Important Parameters of the Football Industry in Cyprus: Challenges and Opportunities

Abstract

An in-depth study of the current football industry in Cyprus was undertaken to evaluate the financial situation of the first division football clubs, the competitive balance of the national league, the management practices of the football clubs and national league, and the negative effects of football hooliganism on the industry. Research involved both an extensive literature review of secondary sources from the Cyprus Sport Organization, the Cyprus Football Association, and the football clubs, as well as a qualitative data collection tool which included personal interviews and focus groups. Challenges and opportunities facing the football industry in Cyprus were identified.

Introduction

There is no doubt that football is the most popular sport worldwide. It is the king of sports. Because of the popularity of football all over the world on all continents, it is no surprise that on many occasions people address football as the “universal language.” According to Murphy, Williams, and Dunning (1992) “Soccer is, without any shadow of doubt, the world’s most popular sport.”

The hero of Liverpool FC, the late Bill Shankly, who managed to turn Liverpool Football Club into a big European football power, emphasized that football is a “more important matter than life or death.” It is true that “there appears to be something about the structure of soccer that gives it a very wide appeal in the modern world, an appeal that appears to be relatively independent to the level of development of countries, the socio-political character of the regimes by which they are ruled, their allegiances and the alliances that they are involved in” (Murphy, Williams, Dunning, 1992).

The Federation Internationale de Football Association (FIFA), the world governing body of football, commissioned the social research company in Zurich, Lamprecht and Stamm SE BAG, to conduct the FIFA Big Count 2006. A survey that was conducted through the 207 national football associations worldwide, in which data was gathered on the numbers of participating players in football at all levels. The results of the survey are impressive indicating how big football is worldwide. The president of FIFA, Joseph S. Blatter, in view of the published results of the survey stated, “Football’s popularity remains undiminished and is actually increasing.”

Some of the impressive findings of the 2006 survey as presented in a press release by FIFA on June 12, 2007, indicated the following:

· The overall number of 265 million male and female players is almost 10 percent higher than the number recorded six years ago (242 million). Of the 265 million, 26 million, or around 10 percent, are women.

· Since 2000, the number of registered male and female footballers has increased by around 23 percent to over 38 million.

· The growth in women’s football is particularly striking, with the number of registered players up 54 percent to 4.1 million, while the number of registered players in the men’s game has likewise seen an increase of 21 percent to 34.2 million.

· The number of unregistered occasional players, which was first recorded in the previous Big Count study, is up seven percent to 226 million.

· There are now a combined total of over one million futsal and beach soccer players (both male and female).

· The number of clubs (301,000) is similar to the figure recorded in 2000. That said, the total number of teams (1.7 million) has increased by approximately 200,000.

The FIFA president further noted, “If you count the relatives and close friends of active participants in football, who share in their passion for the game as fans and support them in other ways, the total number is even more impressive: Well over a billion people worldwide are involved in football at all levels of society and across all borders.” Based on the figures provided, FIFA stated that a grand total of 270 million people, male and female players, which represents four percent of the world’s population, are involved in one way or another in football. According to the FIFA press release, it is not only the television audiences and match attendances that are increasing but the number of people playing football on all continents. It is not only popular as a spectator sport but as a participant sport as well. It is worth noting that based on FIFA records, out of these 270 million people, 99.8% are amateur football players with 80% being youth players.

With all those figures available, the FIFA president is happy to state, “Football is truly the world’s game. It is played in every conceivable place, on every corner of the world by men, women, boys, and girls of all ages. It is played in narrow streets, in muddy fields, and in packed stadiums on grass, concrete, earth, and sand. Any differences between people fade away in its unifying light.”

The figures and all this related information display a picture of football’s development worldwide. However, besides this success in football’s development, which is proven by the increasing numbers, there are critics of the work of FIFA. Sugden and Tomlinson (2005) noted that FIFA has transformed itself from an international nongovernment organization into a business international nongovernment organization. FIFA has been increasingly profit driven and presents one of the leading examples of the professionalization and commercialization of modern sports. They define this as “sport’s emergence at the heart of the worldwide cultural industries” (Sugden and Tomlinson, 2005). Thus, Sugden and Tomlinson were willing to “… show what happens in an international nongovernmental organization when the pursuit of profit overwhelms an ethic of service” and in view of this they presented an analysis of the crisis in world football (Sugden & Tomlinson, 2005).

