Fantastic article by Ryan Fenix on the economics of a UFL Club. I'm pleasantly surprised that some clubs are actually earning a revenue, albeit a small one at that. The operations of the UFL and its clubs could give us an idea of how the clubs of our future national league would operate
Rampaging Fullback: Philippine Club Football Economics 101
Ryan Fenix, special to InterAksyon.com · Tuesday, May 6, 2014 · 3:49 pm
Are you a football fan armed tons of passion for the game, with dreams of owning a football club and more importantly, have at least P5 million pesos1 to burn per year?
Then you may have what it takes to own a Division One football club in the United Football League.
A lot of times, fans come up and ask, sometimes quite naively, why their favourite team just doesn’t snap up Player A to partner with Player B and bolster their squad. Perhaps it is best if we try to understand the financial side of how it is exactly to run a football club in the Philippines.
Anyone who has remotely played fantasy football can easily tell you: talented players inherently cost more. It is up to the fantasy manager to get the best players available under the prescribed budget.
Fantasy imitates reality, but does a higher team budget mean a better performance for the teams?
Green Archers United team manager Monchu Garcia has a very interesting analysis. “I’ve looked at the past rankings and can see there is a direct (although not exact) relationship between annual budget and position/ranking. In other words, those that spend more have better performance,” he said.
“As is usual in many bell curve statistics, there are a few clubs on either end of that budget spectrum with majority falling somewhere in the P8 to 12M range. This is approximately the amount you need to have a mid-table team.”
So… P8 million, at least, for a mid-table team? Where is all this money spent on, exactly?
“League entrance fees are, I think, Php 400,000, field rentals amount to 100k/month, ball (fees) is around 2,000 pesos a month,” said Kaya FC team manager Justin Tolentino.
“We also have to provide housing for foreign players, provide transportation, and of course the wages and bonuses of our players, coaching and medical staff.”
Money in the UFL thankfully isn’t just a one way street. Most teams do get some revenue to run their clubs, and most of it comes from sponsorships from private companies. In the case of Kaya, income from its football academy supplements their sponsorship money, as well as sponsors in kind like sports drinks, jerseys, and vehicles.
For Stallion FC, Mizuno sponsors their kit and Star does the same for their balls and training aids.
But exchange deals can only go so far for a club. “Financial support is still the best form of sponsorship. We cannot pay players’ salaries with goods from x-deals, right?”
Aside from the sponsorships, the biggest source of revenue for the teams is from television revenues from its deal with TV5.2
“Club revenue from the league works this way — TV5 pays the league P30M per year (for 5 years)3 for UFL rights,” said UFL president and Loyola Meralco Sparks vice chairman Randy Roxas.
“Our operating formula includes revenue share for the clubs. There is an equal share amount that goes to each club and a variable portion depending on where the club places at the end of the league.”
In short, all teams get the same fixed amount from the UFL plus another amount that will depend on where you finish in the league table at the end of the season.
“This amount, although it can reach close to one million on a good year for the champion, is still insignificant when compared to what a top tiered team needs to spend,” said Garcia.
Randy Roxas adds: “Amounts involved here may not be enough to cover the clubs total operating expenses but certainly helps.
“Ideally as the league grows, and in the future if ticket sales becomes a big contributor, then club’s earnings from the league can improve.
“What is important is that there is a formula in place that helps clubs generate some income. This was never in place before.”
Most of the club owners in the UFL, aside from being ardent football people, are also CEOs of big corporations. Thus, they would quite surely want a return on their investments to go along with their fervor for the game.
But for them, passion and love for the game are enough motivation, for now.
“I would be surprised if you will find any team that makes money,” said Tolentino. “The driving force behind investing in a team is the passion for the sport. We all want to share our love for the sport with people from all walks of life.”
“We do this because we love the game. We want to give back because we have been blessed,” added Nierras.
“What players do not understand is that clubs do not derive revenue from football. Players tend to compare what other clubs pay or what they used to earn in other clubs or leagues. We try to be finically responsible club owners also.
“We cap our salaries based on what we want to spend, and not based on what players want us to spend. ”
Garcia puts it more directly. “Anyone who thinks they can make money out of running a football team today should wait about five years. Once we get over the hump (of acceptance, fan base and better appreciation of the game) then you will see teams start to have better revenues and maybe a little profit,” he said.
Still interested?
To be fair, it should be remembered that as recently as 2011, the Philippine Air Force won the League and Cup with a very limited budget.
“Maliit lang naman budget namin, (para sa) players equipment, recovery meal and snacks after training,” Air Force coach Edzel Bracamonte said.
“No allowance sila kasi may sweldo na sila sa PAF. Walang dagdag na sweldo dahil sa paglaro sa UFL.”
On another positive note, not a few have benefited on football’s renaissance here in the country.
“Many players, coaches, referees, uniform suppliers, equipment providers, fields/schools are already starting to see the benefit of the ‘first wave’ of the Philippine Football experiment that the Football Alliance started with the UFL,” said Garcia.
Just don’t ask the players if they get more money from this year’s prolonged UFL league season, where each club will get 24 matches due to the new triple round robin format this year.
Most teams give salaries on a monthly basis, so it will make minimal difference for the players. The main beneficiaries of the longer football calendar are the ball boys, referees, staff and the atrocious commentators who are paid on a per game basis.
Now, just because there is no money that is made now in football doesn’t mean that there won’t be money to be made in the future.
“For now (gate receipts) is still a small contributor but can be a stable source once club structure and following grows,” said Roxas.
“That’s why it is important to focus on professionalizing the clubs and getting them to set up their own academies. Eventually, clubs should be associated with and represent communities. When that is in place then ticket sales may become a good revenue source.”
Does more revenue in the future mean more spending from the clubs down the road too? Not necessarily, says Nierras.
“A few clubs are starting to sanitise their spending already. I believe this is only proper, considering you want to keep competing in the UFL. We started doing that in 2013, after winning the league title. We will continue to do so until a revenue stream in football is in place that will allow clubs to finically support itself, and not rely on the continuous infusion of funds from club owners alone,” said Nierras.
For those potential UFL owners out there, you might have to manage and temper your expectations regarding making your money back in the short term. For the here and now, most do it for the love of the game.
“None of us earn anything, not even a salary, from what we do. It’s all for the love of the game, and the kids,” said Roxas
“From a business standpoint owning a club in the UFL is not about making money. It is not even pro bono work. It is Puro Abono work!” added Nierras.
To be sure, most sports team owners do what they do for the love of the game. It is no different in the UFL. With the rebirth of football in the country, most of them are happy with the attention given to the sport as it allows them to give back to the sport which they so love, and have benefitted from.
Football’s popularity gives clubs the ability to use football as a vehicle to promote values like sportsmanship, camaraderie, and respect — values that they adhere to.
“It is all about giving back, and paying it forward. What we get out of this as team owners are worth the financial commitments we make to the club. Under appreciated as it may be, we really don’t mind,” said Nierras.
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