Football Economics Explored

EghtesadOnline: Economic strategies have no place in today’s Iranian sports, including football, a former managing director of Rah Ahan F.C. said.

News ID: ۷۴۲۱۳۹

14 June 2017

“The Ministry of Sports and Youth still views sports as a cultural activity, ignoring the fact that they can play a role in the country’s economic growth,” Sadeq Raeisi-Kia also told Financial Tribune.

“Sports managers and heads of federations today don’t adopt economic strategies; instead they are constantly competing to get money from the government. Their success depends on the amount of money they manage to collect from the government.”

Raeisi-Kia noted that Iran’s sports industry is not lucrative and does not have a large share in job creation.

“It is estimated that around 20,000 people work in the sports sector. This is while about 60,000 graduates of sports-related majors are said to be unemployed,” he said.

Referring to the role of sports in the Iranian economy, Raeisi-Kia said the sports sector accounts for only 0.5-0.7% of the country’s GDP, whereas in advanced economies such as Germany, France or England the share is up to 5%.

Interrelated

Football and economy are closely interrelated in today’s world.

Developing rapidly around the world, football is a social, cultural and economic phenomenon.

It is one of the most lucrative fields of sports worldwide. Sponsors invest heavily in this popular field, helping football grow economically.

Professional football teams create huge revenue streams for their shareholders and generate considerable direct and indirect value for their countries’ economy.

Football is the most popular sport in Iran, while wrestling and volleyball are close contenders. It plays an important role in the lives of Iranians, as it is played in schools, streets and football clubs nationwide.

However, the economic side of this game in the Middle-Eastern country seems way weaker than the passion Iranians have for football.

Iranian clubs are usually saddled with huge debts from time to time and fail to implement effective economic plans in the long run.

Government’s Deep Involvement

Raeisi-Kia slammed the fact that the government has the lion’s share in all activities of football.

“In the professional sense of sports around the world, governments only take on the role of policymakers and supervisors; they are not directly engaged,” he said.

Most Iranian football clubs are state-owned. Very few clubs in the Persian Gulf Pro League, such as Padideh, Naft Tehran and Gostaresh-e Foulad, belong to the private sector.

He noted that the negative impact of such an approach is over-reliance on public budget, which prevents clubs from earning revenue by carrying out economic activities because there is no such intention.

“Managers have not been trained to and are not capable of having economic views. The government does not provide them with the means to spur economic growth. All the wrong policies taken by the government have led to inefficient development of football economics in the country. Clubs should have stable sources of revenue,” he said.

Aside from the privatization of clubs, which he deems absolutely necessary, he put emphasis on stadiums and sports venues.

“One important source of revenue for the clubs are stadiums. Stadiums should be passed into the clubs’ ownership. They should be able to earn more money from their matches by selling tickets. This is only possible when they own stadiums,” he said.

“Why is it that all the stadiums belong to the government? Currently, clubs rent the pitches from the government on a match-by-match basis.”

Television Broadcasting Rights

According to Raeisi-Kia, television broadcasting rights, as one of the main sources of revenue, account for over 40% of clubs’ revenues worldwide.

Notably, the English Premier League currently makes £1.07 billion a year from all overseas deals.

“However, in Iran, the Islamic Republic of Iran Broadcasting shows tournaments but does not pay the clubs anything. This is rooted in the fact that we do not view sports professionally,” he said.

The former managing director explained that the economic discourse must be introduced and taken seriously in sports in order to prepare the ground for the clubs’ economic growth.

The Ministry of Sports should view sports as an industry and lead it toward professionalism. Iran’s sports sector has the potential to have a 2% share in the GDP. If achieved, the number of jobs in the sector could reach somewhere between 100,000 and 150,000.

On the subject of investment, he added that currently investors, whether domestic or foreign, are not willing to take the risk to enter football because this sector has proved to be “unstable”. If incentives are introduced and the Iranian sports ambience becomes stable, more investments will be made.

“Athletic clubs, above all, must be regarded as economic entities,” he concluded.

With Iran national football team having recently qualified for the 2018 FIFA World Cup in Russia, fans across the country are hoping to see the profile of football rise both in economic and non-economic terms in the coming years.

To achieve a more stable economic state, football managers and policymakers need to adopt long-term economic strategies instead of pursuing short-term solutions.