strategic challenges in the football business: a space analysis

Strategic challenges in the footballbusiness: a SPACE analysisJohn Cross and Steven Henderson*Southampton Business School, UK

� The football business has been transformed from a tawdry pastime to a major industrythat is scrutinized by city analysts and is the subject of important take-over bids.Yet asGrundy observes in an earlier issue of this journal, there are few serious attempts toexamine the industry with strategic rigour.

� This paper reports on and analyses data from professional football clubs and uses SPACEanalysis to generate strategic positions for individual clubs and a prognosis for theoverall industry. This evidence enables Grundy’s model of the industry to be contextu-alized and shows that in most respects, his ideas are supported. The paper also revealsthat environmental factors play a significant role in the business success of a club.Thisidentifies the paradox that success on the football field can have a deleterious effect onthe strategic future of the club.

� The paper also concludes that the structure of the industry would not support reason-able business expectations and suggests that we are observing a corporate hobby ratherthan modern business activity.

Copyright © 2003 John Wiley & Sons, Ltd.

Copyright © 2003 John Wiley & Sons, Ltd. Strategic Change, December 2003

Professional football hasbeen transformed from anunder-financed sport to a

high-profile industry

the scrutiny of city investors. For example, 12years ago Manchester United attracted littleinterest when offered for sale at £10 millionbut in 1998 BSkyB tried to pay £650 millionfor it. In 2000, the club became the first to bevalued at £1 billion.

The English Premiership has the largestturnover in the world, generating £569 millionin income from all sources (gate receipts,merchandising, hospitality, etc.), compared to£400m for Italy’s Serie A, £345m for Spain’sPrimera Liga and £185m for the Division One

Strat. Change 12: 409–420 (2003)Published online in Wiley InterScience(www.interscience.wiley.com). DOI: 10.1002/jsc.654 Strategic Change

*Correspondence to: Steven Henderson, SouthamptonBusiness School, East Park Terrace, Southampton SO451XB, UK.E-mail: [email protected]

Introduction

Around spins the circus more crazy thancruel.

JP Donleavy, The Onion Eaters.

In an insightful line of thought, Grundy (1998)and Hussey (1998) observe that professionalfootball is no longer a humble pastime activityfor spectators who support clubs managed byamateurs and owned by local benefactors.Professional football in England and Wales hasbeen transformed from an under-financedsport to a high-profile industry. Football clubsare incorporated, many as public limited companies and professionally managed under

410 John Cross and Steven Henderson

of France (Deloitte & Touche, 1999). Profes-sional football in England has thus moved froma sport to a commercial activity in which thegame is only one product and the spectatoronly one source of revenue. Grundy has calledfor a serious analysis of the industry usingformal strategic analysis, and proposed a value-added approach upon which such an enquirycould be based.

This paper complements Grundy’s work onthe value-added aspects of the business byapplying a formal strategic management modelto the wide range of strategic issues that facefootball clubs. The pressures for strategicchange are examined for a large number ofclubs, in both the Premiership and Nation-wide League, by applying SPACE analysis; atechnique often referred to in texts but rarelyapplied effectively.

The paper begins by introducing the SPACEmodel and explaining how it was used for thisstudy. We then describe the strategic chal-lenges facing a number of clubs selected fromthe SPACE analysis, and finally relate our evi-dence to the important issues and questionsidentified by Grundy.

The use of SPACE analysis

In order to identify and quantify strategic pres-sures, it is necessary to apply a model thatexamines each football club’s competitivestrategies, financial resources and the natureof its environment. SPACE analysis is an analytical tool originally devised by Rowe andMason (1994) and updated in subsequent edi-tions. It uses the data and aggregates conclu-sions that would be produced by applying theclassical strategic auditing models found in thestrategy literature, such as the profit impact ofmarketing strategy (Buzzell and Gale, 1987),the five competitive forces that determineindustry profitability (Porter, 1980) and thevalue chain (Porter, 1985), the Boston Con-sulting Group Matrix, the GE Matrix, SWOT,PEST and conventional financial ratio analysis.1

The intention was to distil the lessons fromeach classical framework into one meta modelincorporating four strategic variables: industryattractiveness, environmental stability, com-petitive strengths and financial strengths. Eachelement is considered and enumerated accord-ing to its presence or absence. For example,a firm with tight cash flow might score itself2/6 in its financial strength assessment for thatitem, a more cash abundant one might score5/6. Adding scores for all the financial elements — including profitability margins,gearing and so on — and taking an averagewill generate a total score for financialstrength. The same procedure is followed toproduce a score for all four strategic variables.

