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Posts Tagged ‘Soccer’

Globalisation of the football labour market = demise English National side?

April 15, 2015 Leave a comment

EPL foreign playersGreg Dyke, the chairman of Football Association, has stated in the media that the English Premier League and Championship are not giving young domestic talent sufficient opportunities at the highest level of English football. He declared that the EPL was gravitating towards being “owned by foreigners, managed by foreigners and played by foreigners.”

Football has one of the most globalized markets for skilled labour and the EPL has embraced the benefits of open borders. Greg Dyke’s concern is plain to see:

There are 500 player jobs in the EPL – 20 teams x 25 players
1990’s – 345 (69%) of the 500 player jobs were filled by English players
Today – 185 (37%) of the 500 player jobs are filled by English players

This is contrast to the La Liga (Spanish League) where 61% of the players were Spanish and 59% of the Bundesliga (German League) were German. It is ironic that both the national sides of Spain and Germany have been most successful in recent times:

Spain – European Champions – 2008 and 2012. World Cup Winners 2010
Germany – World Cup Winners 2014.

Furthermore in the English second tier, the Championship, has seen English players account for less than 50% of the total minutes played during the early months of the current season as calculated by the BBC.

Solution to the English Game
Dykes has lobbied government to impose new limits on the supply of foreign players, by making it harder to get work permits. Furthermore he wants to somehow persuade teams to contract more English players in their squads of 25. In economics this is know as import substitution as Dykes is trying to encourage the development of the domestic industry by imposing protectionist policies. But as pointed out by the New York Times, England is not developing a new industry as football was invented there.

Are foreign players bad for the English game?

The money that it brings into the economy through sponsorship, television rights, shirt sales etc, is significant. Furthermore the English players that do play in the EPL are much better off that their predecessors:

2014/15 season – EPL average salary = £2.3 million
2014/15 season – Championship salary = £486,000
1992/93 season – average salary = £140,000 (adjusted for inflation)

Although fans are arguably watching a very high standard of football in the EPL it is ironic that no side from the EPL made the Quarter-Finals of the European Championship.

The Global Game
Globalisation has increased the competitive balance of international competitions like the World Cup, as players from smaller and less affluent countries, such as Ghana and Uruguay, have more opportunities at the game’s highest levels. That suggests England and other traditional powers are losing ground, in relative terms, because they now face stiffer competition.

Source: New York Times – Globalisation Under attack, on the Soccer Field.

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Categories: Labour Market, Sport, Trade Tags: ,

World Cup Winners and Political/Economic Systems

June 14, 2014 Leave a comment

WC winners politicalKeeping with the World Cup theme, I read a very interesting book a few years ago by Franklin Foer entitled “How Soccer Explains the World” in which he outlines that soccer is not merely a pastime but often an expression of the social, economic, political, and racial composition of the communities that host both the teams and their throngs of enthusiastic fans. I thought it worthwhile to look at the past winners of the World Cup and the political/economic system that prevailed in their country at the time.

Command Systems not so successful.

According to Foer the Communist countries have the better of the results against the non-communist countries. Played 118 Won 46, Drawn 32, Lost 40. However a Communist country has yet to win the World Cup. He suggests that the reasons for this are as follows:

1. Coaches thought that science could provide the information to win games – i.e. evaluating teams on the number of passes, tackles, shots etc. This might work in athletics or gymnastics but doesn’t include the individual skill and risk-taking involved in winning games.

2. The harsh conditions of communism also meant that a lot of players defected to other countries that were more democratic.

Fascism as a driving force

The existence and adoration of a single, omnipotent leader is conceivably the best known characteristic of fascist governments.

In Italy Benito Mussolini was always seeking to use popular culture in his quest to grasp authority and to convert Italian society, and sport was a key part of this strategy. Fascists took control of football in Italy and by the mid-1920s had proceeded to revolutionise the game, building stadiums all over the peninsula and creating a national team which was to dominate the international game for four years, winning two World Cups (1934 and 1938) and an Olympic gold medal.