Along the same lines as this critical approach and perspective, Allison set a series of questions trying to set sports in the right perspective in this era of globalization; he emphasized, “… how worried should we be about the nature of power in international organizations?” (Allison, 2005).

There is no doubt that “football has been transformed over the years to a gigantic commercial operation” (Boyopoulos & Milakas, 2005). However, besides this truth, nobody can underestimate the cultural significance of football as elaborated by Norbert Elias in his civilizing process theory.

On the one hand, nobody can argue the fact that football has become commercialized and is big business now, as noted above; on the other, nobody should overemphasize the problems and challenges of the game by ignoring its power and what it can offer to different societies.

Sports generally, and football precisely, presents unique situations whereby we have the coexistence of profit making on the one hand, and nonprofit making and voluntary organizations on the other. In the football world, there is this uniqueness where profit making is an activity that is conducted in many instances by nonprofit or voluntary organizations where they all have common goals and objectives (Capling, 2004; Murphy et. al. 2001; Rachman, 2002).

In many instances, the financial dimensions of football are increasing without actually leading to profitability for the football clubs. In fact, all over the world, and in Cyprus too, many football clubs are facing severe financial problems. Although, there are occasions where the big football clubs in different nations are profitable (Capling, 2004; Deloitte, 2005; Booth, 2004; Rachman, 2002).

The finances of football clubs for many years and in many instances where not made public for many various reasons. In many situations, proper financial records were not kept, and in many countries, this presented a chaotic situation where records and information were not readily available (Kartakoullis, 2005). The introduction of the UEFA club licensing system by the Union des Associations Europeenes de football (UEFA), the European governing football body, assisted in many instances and actually contributed to the sorting of the finances of football clubs in Europe as clubs were forced to prepare financial statements, accounts, and budgets to be submitted to their national football associations; otherwise, they would not be granted permission to compete in national and European competitions.

Purpose of the Study

Football is an international cultural phenomenon which is currently characterized by two major challenges: professionalization and commercialization.

The purpose of this study was to examine specific parameters of the football industry in a small country, Cyprus, where there are certain unique characteristics. The specific parameters addressed were the financial situation of the first division football clubs, the competitive balance of the national league, and management practices in the football industry. What major challenges exist in the football industry of a small country such as Cyprus, away from this globalized form football is taking with the two major characteristics of professionalization and commercialization? What are the challenges facing such an industry away from huge contracts, profitable television rights, sponsorships, and so many vested interests, as one can see them in the international football arena?

The Republic of Cyprus became an independent state in 1960. It became a member of the United Nations in 1960, of the Council of Europe in 1961, and of the European Union in 2004. It has an area of 9,521 square kilometers and a population of approximately 800,000. Since 1974, it has been de facto divided. Efforts to solve this problem in Cyprus and reunify the island have not been successful yet. Nicosia (Lefkosia in Greek; Lefkosa in Turkish) is the capital city.

Three geographic characteristics of Cyprus have determined much of its fate: location, size, and the fact that it is an island. It is located at a strategic position in the eastern Mediterranean, at the crossroads of three continents. Its strategic location, long exposed coastline, and small size always made it an attractive and easy target for outsiders. Its history and demography reflect the ebb and flow of peoples and powers in the region. In the course of its long history, Cyprus has been controlled by most of the major powers that had interest in, or sought control of, the Middle East. The list of its successive rulers include the Egyptians, Greeks, Phoenicians, Asssy6rians, Persians, Ptolemies, Romans, Byzantines, Franks, Venetians, Ottoman Turks, and British. It gained its independence from Britain in 1960 (Joseph, 2000).