The four scores are used to map the firm asshown in Figure 1. In this Figure a footballclub in the first division scored 4.5 and 3.6 forindustry attractiveness and financial strengthsrespectively and -1.3 and -1.1 for environ-mental stability and competitive strengthrespectively. The values for financial strengthsand industry attractiveness are plotted directlyon the axes, while the plots for environmen-tal stability and competitive strengths arefound by deducting 6 from the scores calcu-lated. Consequently, the most desirable posi-tions for these variables are found at theorigin, while a strong financial position and anattractive industry are located at the extremesof their respective axes. Adding opposing axes produces a pair of co-ordinates and thequadrant specified by these co-ordinates determines the strategic posture of the club.


Figure 1. The output of a SPACE analysis.

1 An account of these techniques can be found in anyconventional strategic management textbook.

The club in question is located in the North-east quadrant, suggesting that it is a strongbusiness in an attractive environment with sufficient financial strengths to overcome theenvironmental turbulence ahead. Were thebusiness a commercial firm, one would expectto see aggressive expansion strategies. In thecase of the football club, the comfortable busi-ness position could be used to support ambi-tious plans for the club’s performance on thefield and promotion to the Premier League, orto provide a flow of dividends to shareholders.

The Southeast quadrant locates a competi-tive business with an attractive mix of com-petitive strengths and industry attractiveness,but lacking in the financial resources neces-sary to take advantage of its position. Strate-gies are best directed at acquiring resources oraccess to resources.

Businesses in the Northwest quadrant areconservative, having the financial means toexpand but carrying an unpromising mix ofcompetitive strengths in a poor local market.Ordinarily, strategies would be based aroundfinding and boosting a competitive advantageand/or diversification, before any ambitions on size or performance could be realisticallyachieved.

Businesses in the Southwest quadrant aredefensive — meaning that they are competi-tively weak in an unattractive industry withoutthe financial resources to put things right.Although turnaround management is a possibility (Slatter, 1984), the result is likely tobe a mean existence at best.

SPACE analysis has been used as an integra-tive device in the teaching of strategic man-agement models (Thompson, 1993) to analyseindividual companies (Radder and Louw,1998) and to show the strategic position ofcompanies in the biotechnology industry(Ranchhod and Henderson, 1995) and UKLeisure Centres (Benson and Henderson,2000).

Survey method

The auditing technique for SPACE proposed byRowe et al. (1994) is based on Likert scales

abstracted from strategic managementmodels. There is no reason why these scalescannot be used as a basis for a postal ques-tionnaire, providing the questions are writtenin the idiom of the industry concerned andseem relevant to those asked to complete it.

Discussions with several Football ClubAdministrators pruned down the original auditlist and removed the academic and technicalterms from the questions. A focus group washeld with members of the Institute of Foot-ball Managers and Administrators (IFMA), toestablish whether or not the questionnairecaptured the key factors that drive businesspractices in English football clubs and whetheror not those issues were captured by the questionnaire. As a result of these discussions,modifications were made and these were testpiloted at a later IFMA meeting of different,though equivalent, members. At this meeting,the questionnaire was declared usable andsent to the Chief Administrator at all 92 Pre-miership and Nationwide League members.A supporting article was published in IFMA’sjournal ‘Centre Circle’. A total of 54 usablequestionnaires were returned and analysed for this study.

Football clubs SPACED out

The plot for all the clubs surveyed is shown inFigure 2. In this section we use SPACE analy-sis to produce a small number of strategicaudits for unnamed clubs in each of the postures. Confidentiality promised to eachrespondent prevents naming of the clubs con-cerned in this paper. We note in passing thatrespondents to our survey were able to iden-tify their own club from the analyses belowbut were inaccurate when attributing cases to other clubs.

