Thursday, February 13, 2020

Football Capitalism

Football’s embrace of unregulated hyper-capitalism has created a growing financial disparity that is now destroying the inherent unpredictability of the sport. This is not just the big clubs often winning, as has been the case since time immemorial. It is that a small group of super-wealthy clubs are now so financially insulated that they are winning more games than ever before, by more goals than ever before, to break more records than ever before. They are stretching the game in a way that has caused the entire sport to transform and shift. The concentration of money has brought a concentration of quality and thereby success.

That is a consequence of the explosion of money in the game, which means you need a minimum amount of annual revenue (€400m in 2020, going by Deloitte’s figures) to even begin competing. On the other side, when clubs like Liverpool or Manchester City maximise that revenue through admirable intelligence, the disparity then has an amplifying effect. The gap gets even greater on the pitch. This is why we are seeing so many historic records now being broken season after season.
The last decade alone, which represents the true rise of the super-clubs alongside the huge rise in money, has seen: 

  • a second Spanish treble
  • a first German treble
  • a first Italian treble
  • a first English domestic treble
  • three French domestic trebles in four years
  • a first Champions League three-in-a-row in 42 years
  • the first ever 100-point season in Spain, Italy and England
  • ‘Invincible’ seasons in Italy, Portugal, Scotland and seven other European leagues
  • 13 of Europe’s 54 leagues currently seeing their longest run of titles by a single club or longest period of domination.
Needless to say, they have all been achieved by the wealthiest clubs in those competitions.

Uefa president Aleksander Ceferin made the issue front and centre of his introduction to the body’s 2020 annual benchmarking report, citing the “threats” and “risks” of “globalisation-fuelled revenue polarisation”.

And it really comes to something when Deloitte’s Football Money League  warns of “a situation where on-pitch results are too heavily influenced by the financial resources available” as well as the danger to “the integrity” and “unpredictability” crucial to the long-term value of the sport.
Javier Tebas, president of La Liga, speaks in even graver terms. “If we don’t fix that problem, in a few years our industry will collapse.”

It is teetering on the brink because this core problem loads up so many other ongoing issues: the precarious financial health of clubs outside the elite; the tension between the super-clubs and the rest; the tension between leagues; the tension between Uefa and Fifa; the tension between self-interest and the collective that represents the inherent contradiction of professional sport.

Former Southampton executive chairman Nicola Cortese says. “These bigger clubs are now massive money monsters.”

Due to the sport’s very structure, its immense global popularity has actually funnelled more and more resources to an extremely narrow band of clubs, because they are the only ones with the reach to maximise this. It is not so much the 1%, as the 0.01%. And it is not that money guarantees success. It is that an awful lot of it – in 2020, around €400m – is the single most important requisite to even compete.​
The 1982 English First Division TV deal was just £5.2m and the total international rights were a mere £50,000 from Scandinavia. The wage bill of the wealthiest top-division club was less than three times the bottom club, which meant there was a period when two of the best paid players in England – Michael Robinson and Steve Foster – both played for Brighton and Hove Albion. It also meant that as many as 13 clubs could finish in the top four in England, as many as 12 in Spain, and that teams including Aston Villa, Steaua Bucharest, PSV Eindhoven and Red Star Belgrade could win the European Cup. Football, in effect, was too small an industry to feature anything like the current inequalities. There was far more mobility within the sport.
The total Premier League TV rights for the current 2019-22 cycle are now worth £8.4bn. The total Champions League prize money is now worth €2.04bn, having grown from €583m just 10 years ago. Such forces have seen Manchester United go from a turnover of £117m at the start of the millennium to £627.1m in 2018-19, the most recent figures available. The biggest clubs are no longer the financial size of local supermarkets, as was the case just two decades ago.
Money has simply led to more disparity.

Returning to wages, the ‘stretch’ from the bottom to the top in the Premier League has gone from 2.85x in that breakaway season of 1992-93 to 4.7x last year. In Spain, it has been as high as 17.2x, and in some mid-size leagues like Switzerland over 20x.
This is relevant because of how crucial wages are to the working of the sport. Repeated studies – most notably by Stefan Szymanski and Tim Kuypers – have highlighted that they condition results to a greater degree than anything else. Arguments about net transfer spend are close to irrelevant.

“Buying the most expensive players doesn’t automatically generate good sporting results,” Manchester City chief executive Ferran Soriano wrote in his book The Ball Doesn’t Go In By Chance. “What does generate those good results is having the best players in your team and paying them the salary they deserve.”
“I had the money to buy players,” Cortese says. “But not the money to keep players.”

