The Commercialization Model of Professional Sport Clubs

Introduction

Sports play an important role in the development of the economy in developed countries and has a direct economic impact on the production of sports goods and services, employment, export and import, creating places and facilities, household expenses, advertising, creating employment, attraction of tourism and financial sponsors; And it has indirect effects on improving community health, reducing treatment costs and developing the national health program (Amiri et al., 2014). Sports industry in a growing economy that encourages scientific research to criticize the broad views of marketing and business operations can help the economy of the sports industry (Zhang et al., 2018) . Examining the effects of investment and long-term planning in sports can lead to the economic development of professional sports. Professional sports, meaning sports designed to earn money, has become a main part of the sports industry and professional athletes of that sport receive high salaries. These rights are mainly provided through ticket sales, television broadcasting rights and corporate support (Nazari & Azari, 2021).

Sports industry is known as one of the largest and fastest growing industries in the world (Rezaei, 2018). The sports industry has the characteristics of increasing domestic demand, increasing employment and creating new points of economic and business development (Xu & Yang, 2019). With the continuous expansion of the sports industry, the effect of the promotion of the sports industry on economic development has gradually emerged. The interaction between the performance of sports competitions, the national production of sports equipment and the production of other sports industries related to the regional economy has attracted the attention of scientists (Yang et al., 2020). Governments, individuals and international clubs fully aware of the political, social and economic dimensions exploit it to achieve their desired goals (Memari et al., 2019). This industry, by having a driving factor such as major sports competitions, has made it possible to benefit from advertising opportunities in the media, which has created the necessary platform for interaction between industry, business and sports (Zivari  et al., 2023).

Professional sports is actually a type of business that has a private nature and in many developed countries, it consists of non-governmental clubs. The pillars of professional sports are professional athletes, professional coaches, and clubs (Arabnarmi et al., 2018). Professional sports, with its expansion, refers to one of human’s most popular form of sports in the world, which attracts the most viewers (Bondarik et al., 2020), Professional sport is one of the most popular form of sports and in fact, it is a part of the society (Sadeghi et al., 2009). Professional sports is a growing business and generates significant economic interest among a variety of consumers and a large number of stakeholders (Yiapanas et al., 2020). Although the economic effects and income generation of professional sports are not limited to the holding of large international tournaments such as the World Cups, but in many countries, the holding of professional leagues and the industry of professional sports clubs have led to the development and economic development has been favorable in their professional sports industry (Rezaei, 2018).

The development of professional sports as a commercial phenomenon has been significant in all societies for several decades and is considered one of the most profitable industries in this century.  Its development and survival in today's business world requires the provision of equipment, culture, rules and it has its own bylaws. The studies conducted indicate that the professional sports in Iran, despite stepping into the field of professionalism, have not been able to benefit from widespread support enough (Nazari & Azari, 2021). Making money in professional sports clubs, like all sports clubs, is an important strategy for survival and development, although these ways of making money are usually determined in advance, and there are rules in this regard that clubs can proceed within the framework of these rules.

Professional sports clubs around the world have become reputable professional business companies. For example, currently twenty famous English clubs are present in the London Stock Exchange and thousands of professional sports fans are the shareholders of these clubs and through trading their shares, in addition to earning profits, they also give a lot of financial support to their clubs. This form of management has made the clubs achieve their two main goals; it means to achieve commercial and sports success (Deldar et al., 2016).

Commercialization includes various arrays of important technical, commercial, and financial processes that transform new technology into useful products or services and generate revenue when entering the market (Reamer, 2003). One of the primary requirements for the establishment and sustainable economic development of sport clubs, the registration of these clubs as registered commercial enterprises, on the one hand, as a set independent of the state economy, will have freedom of action, and on the other hand, they will have legal personality. Clubs and sports clubs will be able to continue their existence when they can cover their expenses and generate income (Naghdi et al., 2013). Therefore, sports clubs can compensate their development and progress costs through commercialization and create the possibility of better and more advanced investment for themselves ( Nazari & Azari, 2021).

In the first stage of commercialization, the idea is discovered, and in the next stage the idea is examined and evaluated from various aspects; this stage is called the second stage of idea commercialization, and the next stage is idea development and evaluation. Then, the business analysis is that the sports company before production finds out with statistical investigations that the most appropriate amount of production of the product or service in the first stage is the number or quantity and the break-even point of production. And what is the approximate profit at this point? The next step is market research. That a physical model of the product is prepared and how to use it is checked. The commercialization process takes place after the product market testing stage (Goudarzi et al., 2013). Commercialization of professional sports is also that aspect of sports that involves the sale, display and promotion of part or all aspects of sports in order to earn money. Sports have the ability to generate significant revenue from reception, television, internet rights, sponsorships, merchandise and licensing fees (Westerbeek, 2013).

