The football economy is entering a new era

The idea that football is a “mirror” of society is often put forward in the living room and proved to be quite true from the point of view of its economy. Branko Milanovic, recognized expert in inequalities and well-rounded analyst of the ball, sees it well: “Football has been a mirror of society, where inequalities have grown exponentially over the last three decades”, explaining this in a column for the magazine. forbes,

21st century football condemned for its social and environmental organizational conditions in the time of a World CupI The century also does not escape the great current economic debates, particularly of growth and inequalities. All these questions, in our view, are symptoms of a historical and economic change in the sport.

According to the English sociologist Richard Giulianotti, there have been four periods in the history of football. The traditional period extends from the establishment of the rules at the end of the XIXI century until World War I; Early modernity corresponds to the inter-war period when competitions were invented; Late modernism, which sees building commercialization, ends in the late 1980s; Media coverage, labor market liberalization and development as the postmodern period begins.

The thesis we defend in our latest work is that today we are at the beginning of a new era which we qualify as hypermodern.

Stars, Groups, Earnings and Viewers

Four characteristics allow us to define this hypermodernity. first concern economic inequalities Which has increased rapidly in the last decades. They are observed on the one hand between clubs of the same league, on the other hand between different competitions, and as a result of a sporting competition, national as international, the dominance of some teams is much greater than that of others. They also concern the distribution of footballers’ salaries, with the increasingly strong segmentation of the labor market with respect to stars, even superstars.

Manchester City’s buyer in 2008, Mansour bin Zayed Al Nahyan, Deputy Prime Minister of the United Arab Emirates since 2009, handed over management of the club to businessman Khaldoon Al Mubarak here in full conversation with Nicolas Sarkozy during a European Cup match.
Frank Fife/AFP

The second feature is related to the arrival of new Investor Profile, namely public and private investment funds, the latter often American and already owning collective sports franchises across the Atlantic. Compared to the previous period, this change in “ownership” could have at least two consequences: football at club or league level would now have to be financially profitable; Moreover, “galaxies” of clubs are formed around the same owner. For example, the wealthy Emirati buyers of Manchester City have since 2008 gradually incorporated eleven other clubs into their “City Football Group”, including New York FC, Palermo and Troyes.

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related to the strategy of the third globalization Larger clubs and leagues which provide them with increasingly large commercial revenues and international broadcasting rights. Finally, the last characteristic is related to football request Suitable. This is a result of the advent of new broadcasters such as Amazon Prime in France, the proliferation of broadcast platforms and new ways of consuming football, especially among the younger generations.

Picetti in the penalty spot

The economics of football has become an interesting area to apply analytical grids inspired by the worldwide success of economist Thomas Piketty’s book. capital in the 21st century, the first edition of which dates back to 2013. The author showed that the topic of distribution of wealth and the topic of inequality are at the center of society today. Football doesn’t seem to escape the rules.

Since the 1990s, the world of football has experienced very strong growth in the main European countries. Excluding transfers, club income comes from four main sources: broadcast rights, ticketing, sponsorship and derivative products (eg jersey sales). All have increased significantly since the 1970s, but in varying proportions: ticketing, prevalent fifty years ago, has gradually seen its share decrease in favor of TV rights and sponsorship at major European clubs.

This economic boom has coincided with increasing disparities between clubs at national and European level. As with society in general, this increase in inequalities is mainly related to the top of the distribution. The income share of the most elite clubs in the league’s turnover has increased, resulting in an increased concentration of titles in sporting terms. In the German First Division, for example, nine different clubs won the first division in the 1960s, five in the 1990s, and only two since the 2010s.

Despite rising revenues, the football economy is still a “smaller economy” than most people think. On top of all that, until recently, it generated little or no profit for its shareholders. The fact is that many owners, billionaires or sovereign wealth funds, often buy teams for reasons other than the simple financial profitability of their investments: “soft power”, nation-branding Or charity are also key words.

worthy stars?

When football and inequality go hand in hand, the issue of player salaries also comes to mind. The idea that they would be “paid more” either on an individual level or on the club payroll transcends the political sphere. The right-wing formulates social critiques, the left-wing questions the liberalism that feeds them: in any case, there is a certain consensus to see in the remuneration of footballers one of the sources of the perceived evils of football’s economy today.

Note beforehand that only a very small proportion of players earn millions, while most have extremely short careers, on average about four years in the elite. Furthermore, less than one in three transfers in the five major championships (England, Spain, Italy, Germany and France) and almost one in seven worldwide are the subject of a monetary transaction.

The fact is that there are strong disparities between footballers and these have also increased. However, reducing the salaries of superstars is against a “moral” roadblock. These players have far above average talent, the cost of which is highly convex to the clubs: the big teams are then willing to pay dearly for the “talent” of these exceptional players, a unique talent that cannot be “replaced”. Could of many “average” players.

By extending his contract at Paris Saint-Germain until 2025, Kylian Mbappe has secured himself around 100 million euros gross salary per year.
Frank Fife/AFP

Furthermore, a supporter pays for his or her place in the stadium to watch the latter game, even if it hurts the chances of seeing their favorite team win. From this point of view, if we adopt the philosophical principles of John Rawls, superstar footballers “deserve” their remuneration: the expression of their talent contributes to the welfare of the “community”, particularly those from disadvantaged backgrounds. Daniel Cohen, director of the economics department at the École Normale Supérieure (ENS) in rue d’Ulm, puts it this way in a column the new obs ,

“Football is the only case where young people, mostly from working-class backgrounds, are extorting their consent from billionaires.”

As suggested by the extension of Kylian Mbappe’s contract at Paris Saint-Germain, the trend is towards much higher wage increases which could modify the functioning of the labor market for footballers. We’ve probably moved from a two-segment system, superstars and others, to a three-segment system: few hyperstar players, more superstars and others.

empty stand

Does this observation on inequalities support the idea of ​​football in crisis in the post-pandemic context? Contrary to everything announced by the wooden forecasters, what the coronavirus has changed in football, apart from the financial difficulties that the entire economy has suffered, is nothing or not much and we do not live. Definitely not the apocalypse!

Real Madrid president Florentino Perez is not discouraged from giving birth to his Super League project.
Frank Fife/AFP

The most visible “crisis” was that of supporters during the normal closed season from March 2020 and the 2020–2021 season. Beyond its financial aspects, the lack of public was felt at two levels. Sportingly, without this “twelfth man”, we used to wonder whether the advantage of playing at home has diminished in general. Taking advantage of this “natural experience”, economists have reached nuanced conclusions regarding the outcome of matches, but not arbitration. Men in black were more benevolent towards the visiting team in empty stadiums, revealing the role of “social pressure” from supporters.

Above all, it delivered television broadcasts without any atmosphere. The lesson to be drawn from this is that this dimension of “spectacle”, to which supporters are no strangers, must be taken into account when measuring the importance of TV rights to club budgets. Maradona said that playing behind closed doors is like playing in a graveyard.

Fans have recently been incensed by the proposal by some presidents of major clubs to “segregate” through the (aborted) project of a more or less closed Super League. This recurring project of the European Championship, and relaunched in recent weeks, reflects, in our opinion, the economic need to reform the competitions, a development that is undoubtedly one of the main current issues in professional football. The creation of the Super League, the culmination of all the elements that characterized football’s hypermodernity, would then be its “apotheosis”.

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