Aggressive posture

Club A: Played in the Premiership. It has hugefinancial leverage, principally from the sale ofshares and many local environmental advan-tages. It has invested in its ground and inplayers to improve the performance on the

Strategic challenges in the football business 411



field. It regards both strategies as being suc-cessful, since it has won several competitionsand spectators continue to pay at the gate.Theclub was able to cover its wage bill from gatereceipts. Clearly, continued business successdepends upon achievement on the fieldwithout adding to costs. If gate receipts fall,or the wage bill escalates, the club will not be able to sustain its present position.

Club B: This club competed in the seconddivision of the Nationwide League and hasnever managed to compete at higher levels, orwon a major trophy. Nonetheless, its businessposition is enviable in many respects.The gatemoney does not cover players’ wages but revenues from extended activities (conferencefacilities, financial services, etc.) make a critical contribution. Sponsorship is also im-portant and growing. In addition, the clubdepends upon rising income streams fromsuch media as television. Overall, the clubruns at a small but respectable surplus. Theclub’s strategic success depends upon activi-ties outside football. Even revenue from sellingon promising young players, a mainstay ofmany unglamorous clubs, is expected todecline. In many ways, it could be argued thatthe business would work better without theexpensive football club to support but it is

thought that much depends upon the value ofthe club as a brand for these ventures.

Conservative posture

Club C: Played in the second division of theNationwide League but has competed at thehighest level in the past. It is just able to coverits wage bill from gate receipts and has secureincome streams outside the game. Conse-quently, it runs at a financial surplus. Since itsstadium is already adequate for attendance,it is not under pressure to invest in furtheradditions to capacity. The club could chooseto invest in superior players to boost itsplaying performance, but there are businessfactors to consider. Its local environment isnot attractive. Rather unusually, improvedplaying performance is not thought likely toincrease gate revenues, thus investment insporting success is likely to compromise theclub’s secure financial position. Further, manyof its income streams from the game are likelyto decline in the near future and the club willneed its financial reserves to survive.

Club D: Played in the Premiership. The localenvironment is attractive and quite stable. Theclub has a secure financial position and runsat a surplus in spite of gate revenues that aresignificantly below the players’ wage bill. Thepoor returns from gate receipts are due in partto the small size of its ground. The club has anunusually fickle spectator base and gate rev-enues will fall and merchandising sales will tailoff when the team is not performing well andwinning trophies. This makes the club’s finan-cial position particularly sensitive to dis-appointing team performances. The club hasno exit strategy from this position becausesavings on the wage bill from selling playerswill likely be lower than the drop in gate rev-enues that result. Its current conservativeposture is therefore contingent on somesuccess every season.

Competitive posture

Club E: This club is famous the world over for its past glories. Its intensely loyal fans disregard both the team’s lack of recent


Figure 2. Football clubs SPACED out.

success and the relatively uninspiring qualityof their current opposition when supportingtheir team. Merchandising and extended activ-ities make a contribution to income but thecritical source is media revenues, which theclub believes will continue to rise. In spite ofthis good position, the club faces severe finan-cial constraints. Gate receipts are well short ofthe players’ wage bills and liquidity is quitetight. The club runs at a significant deficit. Theheart of the problem is that the club’s presentachievements do not justify its current expen-diture on players and the ancillary sources ofincome are insufficient to close the gap. Pre-sumably, the club is relying on future successwith the same squad, which would boost rev-enues through playing in prestigious Europeantournaments. However, the possibility thatthis strategy is not financially sustainable mustbe faced at some point.

Club F: This club has adjusted to the FirstDivision after a period in the Premiership.It does not fill its stadium and thus cannotcover players’ wages, but extended activitiesperform well. The departure of many of itsbetter players created a revenue stream butthis has ended and the club wishes to hold onto the quality players it still has. Even thoughincome from sponsorship is expected toincrease over the next few years, it is expectedthat the club will continue to run at a sub-stantial loss for the near future. Clearly thecurrent situation is untenable.The club cannotafford to pay the players it has to maintain itspresent position and must expect to slipfurther down the league unless it can improveits playing success, which depends uponfinancial investment in players.

Defensive posture

Club G: This club played in the Second Divi-sion and has rarely figured in any great footballevents. It has a small ground that it cannot filland cannot cover players’ wages from the gatemoney. Revenue from extended activities and sponsorship is limited and so the club’sfinancial position is very poor.The commercialsituation would only improve with success, or

at least improved performance, on the pitch.The club does not have and is unlikely to getthe necessary funds to strengthen its squad ofplayers and so the poor position is expectedto worsen, rather than improve.