Cyprus has been considered a football-loving nation, arising from the fact that football competitions draw good attendance in Cyprus as well as from the fact that it is extensively covered in the media. It is not surprising for example that when the two big football teams of the country play against each other, they attract crowds of more than 25,000 people, which is indeed large, bearing in mind the small size of the country. This fact is further reinforced by the results of the football survey (2005-2006), conducted on behalf of the Cyprus Football Association by the Centre for Leisure, Tourism, and Sports Research and Development. The results of the research clearly indicated that Cyprus is a football-loving nation. For example, the fact that 77% of men aged between 21-70 years old support a football club, and another 20% who do not support a club, still follow football in Cyprus and are well informed about the results of the national league, clearly displays there is great interest. Additionally, the fact that 16,000 kids are registered and play football in football academies all over the island displays this love for the game.

Method

A combination of methods has been used to gather the material required to analyze the football industry in the country. Thus, as a first step, all related information was collected from the Cyprus Sport Organization, the Cyprus Football Association, and the first division football clubs in Cyprus. The task of collecting information for the football clubs was not as hard and difficult as initially predicted, as this was already done by the National Football Association, who collected all related material for the UEFA club licensing scheme. However, a review of available material was definitely not enough for such a purpose. That was only one aspect of this research.

Participants

In view of this, personal interviews and focus groups were conducted in the attempt to collect as complete and as accurate information as possible. Interviews were conducted with the presidents or secretaries general of all 14 footballs clubs in the first division of the national league, the professional clubs in Cyprus. This was done in order to collect qualitative data which was going to complement the material already collected in the first phase of the research. Qualitative data was useful in this respect in gaining additional information in relation to the issue under investigation. Qualitative data according to Straus and Corbin (1990) is “any kind of research that produces findings not arrived at by means of statistical procedures or other means of quantification.” Qualitative interview studies are usually conducted with small samples (14 in this case) and the “aim is usually to gather an authentic” understanding of people’s experiences (attitudes, knowledge, beliefs about football in Cyprus in this case) and it is believed that open ended questions are the most effective route towards this end” (Silverman, 1993). Thus, this method involved an open ended interview study which encouraged the top decision makers of the football clubs in Cyprus to offer their own attitudes, knowledge, definitions and understanding of the football industry.

Design and Procedure

Two focus groups were utilized as the means to collect data for the analysis of the football industry. For Morgan (1988), focus groups are basically group-oriented discussions that rely on interaction within the group based on the topic that the moderator supplies. The advantage is that through focus groups, the moderator assists, especially at the first stages of the interaction, by providing information that could be helpful to participants in placing the focus group in context.

According to Morgan (1988) focus groups are basically group interviews; they rely on interaction within the group, based on the topic that the researcher supplies; with the researcher taking the role of a moderator. Furthermore, Morgan (1988) notes that focus groups can be used as a supplement for collecting data when using either qualitative or quantitative methods. Additionally, focus groups can be used as follow-up research to clarify findings in the other data collected, but more importantly, according to Morgan (1988) the goal in using focus groups is to get closer to participants’ understandings of the researcher’s topic. In view of this, the use of the focus groups in this case provided a valuable insight into the variables examined for the football industry. Focus groups are thus helpful in investigating what participants think, uncovering why participants think as they do, crucial in the attempt being made to investigate the perspectives analyzed above. There are both strengths and weaknesses of focus groups as a setting in which to collect qualitative data; in this particular case the use of focus groups was considered appropriate in supplementing the data already collected. Additionally, focus groups were useful to conduct as they produced valuable data from group interaction on the specific topic under examination; a focus group can delve deeper as participant’s contributions can trigger further comments of other participants. Two focus groups were conducted; each group consisted of six persons (members of executive committees of football clubs, football players, referees, coaches, sports journalists, sponsors, supporter’s clubs, and representatives of the Cyprus Football Association) under the moderation of Dr. Andreas Theophanous, who has experience of more than 20 years in qualitative research. The focus was on obtaining a good representative sample of persons associated with the football industry in Cyprus. The focus group sessions lasted for almost two hours each, and the data collected was then analyzed using the coding technique of content analysis. Thus, a series of categories or coding frames have been developed in relation to the finances of the clubs, the governance and management of the clubs, the competitive balance of the league, and the major problems that the industry is facing today.