Based on the research conducted in professional sports in developing countries, it must be acknowledged that government participation, public relations, capacity development and culture had a positive and significant effect on the commercialization of sports in some sectors of professional sports in Kenya (Origi & Deya, 2019). Laws and regulations have had a significant impact on the commercialization of professional sports in India (Kumar Yadav, 2016). Government participation has a positive effect on the commercialization of professional sports in Asian countries (Slack, 2014) . Political influence plays a role in the commercialization of professional sports in these countries, and the commercialization of professional sports requires more regulations to use its economic and economic effect (Alapartanen & Kelly, 2016).

Bayern Munich's global marketing strategies, financial performance and global fan base are worth mentioning. In addition, the past actions of this club in attracting the opinion of domestic and foreign fans along with the income generating tools of clubs and interactions between them and sports teams can be effective in increasing the value of the brand (Baena, 2019).  In the field of professional sports in Iran it is suggested to the managers of the professional sports clubs to consider the listed indicators in order to improve the national brand of professional sports ( Amir hajlu et al., 2019; Tabatabaeian et al., 2018).

General policies in Iran's professional sports and the division of obstacles into two economic and financial obstacles and investment and financial support obstacles and the most important obstacles identified in this field are the background of instability in monetary and financial policies, the lack of participation of foreign capital in the domestic capital markets. State ownership of many sports and non-sports clubs and the high risk of investing in professional sports (Nazari & Hajiheydari, 2021). The most important strategic factors include supporting public and private bodies, enhancing cultural and social responsibility, developing media awareness, managing systems and processes, developing appropriate infrastructure, improving financial and environmental impacts, and security was identified as being consistent with the club's sustainable development (Nazari et al., 2022).

Iran's professional sports do not have a stable performance in both income and sports sectors. Also, obstacles and factors affecting strategic business development are based on a global approach in key players, stakeholders, sports structure, critical uncertainty, seniors, surprises, hardware infrastructure, human resources development, and development. It was achieved with the global approach, development consequences, and the preferred future of Iran's professional sports (Sohrabi et al., 2023). Sports has been used as a means to promote and develop business activities globally in order to access international markets(Abdolmaleki et al., 2016). One of the dominant trends in sports has been commercialization, and it refers to the process that is formed in the course of a close connection between sports and market forces(Bonakdarchyan & Nazari, 2021).

The business trends governing the sport are so important and wide ranging that they are often accepted without any doubts or questions. Management and organizational transformations that parallel the increasing commercialization of sports since the second half of the 20th century, while it can be beneficial for sports and society, there may be shortcomings and limitations, including commercialization, to create an unequal relationship between managers. In all sports and especially professional sports clubs do not follow the same methods for commercialization, but in many clubs it requires complex processes. Therefore, for the commercialization of all clubs, it will be necessary to communicate industry and market. However, what is important is the commercial motives of the clubs and their participation in commercialization.

The professional sports in European and Asian countries get different sources of income from the rights to broadcast games on television, advertising around the field, sponsors, and fan membership cards.  The current research seeks to design a model through which the commercialization factors of professional sports are identified and create a constructive interaction between the club, industry and sports. According to the issues raised in the field of commercialization of professional sports, the question is to what extent these factors in the business dimension can solve the problems that the business field may face in sports, especially professional sports, so in this research, the researcher seeks to answer the question, what are the mechanisms and factors that create sustainable commercialization of professional sports in Iran.

Research Methods

The research method was carried out qualitatively using the systematic design of the Grounded Theory (GT). For collect information, in-depth and semi-structured interviews were used, and data analysis was done using the Glaser approach.

Table 1- The research process of Iran's professional sports

The present research is considered as a descriptive (non-experimental) research in the stage of data collection in a real way and without manipulation.