Club H: This club played in the Third Divi-sion and has seldom played out of the bottomdivision in its history. It has a small ground,which it largely fills, but the poor infrastruc-ture around the ground would make expan-sion difficult. Gate receipts are well short ofthe wage bill but extended activities and spon-sorship brings the club close to breaking even.However, the situation is set to worsen, ashelp from a generous benefactor is likely todecrease.

In this section of the paper we have examinedthe business position of eight clubs and seenthat SPACE analysis helps to identify a varietyof strategic issues. This helps to build abroader picture of the issues facing clubs inthe football industry. In the next section of thepaper we develop Grundy’s model of the foot-ball industry, by aggregating data generated bythe individual SPACE analyses. Where relevant,data will be presented using boxplots.The boxindicates the inter-quartile range (half theclubs in the sample), with the thick lineshowing the median. The arms indicate thelimits of the range, apart from outliers that arerepresented by detached circles. These box-plots give ready access to the data and scopefor interpretation.

Pressures for strategic change

From the SPACE plot (see Figure 2) it is clearthat all but six of the clubs fall into aggressiveor competitive postures, strongly suggestingthat the major difference between issuesfacing clubs is caused by the finance/stabilityaxis rather than competitive/attractivenessfactors. The importance of finance in deter-mining the postures of the clubs in shown bythe following plots. Overall profit and loss byposture is shown in Figure 3, illustrating thatrelatively few clubs achieve financial perfor-mances that would make any investor happy,




despite the modernization and professional-ization of the industry.

From our sample, 67% fail to break even,with 79% of clubs in divisions two and threeof the Nationwide League in this position.Liquidity shows a similar pattern, with 37% ofthe sample claiming that liquidity is very tight,with the problem more acute in lower divi-sions. Even excluding debt service and othernon-operating costs, 61% of clubs cannotbreak even. Further, clubs frequently regardthemselves as risky, rather than safe invest-ments. A large part of this difficulty is causedby the inability of clubs to cover the players’wage bill, as shown in Figure 4.

The heart of these financial problems isclearly the inability to cover wages from thedirect football activities. Grundy explains thatthe power of suppliers (the footballers) is veryhigh. However, Grant (2002) provides us witha more comprehensive framework for under-standing the power exerted by players.Working from the basic premise of theresource based view that the skills of the work-force are the main source of superior rents ina firm, the opportunity for players to appro-priate ‘economic rent’ is higher than everbefore.

Appropriability — If resources are homoge-neous and interdependent it is straightforwardfor the controller — the firm — to appropriatethe value created. Clearly a football team isrequired to integrate the talents of individuals

to gain best value from the resources. To someextent this may reduce the bargaining strengthof some players — particularly players ofaverage ability (generally referred to as ‘journeymen’) who may appear more talentedthan they are, because of a club’s coachingmethods and ability to blend players of com-plementary strengths in the team. Howeverthis force may be relatively weak when con-trasted with the forces outlined below, whichincrease the appropriation power of playersagainst the club.

Transferability — If resources can be easilytransferred, it is difficult for the firm to stopthe resource claiming the lion’s share of thevalue created. Legal changes in the way thatplayers are contracted to clubs (known as theBosman Ruling) has enabled players to nego-tiate their terms and conditions for a fixedtime period. After the term of the contract hasexpired, the player can change clubs withoutpenalty and negotiate a large signing-on feewith a new club.

The increased transferability of playersmakes it extremely difficult for a club to builda team based upon the skills of a few key indi-viduals and so consistently successful clubshave been forced to adopt a squad system.Thus clubs must maintain a larger squad ofmore expensive players than hitherto, raisingthe demand and price of good players and


Figure 3. Posture against financial surplus or loss (1 issubstantial loss, 4 is break even, 7 is substantial surplus).

Figure 4. Posture against ability to pay wages from gate revenues (1 wages exceed revenues, 4 break even,7 substantial surplus of gate revenues above players’pay).

even journeymen, but on the other hand,creating an effective financial barrier to entrythat smaller clubs cannot climb.

