Management and Money — Club Licensing and the DAZN Shock

Packed stadiums, fervent supporters, clubs rooted in their towns—. What we have told up to here was the story of light, won by the J.League through its ideals. But no matter how beautiful the ideal raised high, a club cannot live by eating mist. Paying players’ wages, renting the stadium, running the buses for away trips. Each and every one of these costs money. Right behind the cheers, there always lay the unavoidable reality of management and money. In this installment, we trace the story of how the J.League faced up to that reality.

An Ideal Alone Cannot Protect a Club

After the fervor of the kickoff had settled, the J.League faced one harsh fact. The clubs’ management was more unstable than expected.

Swayed by the business performance of sponsor companies, a club’s cash flow would tighten the moment attendance fell. Among them appeared clubs that took on deficits, or fell into a state of insolvency where liabilities exceeded assets. A treasured club rooted in its region vanishing over a single matter of money—that was a crisis that could shake the very ideal the J.League had built from its foundations.

So what the J.League introduced was the Club Licensing system. This was a mechanism that granted the qualification to take part in the league—that is, a license—only to clubs that met a certain set of standards. Originally it was something the Asian Football Confederation required of its member nations, and in the J.League full operation is said to have begun from the 2013 season.

The objects of review were not only matters of money. Sporting, facilities, personnel and organization, legal affairs, and finance—detailed criteria spanning multiple fields were laid down, and clubs had to clear every one of them. Strictest of all were the financial criteria. For example, not having posted deficits over several consecutive terms; not being in a state of insolvency. Such conditions strongly urged clubs toward sound management.

Imposing Strict Discipline Upon Itself

Another feature of the Club Licensing system lay in the transparency of its review.

The licensing judgment, rather than being decided by the J.League itself at its own discretion, is said to be carried out by a third-party body independent of the league. Furthermore, a club dissatisfied with that judgment could even appeal to a separate independent body. So as not to go soft on its own kind, it entrusted the decision to outside eyes. To disclose the flow of money properly every year and accept the checks of a third party—in the world of professional sports, discipline that went this far was by no means a matter of course.

This system at times became a harsh shackle for clubs. If they could not meet the standards, there were cases where they could not be promoted to a higher category even with good results. Yet that very strictness became the foundation of trust in the J.League as a whole. For the companies investing and the supporters cheering alike, the reassurance that ‘the clubs of this league will not collapse easily’ was a value beyond anything else.

2017, the Vast Money That Rained Down

Upon a J.League that had firmed up its financial foundation came the next turning point. It was money vast enough to overturn the league’s very common sense.

In 2016, the J.League announced that it had concluded a huge broadcasting-rights deal with the company that operates the sports live-streaming service DAZN. Its scale was a total of 210 billion yen over ten years from 2017. Since the broadcasting fee up to then is said to have been around 5 billion yen per year, converted to a yearly figure it was an extraordinary sum that truly exceeded fourfold. From an age when television broadcast was the mainstream, to live-streaming every match over the internet—a revolution in the means of watching, and an extraordinary sum of money, came pouring into the J.League at once.

The impact of this contract was immeasurable. The league returned the funds, now abundant, to each club in the form of payouts. For the clubs that fought at the top in particular, generous payouts were prepared to back the realization of the ideal. According to one report, the sum a champion club received, combining prize money and payouts, reportedly reached a scale of somewhere between ten-odd billion and twenty billion yen.

A New Era, Holding Both Light and Shadow

The abundant money carried great dreams to the J.League. Yet not everything was welcomed unreservedly.

Rich funds inevitably create gaps in power between clubs. The concern that the disparity between the top clubs that gained many payouts and the clubs that did not might widen—such voices were reportedly raised as well. Also, the form of the contract was reviewed several times with the passing of the era, and the contract amount and period are said to have been changed. Vast money was, at one and the same time, a new possibility and a new challenge.

Even so, there was one thing that was certain. The J.League was no longer a league of ‘idealism alone.’ The discipline of Club Licensing that governs its finances, and the fuel of DAZN money for setting its sights on the world. When it held these two in hand, the J.League at last gained the legs to run its dream as a real enterprise.

And so the J.League gave the ideal of community roots, built up since the kickoff, a firm backing of management. The cheers, and the figures that support those cheers. The ideal, and the money that brings that ideal to life. When those two wheels began to mesh, the J.League’s gaze came to look farther than ever before.

Holding abundant funds and a firm foundation in hand, the J.League steps forth toward its next challenge. It would not stay within the bounds of a single town, or a single sport. Into the world of women’s football, across the sea to the nations of Asia, and into the various challenges of local society—. The J.League’s story spreads ever wider, beyond region, beyond gender, beyond borders.