The Pros and Cons of Ups and Downs, part four

As an American I realised very quickly that following an English football club, especially at the lower levels, was a very different experience to being a fan of a similar team in America. There are lots of obvious differences, but there is one that runs very deep and is difficult to express in words.

From early childhood I followed the Atlanta Braves with sincere devotion. I went to, watched, or listened to most games most seasons (and this is in a 162 game regular season). I knew the players. I knew the team history. I hunted autographs. I befriended the usher who manned Ted Turner's box and he invited me to come and sit in it for the last few innings of games I was attending. I wore a Braves cap every day for my first year of University. I was, I thought, pretty serious.

Looking back on this, though, my relationship with the Braves has always been that of a loyal customer. I came and I paid my money. It never occurred to me that the Braves needed me or that I was anything other than an observer to their successes and failures. It would be like me claiming credit for Julia Roberts' rise to stardom because I went to see Pretty Woman in the theatres. Now that I am no longer an Atlanta resident I don't get to follow the Braves live and in person, and because I have no one to talk to about it my relationship with the club can get a bit detached. Someday I will get back to Atlanta again, though, and the Braves will still be there, still playing at Turner Field and still playing in the National League.

My relationship with Bath City has been very different from the outset. Last season City came very close to a playoffs spot. The club's player budget is modest and the squad is small. Injuries racked up as the campaign went on and it became clear that another striker was needed. The budget was small because, like most clubs at this level, attendances have been falling. In other words, City failed to make the playoffs, in part, because not enough fans wanted to watch them play. They failed for lack of support.

When the Braves came in second in the National League West in 1983, manager Joe Torre sighted a lot of reasons for this. Lack of attendance was not one of them. Football is different. Football clubs rise and fall based on short term results. To get good short term results you need short term money. The most reliable source of short term money is from the fans (or debt, but that is a great way to kill a club in the long term). An extra hundred people a match this season would mean roughly £20,000 for the club. That would boost the playing budget by 25% I will go to every game I can, and bring everyone I can along with me. I make a difference, and this is not just because it is a small club. English fans are called supporters because they support the club, whatever the level it plays at. Even though I might not say it out loud, if they did make it to the playoffs this year I will give myself a small sliver of the credit.

There is one more thing that relegation and promotion brings to life as a fan. The football season is, in essence, an enormous gamble of each club's future on its performance on the pitch. The key word of the last sentence is 'gamble.' It is both terrifying and exhilarating to think about what might lay ahead in the next ten months. We might get lucky and find ourselves on the brink of national competition, or we might get in real trouble and find ourselves on the brink of insolvency. Like all forms of gambling, the terror and exhilaration are addictive, and we the fans are the junkies. We tell ourselves that we can stop anytime we like, but.....

Major League Soccer's fans try to copy the passion of their European counterparts. They have 'ultras.' They sing. They even, somehow, mange away match travel. Without the fear of relegation, though, American soccer fans will really never know what it is like to invest all of your emotions on the progress of their club. The best they can achieve, a poor copy, is to be passionate customers.

The Pros and Cons of Ups and Downs, part three

So far I've been explaining how relegation and promotion, and its absence, changes the way professional sports operates in Europe and America. Now I want to discuss some possible explanations for how sports culture evolved so differently between continents.

This is not scientific, but I can think of two main reasons why movement between leagues would be attractive in England, and unworkable in America. The first and most obvious of these is geography.

After ten years of living in England places like Chelmsford and Dover seem like a long way away to me. This is a complete illusion. Especially when the extensive rail network is considered, it is impossible to travel any linear distance in England that would be considered a long trip by American standards. Most places can be reached in a few hours. You can even drive to Scotland if you want to in a single day. This has led to the wonderful tradition of 'away' supporters travelling to watch their club - something that is largely unheard of in America. Also, despite the grumbling of the occasional club chairman, there is no scenario in any of the top five English divisions where away travel by itself could cause a club to have financial difficulties. Even if a Cornish team was in a division over-represented by the northeast, it would be manageable (although very inconvenient). This means that the natural setup for any league is for all teams, nationwide, to compete against each other.

All professional sports in America have some sort of geographic division even at the very top levels. There are no leagues where every team competes equally with every other team regardless of location. Normally clubs are divided into geographic 'divisions' of five to ten teams and tend to play teams in their division more than teams outside the division. Division winners progress to a round of playoffs (to determine the overall champion, not second place). This system only works because the same teams are in the league every year. If a team in Seattle was dropped in favour of a team in Miami, it would throw the divisional structure into chaos. What's worse, it would risk undermining the most important revenue earner in American sports: television. Most leagues spread teams out across the country, careful to cover the top twenty or so television markets.