Transferability is reduced for young players,again for legal reasons. Larger clubs haveresponded by creating academies for trainingand developing youths and may be tempted to introduce them into the first team morequickly than formerly.

Replicability — replicating skills, ratherthan buying them in, is intrinsically moreproblematic in this industry than most. By def-inition, the distinctiveness of a top profes-sional is his principle attraction. Hence, lowreplicability leads to greater rents appropri-ated by skilful players.

Durability — Resources decline over timeand are therefore less valuable. With an ageingplayer this is particularly the case. However,there is a further economic effect of theBosman Ruling. When a player’s contractexpires, he is free to join another club for anegotiated fee that he appropriates, ratherthan accept a proportion of the transfer feeagreed between clubs while the contract is inforce. There is thus a durability cycle to thecontract relationship, that favours the playerboth at the beginning, when the contract ismade and towards the end, when the playermay be able to renegotiate terms that reflectthe personal loss involved in maintaining thecontractual relationship rather than allowing itto lapse. These bargaining points are wellunderstood and exploited by the professionalnegotiators and agents who represent players.

In short, players are not homogeneous andonly partially interdependent. Because of thisand their limited transferability, replicabilityand durability, the relatively weak powers ofclub against player have created a situationwhere clubs cannot cover the costs of playersfrom gate receipts. Since success dependsupon the players and these are the largestelement of costs, it follows that cost basedstrategies will be of limited effectiveness interms of financial and professional success.Rather, financial viability depends uponturning value into revenue streams that areless open to appropriation by players.

Cost based strategies willbe of limited effectivenessin terms of financial and

professional success

In the next section of the paper we useGrundy’s thoughts on value creation toexplore the range of possibilities for clubs in the various postures.

Grundy’s model of value creation in the football industry

Grundy’s model, shown in Figure 5, estimatesvalue creation in the industry. In this section,key components of his model will be exploredusing SPACE analysis. The data obtained fromthe study gives insights into how the partici-pating clubs view the elements of the modeldescribed above. An item is considered impor-tant to a club if it answered 5, 6 or 7 on theseven-point Likert scale used.

Match days

Grundy places match performance at thecentre of the value creation. In terms of gen-erating revenues, we would suggest that thisconfuses the day of transaction with con-sumption in terms of the value creating



Figure 5. Value creation in football (Grundy, 1998).


process.The success of the team over a seasonand the quality of the opposition on the dayare greater guides to value and revenue cre-ation in the stadium, rather than events duringa game (Figure 6).

Attendance contributes to several revenuestreams actualized on match days, includingthe overall success of the team (85% impor-tant) and the style of the opposition team(74%). The latter is particularly importantbecause corporate clients are willing to paymuch more for hospitality when the opposi-tion is revered, regardless of the performanceitself. Similarly merchandising revenues aredependent upon team success.

Gate numbers

Grundy observes that the chief areas of expan-sion of the value system for each club are in

leveraging the brand and in selling productsand services to supporters inside the stadium.This latter is obviously constrained by thegrowth of attendance over time. Projectionsfor future growth of attendance numbers areshown in Figure 7, demonstrating that thecompetitive postures are more likely to findgrowth than the constrained ones.

Merchandising, branding and extended activities

Extended activities include a range of servicesthat leverage the club’s physical resources andreputation to other markets. Clearly, they arepart of Grundy’s value domain but there aretwo distinct elements to it. Many activitiesdepend upon match day attendance — cater-ing, corporate hospitality and so forth — andtherefore depend upon the performance of


Figure 6. Factors influencing match day revenues. Match day revenues depend upon the success of the team over a season, and the quality of the opposition on the day. Events during a match are of lower importance: 1 is noimportance, 7 is critical importance.

the team over the season, and the quality ofthe opposition at any game, as illustrated inFigure 8.

Grundy (1998) argues that the power ofbuyers — in this case spectators — is verylow. This results from the loyalty that sup-porters feel for a club, often from a young age and as part of a family and peer groupactivity. Clubs are clearly aware that support-ers rarely switch teams and might exploit thisloyalty through the pricing of tickets and merchandise.

