45 million-£50 million a year in broadcast revenues over and abovewhat they already generate. For eight of the 14 ever-present clubs in the top flight since 2011, this would mean their TV income would effectively double, reducing the reliance upon gate receipts. Indeed, only three clubs (Arsenal, Chelsea and Manchester United) currently enjoy an income from gate receipts in excess of £45 million.
Once the impact of the new broadcast deal filters through to year-end accounts, ie in August 2014, it appears likely that the money fans hand over at the turnstiles will, on average, form an even smaller proportion of total income than it presently does, possibly falling to as low as 10 per cent.
Proposing free entry to football grounds might appear radical, but it’s worth noting what Towcester racecourse has done in the decade since it opened its doors for free.
Sponsorship and merchandising income has increased markedly, while spectators can still upgrade (for £10) to VIP seating or even corporate boxes.
There’s no reason why something similar cannot happen at football grounds.
Merchandising income would almost certainly rise to compensate for the loss of gate receipts – after all, fans would have more money to spend - while sales of food and drink would also soar.
At present, there’s little incentive for clubs to change and, as only four of that 14 ever-present batch actually report pre-tax profits and only two have any money in the bank, net of borrowings, advocating the abandonment of a guaranteed revenue stream will strike some club directors and owners as madness of the nth degree.
Yet businesses are becoming more attuned to offering their customers something worthwhile for free and generating additional revenues from a variety of other sources to offset a notional ‘loss’ as the internet frequently shows. Perhaps the football industry will shock us all and adapt some radical business thinking, though few people are holding their breath waiting for that to happen.
Meanwhile, it’s early days, but those behind BT Sport’s new business model are likely to be pleased with the results from their opening match; if they can attract an average of one million-plus by the end of the season, many analysts will consider it a huge success.