Football Economics I: Growing wealth disparities


Does profit strife destroy the spirit of football?

While some clubs are under the reign of wealthy owners, others still pursue the traditional way of self-ownership – while running the risk of becoming uncompetitive. Over the last decades, the power in football has been more and more centralized in a few major countries, and even there in a few major clubs. While on the one hand, this might be the natural lifecycle development, it still raises the question of whether sports have been industrialized too much…   

By: Joost Haddinga                                                                                                                                                                                      Date: March 3, 2022

Older generations often get quite melancholic when they remember football in their youth: It was all about the sport, you never knew who would win the championship and every team had their own stars – money was secondary, even in the top leagues. But the tables turned in the 1990s after the collapse of the Soviet Union, the introduction of the English Premier League and finally the Bosman case (which enabled players to switch clubs after their contract ended without a transfer fee) – all in the 1990s. Since then, it held true for the domain of football what can also be said for society as a whole: The rich got richer, and even the richer – while the position of the poor stagnated and declined relatively. The power of investors rose continually and enabled them to shape clubs and teams simply as they desired – see Roman Abramovich at Chelsea, Tamim bin Hamad Al Thani at PSG and Mansour bin Zayed Al Nahyanat Manchester City. 

Nostalgists would say money does not win you trophies, but this is only true on a certain level: Firstly, looking at for example England, if everyone has an investor and it is all about money, then money does win you trophies – and if you do not have enough money, you go down pretty quickly – see the cases of Portsmouth and Sunderland in the last years. Another case would be Germany, where clubs must retain ownership following a 50+1 rule (50 % + 1 part of all shares must be controlled by the club): Here money alone helped clubs as Wolfsburg or RB Leipzig to climb the table for some years but was not enough to break the reign of Dortmund and Bayern Munich. The same goes for European competitions: Clubs only powered by money in the last years were not able to win any trophies on that stage – only those who build a strong team by natural developments and considerate transfers succeeded – see Real Madrid, again Bayern Munich and Chelsea, as well as Liverpool and Sevilla. Whereas all these clubs are still considered rich, they made their way not because of the money, but money followed their sportive successes and led to a self-perpetuating development.

What has also changed over the last decades is the structure of title winners: While still in the 2000s the winners of domestic and international competitions fluctuated a lot with few consecutive championships, in the 2010s the reign of the top few have begun: PSG in France, Juventus Turin in Italy, FC Barcelona and Real Madrid in Spain – only in England there is still a fierce battle among the top 5: Chelsea, Manchester City, Manchester United, Liverpool and Tottenham Hotspurs. But in all countries the distance between the best and the rest increases with every title – and hence every year and leads in some places to 8 consecutive championships or more. The best clubs remain in their position – because they have the funds, have the structures and good management, and can reap all the benefits because money is more important than ever in European football. Surprises still exist, see Ajax Amsterdam 2018, Leicester City 2016, or Lille OSC in 2021, which all broke the reign of the usual suspects for a short time. Thankfully, these wonders still exist, but with time proceeding they become miracles as rich clubs do everything to secure their positions and to tactically weaken possible opponents. 

Given these developments, the sports aspect in football is still there and at the top sports is still the decisive factor that distinguishes investors from well-organized clubs. Till now, the symbiosis of both is still to be seen and multiple projects in e. g. Germany (Hertha BSC, 1860 Munich) or Italy (AC Milan) have failed in bringing the desired success to the clubs. Still, it becomes harder and harder for clubs to succeed that focus solely on the sportive side because money makes the world go ‘round – also the football world.

Concludingly, football has not yet lost all its spirit but is on its way into a pure business operation when capitalism and the profit strife of investors are the single most important factors for the clubs. The sport can only survive, both in its reception and business case when it is about the game itself. Otherwise, you end up with a concentration of super-rich clubs that do everything on their own and all other clubs beneath, which can play among themselves but play no role. What sounds like monopolistic competition, could become reality. However, it better don’t because it would not only demolish the ‘beautiful game’ -  into a cash game, but would make people turn away from the sport and get rid of all its recognition and inclusive power. 

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