Clubs have been criticized in the past forexploiting supporters by enforcing repeat pur-chases on supporters by changing strips andproviding poor quality products. Clubsregarded repeat purchases as relatively un-important (mean 4.6), but the importance ofquality to revenue receipts is shown by Figure9. Clearly, the belief that quality is not impor-tant is not widespread but most concentratedin postures with more severe financial constraints.

Grundy raises the issue of shorteningproduct lifecycle for merchandising products,together with high market penetration inmany instances — 75% in the case of replicashirts at Newcastle United. However, wewould point out that the intrinsic loyalty offootball supporters opens the possibility of

repeat purchasing in extended merchandisingactivities, as shown in Figure 10.

Grundy refers to the importance of brand inmatch day revenues but his work does not linkparticularly well with his interesting discus-sion about the nature of value creation withina particular game. We think of a club’s brandas an embodiment of the long-term values thatcan be used to leverage revenue. The valueseen in this way does not fluctuate over thecourse of a game but reflects the generalsuccess and style of the team, its history andits infrastructure, its stadium and so on. A



Figure 7. Expectations of gate numbers over 3–5 yearsby posture: 1 is substantial fall, 7 is substantial rise.

Figure 8. Posture against significance of revenues from extended activities (1 indicates no significance, 7is critical contribution).

Figure 9. Posture against sensitivity of merchandisingrevenues to product quality (1 not sensitive, 7 very sensitive).


strong brand can be used on an extendedrange of activities, such as financial services,hospitality and conference organizing, thatleverage the club’s physical resources and rep-utation into unrelated markets. In fact, valuecreated here may be particularly beneficial tothe club because such revenues might be lessopen to appropriation by players since trans-parency is reduced, and the involvement ofplaying staff in the service may be no morethan ceremonial at best. Again, we see thatsuch revenues are most important to the leastfinancially constrained postures.

The history and playing style are importantelements of brand but difficult for a club tochange in the short run. There has been muchattention focused upon the third element —the quality of the stadium. Traditionally, foot-ball grounds were often shabby, unsafe places,in older, inaccessible parts of the town. Largerclubs have invested in modern stadia, often inclose proximity to retail centres, with confer-ence and hospitality resources incorporatedinto the design. The constraints imposed byground constants are shown in Figure 11.

The boxplots suggest that the problem formost clubs in the competitive posture is thatthey cannot fill their stadia, not that capacityis a major problem. Of course, dilapidatedfacilities could have been a reason why supporters do not attend, but we suggest thatthis may only be a moderating variable aroundthe gate revenues. Clubs with the defensive

posture reported a further difficulty withtransport infrastructure and parking.

The boxplots suggest that the financial con-straints experienced by clubs in defensive andcompetitive sectors are due in some part toinability to leverage finance from extendedactivities based around the football activities.

Media

Television receipts from BSkyB satellite havefunded much of the explosive growth inplayers’wages. Grundy also observes that suchrevenue streams are of particular interest toexternal investors from financial institutionsand that future revenue streams are of criticalimportance to many clubs. Clubs’expectationsabout such revenue streams in our study are shown in Figure 12, and suggest thatdefensive clubs are generally pessimistic. Pre-sumably the higher scores from competitiveclubs relate to the expectations of futuresuccess that result from investments in thepresent.

Match day performance and the success ofthe team and its opposition on any particularday are associated with such media receipts,since broadcasters do not set the whole schedule at the start of the season when fix-tures are known, but reserve a substantial partof their airtime for clubs that are newsworthy,or successful, at the time of the broadcast.


Figure 10. Importance of repeat purchasing in mer-chandising revenues (1 is of no importance, 7 is of greatimportance).

Figure 11. Posture against constraints on gate receiptsimposed by stadium capacity (1 is major constraint, 7 isno constraint).

Player acquisition and disposal

A further traditional source of revenues, par-ticularly for clubs in lower divisions, has beenthe nurturing of young, talented players forlater sale to larger clubs. Since players belowthe age of 24 years are not covered by theBosman Ruling, this opportunity still existsand might be supported. However, Figure 13shows this to be a declining opportunity.

Grundy suggests that expertise in the trans-fer market might also create a revenue stream,particularly in the employment (importing) offoreign players for resale. However, Figure 14suggests that further expansion through thisroute is unlikely in most cases.

