The impact of on-field performance on a sports’ club’s revenue streams: the case of AmaZulu Football Club.

Abstract

Abstract Financial institutions and economists have begun accepting the concept that the sports industry plays a major financial and economic role in society. In turn sports teams and their brands have become a major source of income for the teams and stakeholders and a method of recreational activity for societies who are the fans. These teams rely heavily on the financial support from their sponsorships, incentives they receive by participating in their respective leagues and tournaments, merchandising and gate ticket sales. This research worked at ascertaining whether there is a link between teams on field performances and whether these can be linked to a potential to increase their revenue stream through their marketing demand sponsorships, sales of merchandise memorabilia, the incentives from the respective leagues as well as the ticket sales to supporters. The research was conducted with the realisation that not every team can win the league or cup but that good performances enable teams to survive and be profitable which in turn enables clubs to build and potentially challenge for their respective honours. A good example being a mid league table club, Leicester City winning the English league. Data mining as well as academic literature were applied to compare whether good team performances shared a common pattern with the potential for a team to increase revenue. Secondary data was supplied by AmaZulu Football Club, based in Durban, South Africa. The secondary data included information regarding the performances of AmaZulu FC in the Premier Soccer League, ticket sales, marketing demand for the club advertising space, league incentive payout as well as jersey merchandise sales. These are presented as figures and tables based on data covering a four season period beginning at the 2011/2012 season until the end of the 2014/2015 season. This data identified that when the team performed well there was a general increase in supporters coming to the stadium resulting in increased ticket sales. Good team performance also saw an increase in interest from the general public therefore leading to an increase in interest in the team and therefore advertising space became valued more. By virtue of performing well the league incentive payouts to the team were substantially higher when the team finished in higher log positions than when they finished in lower log positions. Merchandise sales did not follow similar patterns and a change in jersey sponsor in the 2012/2013 season was identified as a probable cause for fluctuations and a note for further research has been identified in this iv category. Amazulu FC team management were also surveyed on their opinion of the link between good team performance and the potential to increase revenue for the team. The study found that performance certainly impacts on revenue generation in terms of ticket sales, merchandise and sponsorship. It is thus of vital importance that clubs have good team performances as a key growth strategy as that alone can ensure that the club remains profitable and thus potentially competitive in the league. This research was not designed to establish the extent to which good performance leads to cups and league success.