Analysis or coding of qualitative data represents the operations by which data are broken down, conceptualized, and put back together in new ways; it is the central process by which theories are built from data (Straus and Corbin, 1990). This technique entails defining a series of categories of answers in which the researcher is interested (Breakwell, 1990). In addition, according, to Breakwell (1990), if the researcher does not wish to push responses into categories because this loses some of the individuality of the original statements, then content analysis can be used in a different way whereby in the report produced of the findings there are lots of quotations which will show the depth of the opinions expressed. More precisely, for analyzing the data gathered in this section, a classification system or coding was used where responses were classified in schemes using coding frames.

Results

Based on the data collected, it is evident that football clubs in Cyprus have four major sources of revenue (M. Gavrielides, A. Michaelides, D. Seraphim, personal communications, April 10, 2007). This include the income from tickets sold for the home matches, the television rights, membership fees and financial support from friends of the clubs, and commercial activities including sponsorship. The expenses of the football clubs are usually more than their income, and this was actually identified as the major cause of the financial problems that football clubs are currently facing in Cyprus during the focus groups (A. Michaelides, personal communication, March 20, 2007).

The major expenses of the football clubs involve salaries to the football players, coaches, and administrative staff, accommodation and board when the club is traveling for away games, transfer fees, and expenses for the organization of matches. (K. Koutsokoumnis, personal communication, April 6, 2007). This issue with the salaries of players and coaches is addressed extensively in the discussion section that follows.

For securing confidentially, the budgets of the different clubs discussed in the focus groups could not be presented separately, but Table 1 provides the total budgets of the 14 first division clubs for the 2004-2005 season in terms of their income and expenditures. For the purpose of analysis, the 14 teams are divided into two groups: the first group is comprised of the five largest teams in the country, and the second group includes the remaining nine teams. It became clear from diligent examination and discussion of the budgets submitted by all 14 first division clubs that most of the teams will have difficulty meeting the criteria of the UEFA club licensing scheme, which prescribes balanced income and expenditures of club members. From the study of the budgets submitted, as well as from the analysis of the data collected through the interviews and the focus groups, it appears that most of the budgets are over-ambitious. Additionally, the profit and loss accounts of the clubs were diligently studied. In most cases, it appeared that there was an over-estimation of expected income for the clubs.

Eight major points were identified by the research team in relation to the financial situation of the clubs in Cyprus.

· The 14 clubs of the first division submitted in their budgets their incomes for the period under examination, and total incomes for all clubs were calculated at Euro 17,530,250, which corresponds to Euro 1,252,404, for each club. The biggest income declared by any club was Euro 2,853,364, and the lowest income declared was Euro 744,319

· Total expenditure was calculated at Euro 17,629,349, which corresponds to Euro 1,259,239, for each club. The biggest expenditure declared by a club was Euro 2, 392,004 and the lowest was Euro 744,319.

· Six clubs declared that they were expecting losses in the period under investigation; while the other eight clubs expected to have a profit.

· The biggest profit to be made was estimated at Euro 640,725, and this was by a club which by the end of the season was relegated to the second division.

· Paying the salaries of players, foreign and domestic, and coaches consumed 75% of every club’s budget.

· From the data gathered, it was clear that foreign players were paid better salaries than the domestic players.

· Season tickets contributed an average of 10% of the total income for the clubs. The highest contribution from season tickets to total income was 20%, and the lowest was 1%.

· The television rights for the period under examination were calculated to Euro 934,177, which represented 5.3% of the total income of clubs.

The government of the Republic of Cyprus acknowledges the importance of football in Cypriot society. In view of this, the government has provided different forms of financial support to the sport. The Cyprus Sports Organization, which is the semi- governmental organization in charge of sports, has provided annual financial support to the Cyprus Football Association which comes to Euro 4,613,223 per year. However, in view of the financial problems of the football clubs in the country and in the attempt by the government to assist the clubs to get through this financial crisis, the government decided two years ago to provide a grant of Euro 10,251,608 over a four year period. Additionally, the Cyprus Sport Organization returns to the individual football clubs a total sum of Euro 717,612 per year, which represents taxes collected on gate income as well as community taxes (T. Christofides, personal communication, April 10, 2007). Furthermore, another amount of Euro 683,440 per year is given by the Sports Organization to pay the police forces in charge of security during the football matches (K. Papakosta, personal communication, March 15, 2007).