I do not think geography is the critical factor in this difference, however. The most important difference, I think, is to do with the differing attitudes in sports to amateurism versus professionalism.

Outside of football, the term 'professional' is a strangely negative term in British sport. I think this is more a phenomenon of southern England rather than the whole country, but for better or worse, southern England often controls what happens in the UK. Historically, amateur sportsmen were considered noble and pure. A professional's need to accept money for playing sport betrayed his lower class background. Cricket has been particularly plagued by this dichotomy, with all English players being classified as either 'gentlemen' or 'players' up until the 1960s. Football has escaped this scourge by and large (probably due to its popularity in the north of England where such niceties are recognised for the nonsense they are), but there is still a strong desire to leave space at the table for the amateur sportsman. The Football Association is a keen proponent of amateur football for all ages. The 'football pyramid,' which allows any team to have a chance to climb through the leagues to compete at the highest level (no matter how practically impossible) sits well with the British values of fair play and hard work. The fact that I could register a team composed of myself and ten friends and begin a long assault on the Premiership is an important component of the English sports ethic (even if it is practically impossible without the intervention of a millionaire or two).

Despite some early attempts, national amateur sports organisations in America failed to take hold. Maintaining a national competition was too expensive for anyone but proper businessmen to administer. The first professional league to last more than a few years was the National League of Professional Baseball Clubs (or National League) in 1876. It was formed when Chicago businessman William Hulbert convinced seven other owners to form a league with enough central authority to impose discipline on member clubs. When the Athletics stopped travelling to away games in the west to save money, he expelled them. The league survived and the owners were able to concentrate on doing what they had always wanted to do: make money. Kicking a fellow owner out of the league because his team had not played well was not on the agenda. The National League was, and continues today, to be a closed shop. The American people did not mind that the new league was a overt attempt to make money from sport. What could be more natural? The fact that the National League was not open to all comers would have bothered no one as long as it delivered a quality product to its fans.

And this points to the other huge difference in sporting culture. In America fans are customers. In England supporters are stakeholders. Tune in tomorrow for the final instalment on this discussion (whew!).

The Pros and Cons of Ups and Downs, part two

Yesterday I described the ways relegation and promotion, or the lack thereof, impact decision making at the top level of sports organisations. A knock-on effect of this is that America and Europe attract different types of club owners with different priorities. Again, this might not sound important, but read on.

In 1976 Ted Turner bought the Atlanta Braves baseball club. The Braves had been in Atlanta for ten years previous to this, but there is no record that Turner had shown a particular interest in the team. He wanted it for one reason only:programming . Turner owned a small, independent local television channel called WTCG. Major League baseball teams play a 162 game regular season, so owning the Braves equated to roughly 486 hours of quality programming that was virtually guaranteed to get good ratings in the south-eastern United States. Even if the Braves played badly having their presence on the broadcast schedule would give the fledgling station enough cache to expand beyond the local Atlanta market. After a name change to WTBS and the cable television explosion of the late '70s, Turner created the first of the 'superstations' that continue to be a big presence in the American media today. Four years later, using the revenue from WTBS, Turner launched his second channel. This was based on a crazy idea to have a channel that only showed news. He called it the Cable News Network, or CNN, and the rest is history.

The Braves did play badly. In the following fifteen seasons they placed last in their division nine times. They did win the division once, in 1982, but failed to win a single game in the playoffs. Since 1991 the Braves have racked up one of the most remarkable records in baseball history, but the important fact remains that for the initial fifteen years of his ownership Turner was able to leverage his ownership of the club into a worldwide media empire despite the fact that they were consistently one of the worst teams in baseball. They would never get relegated, so no matter how badly they played he knew he could still offer Major League Baseball on his airwaves the next year. And as long as he had Major League Baseball, no cable company was going to not carry WTBS in its channel package. The fans suffered, but Turner made good on his investment.

There have been businessmen who have bought Premiership football clubs in England, but rarely as in investment. A football club is a millionaires' bauble, a hobby that can occupy the otherwise idle rich. Roman Abramovich has spent roughly £600 million on Chelsea FC since his arrival in 2003. No one expects him to recoup his investment. Lord Alan Sugar sited the time and money he spent on Tottenham Hotspur as the main reason for the decline of his computer firm, Amstrad. There are plenty of rich men in English football, at all levels. The difference is that they almost always become rich before they get involved in football. No one, bar players and managers, gets rich from the business of football.