This has been the primary issue for most Premier League clubs seeking to grow, despite the influx of TV money that has allowed high transfer fees. By the competition’s latest figures, the big six paid 51.3% of the total wages. This disparity has led to a corresponding disparity in results. And thus the unpredictability of football – the lifeblood of the sport – begins to dissolve. Absolutely every metric shows the sport across Europe is more predictable than 30, 20 or even 10 years ago.
The average points won by champions in the five major leagues has shot up. England might only show a marginal change from the 2000s to the 2010s, but the change becomes much more pronounced if you focus on the last three seasons. It then extends to 96.7 points – and that’s before you even bring in Liverpool’s current season.

Greater disparity has pushed up the requirements to win the league. That can be seen in the most ominous figures of all: the title-winning streaks. In some leagues, it is getting impossible for almost anyone else to win. Prior to this run, Bayern Munich had never won more than three Bundesliga titles in a row. They have now won seven in a row, which is by far the longest streak of league victories in Germany’s history. It is also one of eight such situations across Europe. 
There are then situations like in Croatia, where Dinamo Zagreb have won 13 of the last 14 titles, or Dundalk, who have won five of the last six Irish titles. There has never been a situation where so many of Europe’s leagues – 13 of 54 – are suffering such domination at the same time. That it extends from the very top, to mid-sized leagues like the Austrian Football Bundesliga, to the bottom and the Andorran Primera Divisió, shows the depth of the problem.
It also shows the effect of Champions League prize money, which has become one of the most profound problems in the game, as influential as anything else in creating this disparity.
The difficulty in qualifying for the competition, of course, is just another representation of that disparity.
That is emphasised by the fact more clubs finished in England’s top four in the first five years of the 1990s than in the 20 years so far of the new millennium: 11 to 10. The number for 2010 to 2019 as a whole is seven, down from 13 in the 1990s and 1980s, and 15 in the 1970s and 1960s. The other major leagues tell a similar story, and that without a defined big six.
It is not just that the wealthiest clubs are winning much more, however. It is that they are winning by much more.
So many clear victories are perhaps the clearest indication of the ‘Overton window’ effect of this: where gradual shifts over time make abnormal situations feel normal to anyone watching on. Thrashings of the scale the wealthiest clubs now dole out – Manchester City beating Watford 8-0 or Bayern Munich beating both Mainz and Werder Bremen 6-1 this season – used to be so much rarer. Even 5-0 thrashings were comparatively uncommon. Looking at England’s wealthiest four clubs – which has varied since the start of the Premier League – over a fifth of their games are now won by three goals or more. For the 90s, that was just over a tenth, at 12.6%.  Even the mighty Real Madrid did not used to win like this. Together with Barcelona, their percentage of wins by three goals or more has jumped from 20.5% in the 90s, to a staggering 37.8% now.
The game has been engulfed by capitalism, driven by the same motivation: money.
The Champions League has become so popular that its prize money is simply immense: life-changing for many clubs and game-changing for the sport as a whole. It is so drastic that it distorts football.
Merely turning up in the group stage this season earned clubs €15.25m. Getting to the Istanbul final will be worth €62.25m – and that’s before you factor in many related rewards. The near £100m Spurs earned last season was enough to launch them past Chelsea into the top 10 of the Deloitte Football Money League.
The Champions League does much more, however, than creating this huge financial capital. It also creates a football capital – and what you might call the ‘Everton problem’.
It is just another way the game is so conditioned towards the richest. The massively free player market makes it a race to the top, where the richest are able to accumulate the best in a way never seen before. Every player obviously wants to be in such a competition. This means that even if clubs like Everton have the money to pay competitive wages, they are still mostly getting cast-offs, a level of player short of the true elite. And when they do have a player who can perform at Champions League level, like Romelu Lukaku, he is quickly picked off.
It was the glamour of the Champions League, after all, that first attracted Roman Abramovich to football. That is their platform: the entire planet. The description of “global clubs” is so apt. Only a handful of clubs – Manchester United, Barcelona, Real Madrid, Liverpool, Arsenal, Juventus, Bayern Munich, AC Milan and Internazionale – are capable of truly benefiting from it. They just have a distinctive global fan base, and thereby a ready-made market, that is impossible for anyone else to replicate. 
Football has become show business. The stadiums are big TV sets, where 22 performers are performing. It’s show business, in some ways, more than sport.

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