From the qualitative data gathered, it emerged that there was a consensus among the different parties involved in the football industry that there are three major challenges facing football in Cyprus. Football violence, bad governance and management of clubs, and prejudice against referees and officials are major challenges that the industry is facing, and although there is potential for further development, these problems do not allow the industry to grow to its full potential. (K. Zivanaris, personal communication, April 10, 2007). Peristianis, Kapardis, Loizou, Fakiolas, and Puloukas (2002) noted that the football industry in Cyprus is facing a major crisis in the face of football hooliganism, which can destroy the sport if this is not controlled. It is an ongoing problem that has not been controlled for years now and can lead to the financial collapse of the industry (Peristianis et al, 2002; Aristotelous & Pouloucas, 1996).

Another major issue that was addressed in the focus groups was the fact that there is no competitive balance in the national league, which poses a serious threat to the football industry. (T. Antoniou, K. Malekkos, C. Constantinou, C. Theodotou, personal communications, 12 April, 2007). The clubs are split into two groups: the five large ones in the first group and the other nine in the second group, which represent the weak teams struggling for survival. Out of the five clubs in the first group, three of those, namely APOEL, OMONIA and ANORTHOSIS, are the only ones that compete for the national championship each year. This has been the case for years now, and this competitive imbalance leads to a reduction of interest in the football industry (L. Kyriakou, personal communication, March 6, 2007). The results show, for example, that in the 2005-2006 season a total of 507,000 tickets were sold with 337,661, which represents 66% of the total, being utilized by the big five group. Table 2 shows the distribution of tickets during this season between the big and the weak teams of the league.

As Figure 1 identifies, the gap between the big and the weak teams in the sale of tickets is growing larger, which clearly presents the problematic situation existing because of this competitive imbalance in the national league.

Clubs are recruiting increasing numbers of foreign players, which increases their expenditures considerably, and this is causing Cypriot players to become a scarce commodity. (A. Michaelides, personal communication, April 10, 2007). Over a typical weekend with seven games on the national league calendar, approximately 190 players were used including substitutes during the 2005-06 seasons. Out of those 190 players, only 75 were Cypriots. This is a trend which is increasing every year; whereby last season, there was a point where there were teams starting without a single Cypriot player in the first eleven. Back in the 1992-1993 season, for example, the clubs in Cyprus used to have eight Cypriot players and only three foreigners in the starting eleven. (M. Gavrielides, personal communication, March 22, 2007). It is not surprising then that during that period, clubs were in a much better financial situation. In many countries, this is the trend, but in large developed countries, the football industry is big enough to cope with such expenses. In England, for example, the figures show that in the 1992-1993 season, only 10% of the players starting the games were not British. Conversely though, during this current season, only 37% of the players starting in the first eleven were British.

This is the issue actually. Clubs in small countries, like Cyprus, should not try to copy what is happening in other countries where the football industry is huge. The clubs’ officials need to be very realistic and down to earth when trying to build their teams. However, it is sad to identify that things are getting out of control according to the discussions held in the focus groups (L. Kyriakou, M. Gavrielides, T. Antreou, personal communications, April 10, 2007).

Discussion

Due to the popularity of football worldwide, the game has grown into a huge industry. Gratton and Henry (2001) estimated that in the big European countries, the football industry contributes 3% of the gross domestic product of those countries. According to Theophanous and Kartakoullis (2004), in Cyprus, the football industry contributes only 1.84% of the gross domestic product. This was actually expected as Cyprus is a small country. However, something which is alarming and risky as well is the fact that out of this 1.84%, which totals an amount of Euro 223,826,788, a great percentage of this, which comes to Euro 153,774,130, derives from the betting industry. Thus, the betting industry forms a substantial part of the football industry in the country, and this is something that for some years now is leading to various forms of problems and issues, the major of which is prejudice. In certain instances, rumors are spread concerning fixed matches and for referees that have been influenced by officials and players betting huge amounts of money on specific fixtures. This is a major issue for the football industry as the huge amounts of money spent in the betting industry have led to prejudice against the sport and, in turn, is destroying the image of the game in Cyprus. Similar sorts of problems with betting and fixed games have been identified in other countries all over the world.

