ESSA

ESSA

Soccernomics


Sam O'Connor

By

August 5th, 2015


If a neoliberal created a sporting league, it might look a bit like European soccer, writes Sam O’Connor.


If a neoliberal economist was asked to sit down and create a system of player exchange in a sporting league, he or she would probably design something identical to European association football (aka soccer). Unlike in Australian or American sporting leagues, attempts at equalisation such as draft picks and salary caps are non-existent. Players can be bought and sold by their clubs with little restriction or regulation at a price created by a free market with dozens of competing firms (i.e. clubs). Clubs who perform poorly in a season and finish at the bottom of the ladder are not given a hand up by a market-distorting draft pick or cash injection, but are relegated to a lower, far less lucrative tier. It’s not a fair and even market; clubs with massive global followings (and, consequently, lots of money) end up with a near monopoly on the best players. While this may make for electrifying contests when Real Madrid play Barcelona twice a year, fans of other clubs are left with the harsh reality that they will never see their heroes lift any silverware. Is this a travesty that must be addressed, or is it merely the market at work?

Unlike almost any other sportspeople, association footballers are bought and sold at a specific price determined by market forces. In the AFL, NRL and American sporting leagues, players move clubs through being traded for other players or draft picks which enable clubs to gain new young talents. In soccer, money talks. Clubs make bids of millions of pounds or euros for the services of a certain player. If the bid is accepted by the club that employs said player, the bidding club then gets the opportunity to discuss wages and a contract with him or her. Once this is agreed, following a medical examination, the player moves employers. If a player is out of contract and a free agent, he or she is free to sign for any club that makes an acceptable offer.

Just like any market, every player has a value determined by numerous factors, including supply and demand. If, for instance, there are few strikers (goal-scoring forwards) willing to move clubs, then naturally the value of those available goes up. The same goes for players of certain nationalities, due to rules that require a certain number of ‘home-grown’ players in every squad. In the English Premier League, for instance, English players such as Raheem Sterling are more valuable than a player of identical talent from France or Germany. Aside from this, however, it’s a free market, albeit governed by some rules (known as Financial Fair Play, or FFP) set up by the European regional governing body, UEFA.

The most interesting example of soccer’s laissez-faire economics is in wages. The NBA and AFL have a salary cap which restricts players from potentially earning higher wages at, perhaps, what might represent a ‘true’ market value. Gary Ablett, arguably the AFL’s best player, earns $1 million a year playing for the Gold Coast Suns. While Gary certainly has a comfortable enough salary, it’s probably lower than he could potentially earn if the cap didn’t exist. To provide perspective, the AFL sold its most recent TV rights deal for over $1 billion, and the next deal in 2017 is predicted to reach $2 billion. If you combine this with revenue from memberships, tickets and merchandise, paying Ablett $1 million a year seems a tad low, considering his immense skill and subsequent high profile in Australia.

Comparatively, Ablett’s salary would be considered a pittance in English football. This is exemplified most startlingly by the curious case of aforementioned English footballing wunderkind Raheem Sterling. Sterling is currently 20 (the same age as your author), and recently moved from Liverpool to Manchester City, one of the world’s wealthiest clubs, for the sum of £49 million (About $100 million AUD). As part of the contract he signed with Manchester City, he reportedly will earn the generous sum of £200,000 (About $425,000 AUD) a week! In the time it takes you to read this article, the appropriately-named Sterling will probably have earned more money than you will in an hour’s work. If nothing else, this represents a very strong case for the existence of nominative determinism.

Some clubs, such as Porto in Portugal or Southampton in England, maintain a business model based around selling locally developed talent to richer clubs, and using the proceeds to gradually improve over time. The vast majority of players will move clubs over the course of their career, with the very best invariably joining the most successful clubs. Unfortunately, what this means is that fans of non-elite clubs essentially have to resign themselves to the fact that at some point, their talented players will move somewhere else for more money and more prestige. Unlike in AFL, where one-club players are relatively common, European footballers are expected to move up the chain of clubs, usually from their local team to a club playing in Europe’s most elite competition, the UEFA Champions League. At the very top of this chain are Spanish giants Barcelona and Real Madrid, who have a rich history of success, enormous global support, and the revenue to attract just about any player that they want. In recent years, superstars such as Luis Suarez, Neymar, Gareth Bale, Zinedine Zidane, David Beckham, Ronaldinho, Thierry Henry and Cristiano Ronaldo have all transferred to one of these mega-clubs. Bale, for instance, cost Real Madrid an eye-popping €100 million (About $150 million) when he joined from Tottenham Hotspur in 2013, making him the world’s most expensive ever player.

Barcelona and Real Madrid are in a unique position, revenue-rise, due to a long-standing duopoly on Spanish football’s TV rights. In the 2013-14 season, the ‘Big Two’ earned €140 million apiece from the Spanish Primera Division’s TV rights, while their smaller competitors earned as little as €18 million each. While a new TV rights deal has been agreed that distributes this income more evenly, it is unlikely to depose the duopoly in terms of on-field success, because of how entrenched this dominance is. There’s no doubt that the rivalry between the two giants has had some positive effects for the reputation of Spanish football, in that the ‘Clasico’ fixtures between the two have become one of the world’s most watched club football matches. La Liga is more prestigious and more popular because it contains the world’s two biggest football clubs. However, it’s very debatable as to whether this has trickled down to the smaller Spanish clubs in terms of success. Since 2000, only twice has a club other than Barcelona or Real Madrid won the Spanish title. Atletico Madrid, the most recent challenger to the duopoly, have seen an exodus of players since their 2013/14 title. Arguably their best midfielder, Arda Turan, recently joined Barcelona, while others departed for Chelsea in 2014, such as striker Diego Costa and Chelsea loanee goalkeeper Thibaut Courtois.

Any capitalist will tell you that in order for success, there must be failures. Winners and losers will always be a fact of life in a competitive market. However, is this the right course of action in sport? Is it really acceptable that a fan of any club outside of the entrenched European elite will almost never see their team reach the highest levels of the sport? In Australia, long-suffering fans of struggling AFL or NRL teams can always be comforted by the notion that thanks to equalisation measures, success is cyclical, and that one day they will see their team reach a Grand Final and perhaps win a premiership. In association football, the same clubs have an entrenched dominance that, seemingly, will never be broken. Is this worth it, though, in order to experience some of the sport’s greatest players competing against one another in mouthwatering Champions League ties? Would the sport be as entertaining without seeing Lionel Messi and Cristiano Ronaldo face off twice a year in the Clasico? Ultimately, all this boils down to a trade-off. Is this systematic inequality justified by the immense attention that the sport’s highest echelon receives worldwide? For better or worse, sport in the 21st century has become a business, and the competition that this attitudes brings with it is here to stay. Whether it will endure for years to come is impossible to tell. For the sake of the millions who support clubs lower down the footballing food chain, one hopes that, eventually, something will change.

The views expressed within this article are those of the author and do not represent the views of the ESSA Committee or the Society's sponsors. Use of any content from this article should clearly attribute the work to the author and not to ESSA or its sponsors.

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