Fiscal opportunities of a restructured sports sector: Football as pilot (3)

There is a simple question that the Football Association in Nigeria must answer.  It is that, “does Nigeria operate a league system that makes a football clubside self-sustaining and ultimately, profitable?”[1] 

Whilst enactment of the prevailing Framework Rules, which reflect a change of mindset to run football as a business, is critical, emplacing and consolidating a system that makes the self-sustainability agenda of the NPFF/LMC/NFF for Football clubsides inevitable is more important.

The classic set up of the football clubsides across the 5 major European leagues reflects predominantly the following attributes:

  • The clubside either own or leases its ground
  • The clubside has clearly defined lines of revenue
  • The clubside has a scouting network
  • The clubside has a captive fanbase
  • The clubside has an academy to develop home grown talent for the first team
  • The clubside issues annual report of income and expenditure

The conditions in the 5 major European leagues show a system designed for football clubs to be self-sustaining or be capable to so do.  Obviously, the Framework Rules has provisions relevant to transforming the League into a system that can enable Nigerian football clubsides to attain the same status.  For instance, the Framework Rules has provisions covering club finance, ground criteria, match officials, investors and sponsors, scouts, learning and youth development amongst others.  However, the gap between what obtains on paper and reality is huge.

Given the natural predilection of investors for returns on investment, it is important to interrogate more closely the revenue generating potential of Nigerian clubsides and ultimately the league.

There are three primary sources of revenue for a club side.  These are matchday, commercial and broadcast revenue lines.

Match day revenue: This is the revenue a football club earns from each of its home fixtures during the football season.  It is heavily linked with the capacity and segmentation of its stadium. Naturally, the potential to segment into popular side, state box, VIP, and the related number of seats is tied to available seating capacity in the stadium.  The average seating capacity of recognised stadia for the league in Nigeria is between 10,000 and 30,000 seats.  Most State capitals in Nigeria have at least one stadium even though some have more than one.

Nigeria currently operates spot ticket pricing arrangements as opposed to a season pricing model and home teams generally collect gate takings generated from home fixtures.  A factor then is the appropriate pricing for match tickets.  Rates for match day tickets vary depending on the venue and type of fixture, ranging from a minimum of N100 for popular side stands to a maximum of N500 for covered stands.  There is capacity to double the price of match day tickets for big matches.  Thus, potentially maximum price ticket is N1000.

For instance, Plateau United plays its home games at the Rwang Pam Township Stadium with a capacity of 15,000 spectators.  Even without segmentation, if we assume N1000 per match day ticket, the potential total gate takings assuming full subscription is N1.5 million. Further, if we assume full subscription for all match days, of 19 home fixtures, this translates to N28.5 million for a season.  The necessary adjustments to such potential earnings are:

  • Payments to football association (NPL/NFF)
  • Cost of seats reserved for away fans
  • Avoidable leakages through ticket racketeering

Match day revenue triggers questions on the quality and size of stadia.  Presently, many football clubs do not own their grounds in Nigeria.  Warri Wolves rent their arena from the Federal Government on a per game basis.  If it will be a big ask for Nigerian football clubs to in the short term own their stadia, do we need to construct 6 world class stadia across the six geopolitical zones? Or do we have to elevate or expand some existing stadia to meaningful capacity to derive/deliver meaningful match day revenue?

The importance of match day revenue is further underscored by the recent moves by various clubs around the world to increase the capacity of their stadium. Barcelona FC of Spain recently presented their plan to renovate the Camp Nou, a move which will increase the seating capacity from 99,350 to 105,000 spectators. Similarly, Tottenham Hotspur’ are currently upgrading their traditional White Hart Lane ground from 36,284 to 61,559.  Chelsea FC is also looking to increase the capacity of its stadium, Stamford Bridge, from 41,993 to 60,000.  Arsenal jettisoned the famous Highbury Stadium with 38,419 seating capacity to move to the new Emirates Stadium in Holloway London with an enhanced capacity of 60,432.

Whatever approach is adopted, quality and size of the stadia would be critical to any football club realizing or recording meaningful matchday revenues as well as addressing the following questions:

  • Is full attendance or subscription of match day tickets guaranteed? Can any match day be ever sold out?
  • Is there a sharing formula for match day revenue between the LMC[2]/NPFL?
  • How adequate or fair is the matchday sharing arrangement?
  • What are the possibilities of a football club owning its own stadium within the current league system?

[1] We will return to this question when evaluating the prospects/requisites for privatisation

[2] League Management Company

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