In relation to the above issue, there are some additional complications and issues that are raised because of the betting situation. As noted in the results section, the clubs in the first division are split into two categories: the big five and the remaining small or weaker clubs. In view of the fact that 66% of the total income from games derives from the big five, a series of other questions are generated having to do with the influence that these clubs have in the decision-making processes, in the appointment of referees and in the allocation of television rights among the clubs. Television rights are handled by the Cyprus Football Association, which has developed a scheme for allocating income to the clubs. Again, in relation to this scheme of allocation, there are issues and concerns as it seems that the big five at some stage will start handling their own rights with television stations. The big five will secure good deals with the stations in the country, and the small ones will remain financially exposed, as they will lose a good portion of their incomes from the rights. The television rights totaled a sum of Euro 934,177, which represents almost 6% of the total income of the clubs. This is expected to rise to almost 12% of the total income of the clubs in the next two years, based on the new deals to be signed.

In relation to the distribution of income for football clubs, Back et al. (2004) estimated that the three major sources of income for football clubs should deliver roughly the same amounts. That comes to approximately 33% contribution to total income from each of the three categories of income: tickets, television rights, and commercial activities. For example, for Manchester United in the period of 1992-2002, this was calculated to 40% from tickets, 34% from television rights, and 26% from other commercial activities. When considering the distribution of income for the clubs in Cyprus, this is far from this equal distribution.

It should be noted that this issue of big and weak football clubs is not only a problem in Cyprus but a challenge for European football as well. In the Friedlander Report (2001) by the Centre for Research into Sport and Society of the University of Leicester, it is stated that the gap between the big clubs and the rest is ever growing bigger, so this is something that needs to be addressed.

Another major concern that is leading to great controversy has to do with the contracts and salaries of players. As can be deduced from the expenditures of the clubs (Table 1), 75% of the total expenses of the clubs were on salaries for players, coaches, and the support staff. The football players’ salaries came to 65% of expenditures. Each club in the first division has 25 registered professional players plus another six to ten persons in the support team (fitness trainer, physiotherapist, medical doctor, or administrators). The salaries of foreign players playing in Cyprus are considerably higher to those paid to Cypriot players; however, there is a great concern as to whether the contribution of foreign players to the team is greater than that of the Cypriots, thus justifying their bigger salaries. There are cases of foreign players in Cyprus who signed yearly contracts of Euro 341,720, which is really surprising for such a small industry. Along the same lines, there are coaches in Cyprus coming from Europe with contracts of Euro 256,290 per year, which is again on the very high side bearing in mind the size of the football industry in the country.

In relation to the above, Deloite (2004, 2005), in the annual review of football finances, noted that there is a tendency for decreasing the percentage of salaries on total expenditures. In the premier league, for example, in England, salaries represented 62% of total expenditures in 2001-2002, 61% in 2002-2003, and a further reduction to 60% in the following season. The same tendency for reducing salaries could be observed in other European countries. On the contrary, in Cyprus, the exact opposite is happening; there is an increasing tendency in this respect which is very dangerous indeed, when realizing that most of the clubs, if not all, are in a very bad financial situation. Thus, on the one hand, the clubs, due to their difficult financial situation, are seeking government support, but on the other, they are spending on salaries and contracts amounts with which the size of the industry in Cyprus cannot cope. The financial dimensions of the football industry in Cyprus are getting too big for such a small country, which is an alarming and dangerous trend for the future of the industry.

When all the financial statements and budgets of the clubs were examined from the documents submitted for the UEFA club licensing system, it was again obvious that clubs were in a bad financial situation. The great majority of clubs had big debts, and in order for them to meet the club licensing criteria, they postponed payments for years to come. For example, if a club had agreed to pay a player Euro 200,000 for a salary, they signed an agreement with the player stating that he is going to receive this money in the years to come. However, this is not solving the problem, but the problem is just postponed to the next few years.