The statistical population of the research included professors and activists in the field of sports economics, and the desired number was selected in a non-probable way using targeted theoretical and snowball techniques. Some scientists consider 20 people sufficient to form a group of experts, if their scientific and experimental background is compatible. In this research, 20 people were interviewed, and from the 18th interview onwards, repetition was observed in the received data, and saturation was reached in the 20th interview. The stages of qualitative data analysis are in the form of two stages: 1- real coding, which includes two stages of open and selective (core) coding, and 2- theoretical coding. Open coding is the first step in continuous comparative analysis, which is done before limiting the coding to the central class and its characteristics. Grounded theory directs researchers to focus on what is happening in the research context, reiterates that researchers are part of it, be flexible and follow empirical events.

Sampling of internal and external stakeholders to compile drivers and uncertainties affecting the future of Iran's professional sports clubs were selected based on purposeful and snowball sampling. Research audit is the process of reviewing, confirming and obtaining assurance and reaching certainty. Without scientific accuracy, research is worthless and loses its usefulness. Therefore, many researchers are concerned about reliability and validity in all research methods. The validity of the research findings (interviews) was confirmed by the interviewees and then by informing the professors about the interview process and how to code and analyze the data, as well as using the professors' points of view to correct the necessary cases. In addition, in the present study, the intra-subject agreement method was used to calculate the reliability of the conducted interviews.

Descriptive or demographic information is presented in table 2.

The participants in this research include the academic faculty members of sports management of universities with expertise in sports economics and active managers and agents of Iranian professional sports who have experience according to the characteristics and indicators specified in the criteria for entering the study in Table 2 is mentioned. In order to conduct in-depth interviews, purposeful sampling and snowball sampling were used.

 In order to calculate the reliability of the interview with the intra-subject agreement method of two coders (evaluators), a PhD student in statistics was asked to participate in the research as a research associate (coder), the necessary training and methods for coding the interviews. It was transferred to him. In each of the interviews, the codes that are similar in the opinion of two people are marked as "agreement" and the codes that are not similar are marked as "disagreement". Then, the researcher coded the number of three interviews together with this research partner and the percentage of agreement within the subject, which is used as the reliability index of the analysis, was calculated using the following formula, according to which the reliability value was equal to 0.83. Based on this, the reliability of the test was confirmed.

Table 2- Characteristics of participants and criteria for entering the study

Findings

The findings from the interviews showed that various factors can affect the commercialization of professional sports. In the table 3, we will include these factors.

Table 3- Open codes

Table 4 displays the open, conceptual, and selective codes. From this table, 5 specific codes were chosen: cultural factors, organizational factors, social factors, legal factors, and structural factors.

Table 4- Formation of obtained concepts and categories

Figure 1 depicts the model of factors influencing the commercialization of professional sports in Iran. According to this framework, cultural factors (such as value creation and cultural reinforcement), organizational factors (including administrative system and education ), social factors (such as community Relations and environmental dynamics), legal factors (including Bedding and protective rules), and structural factors (including strategic policies and build and create) all play a significant role.

Figure 1. Model of factors affecting the commercialization of professional sports in Iran

Discussion

In Iran, as a developing country, it is an undeniable necessity to use all commercial and economic opportunities that can be exploited, such as professional sports. Also, improving the financial and economic situation of the professional sports is one of the reasons for the development and improvement of the championship situation. Commercialization includes various arrays of important processes, which in sports also include items such as sales, display, and advertising. Sports has the ability to generate significant income in various ways, which attracts more attention from researchers. Therefore, according to the necessity of the subject. The findings of his research showed that various factors such as cultural factors, organizational factors, social factors, legal factors and structural factors have an effect on the commercialization of professional sports. These findings are consistent with the results of (Alapartanen & Kelly, 2016; Kumar Yadav, 2016; Origi & Deya, 2019; Slack, 2014), that capacity development and culture, government participation, public relations, government participation, social impact and the business of sports and government regulations emphasize the political influence in business in sports.

Since cultural factors have an effect on the commercialization of professional sports, its components should be paid attention to. Therefore, in order to commercialize professional sports, value must be created first. In fact, by using the governance of values and promoting flexibility in facing financial issues in sports and creating commitment in individuals and society in a targeted manner, it is possible to help improve people's understanding of the market and thus create a competitive environment and thinking. As a motivating factor, along with factors such as improving communication skills and strengthening financial intelligence, it creates culture in the commercialization of sports. In this regard (Origi & Deya, 2019), also believe that the development of capacity and culture has had a positive and significant impact on sports commercialization.