Under leader Francisco Franco, Spain was also a fascist regime although it was described as an autocracy rather than a totalitarian state like those of Italy and Germany. This might explain why Spain’s fascist dictatorship endured from the 1940s into the 1970s. Franco was an avid Real Madrid supporter and, according to some, the regime provided decisive aid in the club’s signing of the best player of the fifties, the Argentine Alfredo Di Stefano, even though Barcelona had already agreed terms with him. Franco viewed the triumphs of Real Madrid and of the Spanish national team as in some way
his own.

However he did face serious opposition from the Basques and the clubs Athletico Bilbao and Real Sociedad were the only venues where the Basque people could express their cultural pride without ending up in jail. In the south of the country FC Barcelona was the heroic centre of the resistance to Franco’s military dictatorships. Their home ground, Camp Nou, provided an environment for Catalans to voice their strong disapproval of Franco’s military dictatorship.

Brazil – 5 World Cup wins.

Brazil is the most successful country in terms of performances in the World Cup. Three out of their five World Cup wins have come about under military/fascist regimes. Also Argentina in the 1970s and 1980s achieved soccer’s golden prize under the watchful eye of the fascist generals. Since 1934, no fewer than seven World Cups have been won by countries with some form of fascist ideology.

According to Franklin Foer, in spite of the common modern assertion that civilisation is in discord, soccer provides substance to the argument that a civilised world order is possible. But globalisation single-handedly cannot be seen to achieve this objective. In order to achieve a world environment where citizens have tolerance and respect for each other the institutions of a vivacious domestic liberalism must also be created and sustained.

Is German Football like the German Economy?

June 15, 2013 1 comment

This year saw an all German final in the European Champions League with Bayern Munich defeating Borussia Dortmund 2-1 at Wembly Stadium in London. In order to get to the final both teams beat Spanish counterparts – Real Madrid and Barcelona. What is fitting is that in economic terms German is the powerhouse of the European economy whilst in contrast Spain has suffered greatly from the euro crisis and austerity measures that have been imposed on it. If you look at post-war Germany you can see some correlation between the success of the national side and state of the economy.

Germany Football v Economy

The Economist looked at this and made the point that German has opened up its borders to not just traditional labour but also football players. Of the two squads on show at the Champions League Final at Wembley last month, 17 were from outside Germany.

Most visibly, Germany opened up. Just as immigrants flock to German jobs (more than 1m net arrivals in 2012), so players join German clubs. Between them Bayern and Dortmund have four Brazilians, three Poles, a Peruvian-Italian, a Serb, a Croat, a Swiss of Kosovar extraction, an Austrian of Filipino/Nigerian stock, a Ukrainian and two Australians—and so on. Of the German players, several have dual citizenship or a “migration background”. If the choice is between a German Europe or a European Germany, as the novelist Thomas Mann once put it, football points to the second.

No sign of recession in European Football.

June 3, 2012 Leave a comment

Last week the 21st edition of the Deloitte Annual Review of Football Finance was published. It analyses and comments on notable financial developments within world football for the year 2010/11. Overall the results of the publication indicate that the European Football market continued to go against the trend of the economic conditions that were prevalent in Europe and the global economy.

Some of the key points from the publication:

The Big Five Revenues – EPL, Bundesliga, La Liga, Serie A, Ligue 1

The total revenue in the Big Five grew by 2% to €8.6bn. The English Premier League continued to be the biggest revenue earner with €2.5bn with the Bundesliga some way behind. France’s Ligue 1 was the one of the Big Five to have a drop in revenue with €1,040m. See graph below.

One of the main concerns with the European football market is keeping a lid on the costs. The big five leagues wages increased by over €104m and that exceeded €5.6bn in 2010/11. The English Premier League not surprisingly had the highest wage costs at €1,771m which was €600 higher than the next league.

United v City

Manchester City set a new Premier League record with an £82m loss, whilst their cross town rivals United generated an operating profit greater than £100m for the first time.

Chelsea Highest Wages

For the eighth successive season Chelsea had the highest wage bill – £191m
Manchester City – £174m
Manchester Utd – £153m

There was a strong correlation in the EPL between the level of spending and the final league position. Spend money and you’ll get results.