The reasons for this are simple. If you own a team that cannot be relegated you have a fixed asset. It can decline in value if it is badly managed as a business, but not significantly if it is badly managed on the pitch. Short term results will not make or break you. In other words, it will be a fairly normal business.

If you own a team that can be relegated, suddenly your investment is in constant jeopardy. If you get in a financial pickle off the pitch, you cannot cut costs on the pitch or you will find yourself in an even bigger financial pickle than you were before. In fact, if you don't dedicate any and all available funds to getting better and better players you are going to be outspent by the other teams in your league and you will be relegated anyway. You need a ready supply of cash at all times, and don't expect the banks to be your friends with such a crazy business model. In short, a football club cannot really operate like a normal business. If you buy shares in a football club you are crazy to think of it as anything other than a charitable contribution.

And here is an important irony. In European sports, money (as in short-term cash flow) is the most discussed topic in sports news after the results themselves. American sports franchises, which run like small corporations, very rarely discuss money publicly. Who woulda thunk it?

The Pros and Cons of Ups and Downs

There are lots of differences between American and European sports, but I have come to the conclusion that the biggest and most profound is the lack of promotion and relegation between leagues in American sports. Not only is it the biggest, but it is, I think, the root of many other differences that are not obviously connected. This is too big a subject to cover in one blog, so I'm going to discuss it over the few remaining days before the new season kicks off on 8 August.

Imagine a league that had the same teams in it every year. No team would be removed from the league no matter how badly it performed. New teams would be added only by expansion, and these new teams would be created from scratch - ignoring the performances of the top teams in lower leagues. If you are American this sounds normal. It may not have occurred to you that it could be different. If you are European, you may not have realised that such a set up was possible. This is the fault line that runs through professional sports around the world.

You might think I am exaggerating, but you would be wrong. Let's examine the way the owner of a club in Major League Baseball faces the upcoming season. First of all, no matter how badly the play on the field goes, the club will still be in Major League Baseball next season. This means you can take chances. Hire that unproven manager that you have a hunch about. What's the worst that can happen? Attendances suffer when teams lose, but they do not disappear completely. There is still television revenue, merchandise sales, corporate entertainment, etc. Most importantly, the value of a MLB club does not go down significantly if a club comes in last. The value of a club is determined by the size of the market the team plays in, the stadium (or the stadium deal it has with the municipal government) and the television and radio packages. The New York Yankees are the most valuable club in the major leagues because they are in the largest television market.

The freedom club owners posses is not just to experiment. Losing is not just less risky, it can be downright profitable. Star players are expensive, and there is decent revenue to be had no matter how poorly the team plays. Why not cut costs dramatically and field a sub-standard team? It has happened. In 1914 the Philadelphia Athletics won the American league pennant (the title) with a record of 99 wins and 53 losses. At the end of the season the manager/owner, Connie Mack, ran short of money. He released his best players and signed new, cheaper ones. The result? The next year the Athletics came in last with a record of 43 wins and 109 losses. The good news for the Athletics' coffers is that after winning the title the year before, people still came through the turnstiles. Mack took this drastic action out of financial necessity, not profiteering, but as an owner he was safe doing this. His primary investment, an American League baseball club, was safe. If he had faced being relegated into the minor leagues after a last place showing he would have ended the season with an even bigger financial problem than he started with. He would have had to invest enough money in the club to at least ensure a mid-table finish and might have had to go into debt to make it happen.

Now consider Newcastle United, until recently of the Premier League. In the last twelve months Newcastle has cast itself as a case study for value destruction. After making a string of decisions that infuriated Newcastle's loyal fan base, owner Mike Ashley decided to put the club up for sale for a cool £450 million. Unfortunately, while he was trying to arrange a sale, the expensive players Mr Ashley had hired failed to do their job on the pitch . As the season progressed, the once unthinkable idea that Newcastle might get relegated started to seem realistic. The price of the club dropped to £300 million. After the fifth manager within a year failed to work any miracles the season ended with the club in the drop zone. Newcastle United can now be purchased for a mere £100 million.

This is the nightmare for all investors in football clubs. Your investment is not going to grow or shrink because you look after your customers (the fans) or because you balance your expenses in line with your revenue. Your investment is held hostage to the events on the pitch. If the team does well you can sell your stake for a profit. If they don't you can get wiped out. Owners are incentivized to do whatever it takes to field the strongest squad possible. This leads to fierce competition, fulfilled or crushed dreams, and mountains of debt.