The data from the qualitative analysis was enlightening in discovering the beliefs and opinions of the officials involved, top decision makers of the football clubs. It was indeed very interesting on the one hand, and very contradictory on the other, to identify from this research the commonly felt concern of all officials involved in football in Cyprus, and especially of the clubs’ top decision makers. There was a consensus that the expenditures of the clubs are growing, and the football industry is not currently ready to afford such a burden. However, beside this issue, which was overwhelmingly accepted, the club officials are doing absolutely nothing to resolve the problem. They clearly know the facts, they understand that football is in crisis, and still each year there is an average increase of 10% in the expenditures of the teams. This is indeed contradictory and illogical. The officials of the clubs, when asked why this happens, could not provide an answer. “There is no logic in football,” said one of the representatives of the big clubs. It should be noted that there are certain things that clubs can do to reduce their budgets, but the managers are still doing nothing about it. Actually, they are moving in the exact opposite direction.

The issue of overspending is something that can be observed in football clubs all over the world. Williams and Neatrour (2002) noted that clubs engage in this overspending practice by taking excess risks in view of the tough competition in football, and then, when things do not go the way they expect, in terms of performance, they cannot meet their financial obligations.

Football clubs in Cyprus are in crisis. This is proven by the results of this research, and it is justified in every respect. Clubs are currently in a struggle for survival as they have big debts that they need to repay. However, the situation is even more alarming considering the fact that clubs, despite this financial crisis, annually increase their budgets, with the result that the football industry is becoming too big and too risky for the country as well. Although clubs are operating on considerably big budgets, the structure they have still relies mostly on voluntary work without good governance or responsible management. Bad management and bad governance are major characteristics of clubs, and this was made clear in the qualitative data gathered. The clubs’ governing boards are comprised of volunteers, who for many different reasons become involved in the game. They are not always involved for the good of the Game but for many other different reasons. In view of this, when people become involved in the running of a club, they want immediate results, and they are not willing to plan for the future, as they wish to get the credit when they are on board. Thus, there is no strategic direction in the clubs, and, in view of this, no future plans for development. It is more of a day-to-day struggle for survival than anything else. There is an urgent need for better management of the football clubs and, additionally, a need for professionals to become involved in the football industry. The football industry in the country is getting too big for volunteers to run it. There is urgency for professionalism at all levels. Professionalization of the game is only happening with increasing numbers of professional players arriving from abroad; apart from this, there is no professionalization in any other respect.

Competitive balance refers to the ability of any of the football clubs in the national league to win the championship at the end of the season. Where there is competitive balance, clubs have equal chances to winning the league, and this makes the league very interesting as the outcome is not known. However, this is not the case in Cyprus, where at the beginning of each season, for years now, only three clubs are competing for the championship title. Thus, there are three favorites for the title and inevitably this leads to reduced interest on behalf of the fans, both for attending the matches as well as for watching them on TV. Additionally, it leads to a series of related problems with the remaining clubs that can not compete with the three favorites on equal terms; thus, the clubs are facing both competition and financial challenges. This limited interest at some stage during the football season by the indifferent clubs leads to problems and concerns with fixed matches and other related controversies. In view of this competitive imbalance, it is no surprise that out of 66 leagues organized in Cyprus, 50 were won by the three favorites. Nobody can question this issue, which was again extensively addressed by participants in the focus groups.

The issue of competitive balance in the national leagues is a major issue of concern for the football industry, as this is a critical success factor for the industry. In view of this, extensive work on the competitive balance of national leagues has been conducted by Holt et al. (2004), Michie and Oughton (2004 and 2005), Michie et al. (2004) and Forrest et al. (2005).

Despite the problems and issues identified, the club officials and top decision makers were still quite optimistic in relation to certain issues or opportunities that they identified. For instance, they identified the fact that an increasing number of big organizations and companies are interested in becoming involved in the industry as sponsors. This is quite true as there is a kind of new sponsorship culture that is developing lately on the island. The club officials emphasized this fact as they considered that this is a golden opportunity for the clubs to capitalize on. However, again this is an opportunity and a challenge. Sponsors are willing to join the football industry as long as they are going to get a good return. Gone are the days when companies donated money to football clubs in the form of charity (Kartakoullis, 2007). Consequently, the message is clear. On the one hand, there is potential in this area, but in order for the football clubs and the industry to utilize this, there is the need for expertise in the area.

Conclusion

The aim of the study was to gather data and examine important parameters of the football industry in Cyprus. This was the very first time that such an attempt has been made in Cyprus, which is indeed a football-loving nation. The research team approached the analysis from a purely critical perspective for the good of the game in Cyprus and for no other reason.

