Tuesday, October 19, 2010

What Soccer Can Teach Us About the Value of "The Best"

Word came recently that my beloved Red Sox are close to buying Liverpool, one of the soccer (I should say football, especially since I'm in Europe) clubs in the English Premier League (EPL). While I would prefer that the Sox owners put the money into acquiring a few stronger players, I understand the business motivation: after the last World Cup, there is (again) talk that soccer is finally catching on in America, and investing in a premium franchise, and in an English-speaking country, makes sense as a long-term play.

Well, so I thought, to the extent I thought about it at all. The essential logic is that the EPL represents the best in soccer, and that those franchises will only continue to increase in prominence and importance. Numerous books on business and branding have noted the phenomenon that the rich get richer, that there are many industries where winner increasingly takes all, and the most successful, the most powerful, the most well-known increasingly get more money and fame while second-best fades.

However, this column by Theodore Dalyrimple, ostensibly about the World Cup, caused me to reconsider. The key point:

There is also an interesting contrast between the way the professional sport is practiced in Germany and in England.

The English football league generates far more money than the German, and most observers deem it the best in the world, at least in terms of attracting hundreds of millions of television viewers. Players in the English league are much better paid than those in the German league (though the Germans are hardly impoverished). However, most of the players in the top echelon of the English league are foreign. Many of the best clubs have only two or three English players, and some have none. English clubs import players; German clubs foster and train German players. English clubs are largely owned by foreigners, such as Russian oligarchs of the most dubious reputation; German clubs are owned by Germans. English clubs lose money and are highly indebted; German clubs make a profit and have monetary reserves. And as I have already mentioned, the German national team plays incomparably better than the English national team.

As a marketer, I have to think that the German teams (and German soccer) as brands, are in the stronger long-term position. They are authentic, local, and sustainable, all modern branding buzzwords for a reason. One could imagine a future in which the EPL fans grow disenchanted with their crazy owners (who aren't English) and pampered players (who aren't English) and see their league as fatally compromised. One could also see a future in which the unsustainable financial practices of these teams cause a paring back, with the best talent going to other leagues, including the German ones, and cutting into the EPL's talent advantage.

If John Henry and the other Red Sox owners wanted my advice (which of course they don't) I would tell them not to invest in a bubble inflated by foreign money chasing "the best". They should try to be a part of building something (which is what they've done with the Sox) rather than buying at the peak of a sports bubble. They might even think about using some of that money to build soccer in the US. But I think they'll find the value of owning the Liverpool 'brand' will be much less than they think.

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