Club Wealth Disparities and The Beautiful Game

"Football world popularity" by Johan Elisson
“Football world popularity” by Johan Elisson

By: Harry Richart

At first glance, the casual observer would not assume that the world of European football (or soccer, depending on your persuasion or country of origin) would have much in common with the global economy, but upon closer inspection, similarities between the two become increasingly evident.  These similarities are particularly relevant in regards to the way that a large majority of overall wealth has accumulated into the hands of relatively few individuals.  In light of recent economic literature, like Thomas Picketty’s Capital in the 21st Century and documentaries like Robert Reich’s Inequality for All, income and wealth inequality in the United States, and across the globe, has garnered much attention from both academic and journalistic media outlets, while also becoming a hot-button issue in the public consciousness at large.   While these two men are, in essence, calling for more socialist policies in the largely capitalist US economy, it is important to note that the mainly capitalist policies involved in European professional football leagues could take a page out of the playbook for American sports leagues, emulating the more stringent socialist regulations utilized there. 

This regulatory issue in European professional football has garnered much attention in recent years, particularly following the continent-wide economic hardship brought on by the financial crisis in 2008-09, prompting Europe’s governing body for Football, the Union of European Football Associations (UEFA), to implement Financial Fair Play Regulations (FFP) in 2009 to limit the exponential increase in player wages across the continent.   According to a statement from UEFA President Michel Platini in 2009, over half of the clubs in European football were operating at a financial loss at the time that FFP was enacted.  This fact, while illuminating in itself, shows a worrisome overall trend in European football, where the largest clubs (FC Barcelona, Real Madrid, Manchester United) on the continent and those owned by Russian Oil Czars (Chelsea FC) and Middle Eastern energy moguls and royalty (Manchester City, Paris St.-Germain) operate under vastly different financial circumstances when compared with nearly every other club.

To put this phenomenon in perspective, one only need look at the overall value, revenue, and wage-bills of clubs in the major leagues in Europe.  In the Spanish top division, La Liga, there are two clubs, Real Madrid and FC Barcelona, which financially dominate the rest of the league.  According to Forbes Magazine, both clubs are expected to bring in over $600 million in revenue for 2014 and both clubs are valued at over $3 billion, making their purchasing power far greater than the rest of the clubs competing in Spain’s top league.  As these select, top clubs enjoy ever-greater profit margins, the rest of the clubs in the league have taken on an enormous amount of debt as spending by the European continent’s largest clubs drives player wages skyward, where the rest of the clubs in the league are leveraged to the tune of over $3 billion.  This reality has forced many clubs in La Liga to sell their top players to either Real Madrid, Barcelona, or to wealthier clubs in England, Germany, or France.

This reality has exacerbated the need for the FFP measures that were created in 2009 and enacted in 2011-12, and has shed new light on some worrying issues pertaining to these new policies.  The first of these problems is that the punishments that have been dolled out appear to be having a limited sway on the Continent’s largest clubs.  Clubs like FCB, who are facing impending transfer window signing restrictions, circumvented this punishment by going ahead and signing hundreds of millions of dollars of new, world-class talent before the punishment was adjudicated, in the form of Brazilian superstar Neymar and World Cup bite-man Luis Suarez.  Additionally, clubs like Manchester City in the English Premier League and Paris St.-Germain in France’s Ligue 1 have faced punishments in the form of large fines, which they are easily able to pay with the help of wealthy ownership.  This reality has drawn widespread attention to the efficacy of FFP restrictions and has caused leadership on both a Continental and domestic level to seriously assess the current model presiding over professional football in Europe.

Ironically, it seems that professional football leagues across Europe could take a lesson in socialism from the major American sports leagues. The NFL, NBA and to an extent MLB, have embraced profit-sharing and salary caps, working to even the playing field for all teams active in their respective leagues.  If ownership of less wealthy association football clubs in Europe wish to keep their teams and the fans that support them, they must lobby for change amongst the leadership of the their respective countries’ football associations.  By doing so, they may stem the tide of the growing wealth gap between rich and poor football clubs.  If fans of the beautiful game wish to cheer on their teams for another century, they should apply pressure to team ownership by refusing to pay for ever-higher costs on match days.  While no obvious solutions exist to solve the problems of either professional football in Europe or the global economy, it is clear that certain changes must be made, for if they are not, both could be changed indelibly, with no way to restore them to the more egalitarian conditions of the previous era.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s