The football industry in Cyprus is facing a series of challenges that need to be addressed urgently. Bad management and governance are major characteristics in the industry, and it is no surprise that the football clubs, the major stakeholders in the industry, are in severe financial crisis. They have huge debts that they cannot pay; they have very high payrolls, which the industry can not handle in such a small country, and no strategy for development. Football hooliganism and the lack of competitive balance in the national league complete this picture of football in crisis in the small country of Cyprus. The financial dimensions, as denoted by the different parameters studied of the football industry, are growing, and the country cannot cope with it for the time being, as all football clubs are experiencing losses based on their profit and loss accounts studied. It is obvious that sports authorities need to invest in developing football and, precisely, in the management and structure of football; otherwise, the future of the game will be very gloomy and without hope.

Government support is good as provided, but this will not do much in saving the game, unless good management, governance, professionalism, and accountability are introduced at all levels of the game. In view of this, all those involved in the football industry need to realize the new opportunities and challenges in the world of sports and should introduce innovations at all levels of the game (Westerbeek & Smith, 2003). There is no doubt that all stakeholders in the football industry of Cyprus wish to upgrade football in this country, bringing it up to European standards. On the other hand, they should definitely have in mind all related concepts and issues in relation to this “Europeanization” of elite football (Martin, 2005). Above all, they need to be very realistic and down to earth, always having in mind the size of the football industry and the country as well.

Acknowledgments

The authors gratefully acknowledge the support of the Cyprus Football Association, the Football Clubs, and their officials in conducting this research. Additionally, the financial support of the Cyprus Football Association was greatly appreciated in conducting this research.

Table 1

Total Budgets for the Football Clubs 2005-2006

Income

€ 5 Big Clubs

€ 9 Weak Clubs

Total

% of

Budget

Tickets

4.421.957

2.184.865

6.606.823

37.69%

Commercial Activities

1.940.964

2.115.351

4.056.315

23.14%

Television Rights

452.779

481.398

934.177

5.33%

Funding

1.021.726

1.608.198

2.629.925

15.00%

Other

1.403.371

1.898.915

3.302.287

18.84%

Total

9.240.800

8.288.729

17.529.529

100.00%cmunisteri2009-03-13T14:37:00

Thousands & hundreds should be separated by commas not periods

Expenditure

€ 5 Big Clubs

€ 9 Weak Clubs

Total

% of

Budget

Foreign Players

2.843.174

2.709.558

5.552.732

31.50%

Cypriot Players

2.931.119

2.702.899

5.634.019

31.96%

Coaches

860.458

884.255

1.744.714

9.90%

Field Expenses

106.753

292.751

399.505

2.27%

Sports Equipment and Materials

29.046

230.046

259.092

1.47%

Transport

32.036

49.737

81.773

0.46%

Hotel Accommodation and Board

123.873

144.530

268.404

1.52%

Medical Expenses

90.555

160.523

251.078

1.42%

Field Security

12.643

59.288

71.932

0.41%

Transfer fees

3.417

321.217

324.634

1.84%

Expenses for European Competition

34.172

15.377

49.549

0.28%

Expenses for pre-season training abroad

129.853

203.569

333.423

1.89%

Complementary tickets

17.940

0

17.940

0.10%

Soccer Academies/Development Programmes

61.509

184.101

245.611

1.39%

Miscellaneous

1.475.777

919.724

2.395.501

13.59%

Total

8.752.331

8.877.582

17.629.913

100.00%

Table 2

Tickets Sold by the Big and the Weak Teams

Competition Season

Average no. of tickets

Average of the big teams

Average of the weak teams

Average of tickets sold without the big five

1996/97

1.387

5.065

882

541

1997/98

1.815

6.216

970

539

1998/99

1.911

6.581

955

414

1999/2000

1.813

6.130

941

454

2000/01

2.502

7.208

1.291

584

2001/02

2.553

7.720

1.258

491

2002/2003

3.091

8.458

1.624

707

2003/04

2.943

8.721

1.332

406

2004/05

2.790

7.655

1.563

652

Total

2.311

7.087

1.202cmunisteri2009-03-13T14:42:00

Thousands & hundreds separated by commas not periods

532

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