Regarding organizational factors, commercialization in sports can be improved by using the administrative system and education. Management and organizational transformations that parallel the increasing commercialization of sports since the second half of the 20th century, while it can be beneficial for sports and society, there may be shortcomings and limitations, including commercialization, to create an unequal control between managers. Regarding the administrative system, by reducing administrative bureaucracy and creating a research and development system in sports clubs, as well as providing expert human resources and university-industry interaction, steps can be taken to develop commercialization. This can play a more colorful role in addition to education. Therefore, by using creativity training in product presentation and getting to know the concepts of sports business through holding professional sports commercialization courses, it is possible to perform better.

Social factors also point out that social relations and environment dynamics together can encourage commercialization. Therefore, creating human relations in the field of sports marketing and creating social dependence on sports and sports equipment helps significantly in this way. Social relationships increase the possibility of taking advantage of opportunities. In order to take advantage of the opportunity, entrepreneurs must be able to access information sources that facilitate the exploitation process. These resources are often obtained through direct and indirect social relationships of the individual. Environmental dynamics are also effective as an important element in the development of commercialization. Therefore, factors such as social changes and population dynamics can play a role as a driving factor. Population is a source of opportunity; because many opportunities are related to economies of scale. As a result, due to the fact that the fixed cost required for the implementation of some opportunities in sparsely populated areas is very high and not economical, the possibility of implementing them in more populated areas appears. Population development is a source of opportunity because it increases the probability of achieving economies of scale and causes development in demand, development in demand causes an increase in opportunities.

Other factors affecting the commercialization of professional sports are legal factors. This factor creates the intellectual assets and intellectual capital needed for the commercialization of professional sports through the establishment of transparent laws and the formulation of management rules. Therefore, by using protective laws, a safe environment should be created for people involved in this field. It will be possible to create this space through the formulation of university regulations regarding commercialization, the formulation of commercialization incentive regulations and the legal support of idea owners in the university. (Kumar Yadav, 2016) also concluded in research titled Commercialization of Sports Law and Competition Law in India that existing laws and regulations have had a significant impact on the commercialization of professional sports in India. (Slack, 2014) also showed in his research findings that government participation has a positive effect on the commercialization of professional sports in Asian countries. (Alapartanen & Kelly, 2016), also believes that the commercialization of professional sports needs more regulations. Structural factors as another factor have an effect on the commercialization of professional sports through construction and strategic policies. Therefore, in this field, consulting services regarding business should be provided and the necessary infrastructure to start a sports business should be strengthened along with educational planning. Therefore, this can be achieved through the creation of creativity development centers in universities. The role of strategic policies such as financial support for commercialization plans is not only not insignificant, but it can also encourage commercialization in a strange way. Improving the technology infrastructure to provide services and make systematic decisions can also be an effective strategy.

Conclusion

In general, conclusion from these findings is that in order to improve the sports industry and its commercialization, the desired criteria should be used as development policies. In fact, paying attention to cultural factors, organizational factors, social factors, legal factors and structural factors can cause the commercialization of professional sports in a sustainable way. Therefore, it is recommended to the sports managers of the country to emphasize the results of this research. Finally, in order to complete the studies on business in sports, the following suggestions can be made: should familiarize the club managers with the training of income generation methods and how to spend money in the world's leading clubs; The hardware infrastructure and software design for the development of the professional sports commercialization model should first be created by the government and the responsible institutions in sports.  Based on the findings, it is suggested to reduce bureaucracy and cumbersome rules in sports administrations and focus instead on research and development, because it will not be possible to solve problems in all tasks without having enough information. In this regard, the use of expert and efficient human resources can help. It is suggested that measures should be taken to acquaint the public with the benefits of commercialization. In this regard, marketing should be especially active and pave the way for the development of commercialization. The smoothness of the road can be accelerated with clear rules.  In this regard, by reducing the laws that will prevent commercialization and paying attention to the positive consequences of professional sports commercialization, we can see the development of sports industry commercialization.

 In the end, it is suggested that the universities also provide the possibility for their students to improve their creative thinking in their different departments. This will also strengthen ideation in the sports environment. Therefore, the suggestions of this research indicate that all factors must be present together and attention to one factor alone cannot cause development. Therefore, comprehensive and joint development and attention to all aspects of work are important and necessary strategies for the commercialization of Iran professional sports.

Acknowledgments

The authors are grateful to the anonymous referees of the journal for their extremely useful suggestions to improve the quality of the article. Usual disclaimers apply.

Conflicts of Interest

The authors declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.

Funding

The authors received no financial support for the research, authorship and/or publication of this article.