Summary and conclusion

It is clear that the key strategic variable influ-encing the development of the industry is theability of the players to appropriate thesurplus generated by the sporting activities,particularly funds originating from mediasources. Although control of costs is naturallyimportant, it is not enough to deliver a com-mercially competitive advantage and a costbased strategy must inevitably create deleteri-ous effects on the playing performance,thereby creating financial problems in mostcases. Success depends upon creating strongerrevenue streams that ironically make the club

more vulnerable to appropriation pressures.Further, although Grundy’s value creationmodel accurately identifies the sources of suchrevenue streams, when the SPACE model isapplied to these, it is clear that there is littlescope for further development in many cases.

Overall, the prognosis from SPACE analysisis a pessimistic one. In spite of its high



Figure 12. Posture against expectations of future mediarevenue (1 indicates significant falls, 4 no change, 7 indi-cates substantial increase in revenues).

Figure 13. Posture against expectation of receivingstrong revenue streams from transfer market trading (1 decreasing revenues, 7 increasing revenues).

Figure 14. Posture against expectations of revenuestreams for import/export of footballers (1 is largedecrease, 7 is large increase).


glamour and large sums of money, the indus-try is an unattractive one for all but the playersand the media companies. Even clubs in themost favourable aggressive posture are gener-ally so positioned by a benign environmentrather than large profits, or the potential tomake such profits. The attention clubs receivefrom financiers and industrialists cannot bejustified by sober strategic analysis. Ratherthan elevate this activity to the status of anexciting, dynamic industry, it might be moreaccurate to think of it as a pastime that hasbeen transformed from a cheap and cheerfulworking man’s sport to an expensive, self-important corporate hobby.

Acknowledgements

We would like to express our grateful thanksto Bryn Parry, Larry Nelson and Tom Thomasfor critical comments on the text. Particularthanks must also go to John Latham for hisexcellent advice on the numbers and toSophie N’jai for her painstaking efforts.

Biographical notes

John Cross was originally an engineer at theDepartment of Oceanography at SouthamptonUniversity and is now a Senior Lecturer in Marketing and an Entrepreneurial Fellow atSouthampton Institute. He acts as a consultantfor professional programmes at overseas busi-ness schools. His lifelong interest in footballnow consists of researching, watching and anextensive involvement in the professionaliza-tion of the game with the Institute of FootballManagement and Administration, and hewishes that he was still able to play!

Steven Henderson trained as an economistat the University of Kent at Canterbury andworked in banking and consumer research

before becoming a Reader at SouthamptonBusiness School. Although he chiefly teachesand researches strategic management, his firstapplications of strategy were on the footballfield where he invariably found himselfplaying against more talented opponents!

References

Benson A, Henderson S. July 2000. SPACE analysisof the leisure industry. ILAM Conference,Glasgow Caladonian University, Glasgow.

Buzzell RD, Gale BT. 1987. The PIMS Principle:Linking Strategy to Performance. The FreePress: New York.

Grant R. 2002. Contemporary Strategic Analysis:Concepts, Techniques, Application. Blackwell:Oxford. 4th edition.

Grundy T. 1998. Strategy, value and change in thefootball industry. Strategic Change 7(3):127–138.

Hussey D. 1998. Management, football and theworld Cup. Strategic Change 7(3): 125.

Porter ME. 1980. Competitive Strategy Techniquesfor Analysing Industries and Competitors. TheFree Press: New York.

Porter M. 1985. Competitive Advantage: Creatingand Sustaining Superior Performance.The FreePress: New York.

Radder L, Louw L. 1998. The space matrix: a toolfor calibrating competition. Long Range Plan-ning 31(4): 549–559.

Ranchhod A, Henderson S. 1995. Strategic man-agement in smaller bio-technology companies.In Enterprise in Action, Richardson B, Boyatt I(eds). Pavic Press: London.

Rowe A, Mason R, Dickel K, Mann R. 1994. Strate-gic Management: A Methodological Approach.Addison Wesley: Reading, Mass.

Slatter S. 1984. Corporate Recovery, A Guide toTurnaround Management. Penguin Business:London.

Thompson JL. 1993. Strategic ManagementAwareness and Change. Chapman and Hall:Oxford.


strategic challenges in the football business: a space analysis

Documents