Price structure in football clubs. A theoretical approach using two-sided market models

Abstract

Football (also known as soccer) is by far the most popular sport in the world with several billion fans worldwide. In this thesis the focus will be on two different sides of a football club, spectators and advertisers (sponsors). These two sides have fundamentally different incentives why they want to associate with a football club; the spectators have emotional incentives, while the advertisers have economical incentives. The popularity of football and the different incentives of the two sides are the main reason a football club is a very interesting object to analyze. The popularity of football makes it very attractive for firms to associate with football clubs, and thus increase their exposure to potential customers via advertising. In this thesis I have used two-sided market models to see how the indirect network effects affect the price structure for a football club. In the analysis I have found it reasonable to use an assumption that advertisers have more benefit from spectators joining the football club, than the spectators have from advertisers. With this assumption the analysis shows that the price for advertisers will always be higher than for spectators, and also that in some cases the price for spectators could be zero.