Chelsea also had the highest wage cost per league point £2.7m (71 points). Champions Manchester Utd had a wage cost of £1.9m per point and Blackpool had the lowest with £0.6m.

The four clubs of the EPL who competed in the Champions Lague in 2010/11 generated almost 60% of the £548m in matchday revenue, demonstrating the high levels of ticket demand they enjoy and the higher ticket prices they can command.

Categories: Growth, Labour Market, Sport Tags: ,

Brazilian soccer players decide to stay at home

August 8, 2011 Leave a comment

With the new English Premier League soccer season upon us next weekend it was interesting to read in The Economist and the Finacial Times in London that there seems to a reverse in the trend of Brazilian players taking up high paid contracts overseas. This is partly due to the continuing strength of the Brazilian economy:

– In 2010 the economy grew 7.5%
– Is the world’s 7th largest economy
– Grew fifth fastest of the G20 countries
– Since 2008 the Brazilian Real has appreciated 35% against the Euro and the British Pound. Also this year it hit a 12 year high against the US$. This has helped clubs to bid for players from Europe.
– The Brazilian Terms of Trade has improved by 27%

In 2010 spending on players in Brazil rose 63% compared with a drop of 29% in Europe. Total number exported from Brazil fell 14% in 2009. The stronger finances of Brazilian clubs are also helping them retain younger players.

Rivalling those in the Premiership, La Liga, and the Serie A Santos, the team of Brazilian great Pele, repelled a reported Chelsea bid for Brazilian teenage star Neymar by offering him a sophisticated compensation package that included revenue from image rights. FT London

European league revenues – 2009-10

June 24, 2011 Leave a comment

Just when you thought the soccer season was over The Economist produced a neat graphic showing the revenues for each league in Europe. Key points from the graph are:

– Total revenue from the top 5 are up 5% from 2008-09.
– Significantly more braoadcasting revenue in the English League.
– Germany acquired the greatest corporate sponsorhip revenue.
– Spain – Real Madrid and FC Barcelona accounted for over 50% of the revenue.
– Italy – AC Milan, Inter Milan and Juventus accounted for 45% of the revenue
– Spain showed a fall in the ratio of wages to revenue in 2009-10

Categories: Sport Tags:

Scrap the transfer window.

February 14, 2011 Leave a comment

Should the English Premier League (EPL) scrap the transfer window? – “Transfer window” is the unofficial term commonly used for the concept of “registration period”. At one time clubs could buy and sell players throughout the year but FIFA changed the rule in 2002. Both Arsenal manager Arsene Wenger and Tottenham’s Harry Redknapp both cricticised the system where they have two short windows of opportunity. FIFA regulates in general that there shall be two windows, a longer one (max. twelve weeks) in the break between two seasons and shorter one (max. one month) in the middle of a season. At present here are the transfer windows in England:

Pre-Season – Last day of season – 31 August
Mid-Season – 1 January – 31 January

However many say that that the limited opportunity to buy players creates a frenzy of panic buying and inflated prices for players and contributes to more managers losing their job. In the last transfer window that finished on 31st January Chelsea were the biggest spenders – £75m – Fernando Torres (Liverpool, £50m), David Luiz (Benfica, £25m).

On the same day the club announced losses of £70m, but the soon to be introduced fair play rules insist that clubs need to breakeven or make a profit or they could be banned from playing in European competitions.

So why were transfer windows introduced? FIFA say it was to introduce some stability in the transfer market but this has not been the case over the last couple of years. With the January window closed there are rumours of deals being done with players with regard to the pre-season window. There is no reason to keep a player who is unhappy at a club but the timing of Toores’ transfer request from Liverpool was inexcusable and directly contributed to the panic and inflated prices that followed. Had there been no transfer window the Torres transfer could have been dealt with in a more measured way and Newcastle wouldn’t have been able to hike the price of Andy Carroll (Newcastle to Liverpool) to £35m. Therefore, let the market rule if clubs need to buy players at any stage of the season then let them go ahead – other clubs can always say no. And if there is no time pressure surely this would have a deflationary effect on transfer fees which would be good for the game in general.

Categories: Inflation, Sport, Supply & Demand Tags: ,
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