When Will Real Madrid and Barcelona Stop Being So Good?

Madrid and Barcelona don't like each other very much, but none of the other clubs in La Liga like either of them. No wonder they look so angry. (source: theaustralian.com.au)

In September 2011, Sevilla president José María Del Nido invited all of La Liga's teams to Seville to discuss their financial future. The two excluded clubs were Real Madrid and FC Barcelona, Spain's two biggest clubs by all metrics, left at home to pout like brooding, unpopular teenagers. Del Nido's message was clear: the big two were cannibalising the rest of the league, turning La Liga into what he called a “crap league -- the biggest pile of junk in Europe.”

Two years on, and little has changed. Before their Supercopa match with Barcelona, Atletico Madrid manager Diego Simone issued a damning verdict. “Madrid and Barcelona play in a different league, and this is a boring championship. We'll have to wait until there is a change in the share of television revenue, because this is a two-teamleague." 

Simone is not wrong. The imbalance in Spain's TV revenues makes feudal Europe look equal. Under the latest deal, the negotiation of which Del Nido was trying to influence, Madrid and Barcelona between them take 35% of all revenues. Atletico and Valencia then are allowed 11%, and 45% is to be divided amongst the remaining 16 clubs (the remainder is to be used for league placement payments and such). This means that Real and Barca both take €140 million, almost three times the receipts of Atletico and Valencia (€46 million and €48 million respectively), and more than ten times that of the majority of clubs (seven teams receive €14 million, one €13 million and two €15 million). By way of comparison, in the far more equitable Premier League (in 2011/12), champions Manchester City earned £60million and relegated Blackburn Rovers and Wolverhampton Wanderers earned £40 million from the television deal.

The reason for this disparity is that the league does not negotiate its TV rights collectively, as the other major European leagues – including the Premier League, the Bundesliga and Serie A – do. The result is that Barca and Madrid, the most popular La Liga teams by far domestically and internationally, have greater TV rights income than any other clubs in the world. According to Deloitte, Madrid earned €199.2 million in total from TV distribution rights, and FC Barcelona €178.9 million. By way of comparison, the next highest earners were Chelsea, who received €139.4 million (in a bumper year where they won the Champions League) and Manchester United, who earned €128.5 million in total.

Spain's TV deal thus gives Real Madrid and Barcelona a structural advantage over their rivals both domestically and internationally. This is not their only one. Both clubs enjoy status as 'membership clubs', allowing them to register as not-for-profit organisations and receive significant corporate and property tax breaks. In 1990 the Spanish government ruled that all clubs besides Madrid, Barca, Osasuna and Athletic Bilbao had to become limited companies, waiving their tax advantages.

The result of these two structural advantages is that Real Madrid and Barcelona are vastly wealthy. They are not just the richest two clubs in Spain, but the richest two clubs in the world: their revenues of €512.6 million and €483 million respectively are around €100 million greater than the third-richest club (Manchester United, €395.9 million) and almost double the eighth-richest (AC Milan, €256.9 million). No other Spanish teams make the top twenty; indeed, Real Madrid and Barcelona account for almost 60 per cent of revenues generated by the 20 first league clubs, an unbalance far greater than can be found in the other European leagues.

This wealth is, of course, reflected in their on-the-pitch dominance. The brilliance is easily visible to anyone who has seen the teams of Messi and Ronaldo play. Both clubs routinely win by four or five goals, and have been ratcheting up record points totals in consecutive seasons. They also regularly reach the last stages of the Champions League, with Barcelona having won the trophy three times in the last decade. Pep Guardiola summed up the Madrid-Barcelona duopoly as “fucking barbaric”.

It is no coincidence that the last time a team other than Real or Barca challenged for La Liga was Sevilla in 2006/7. This was the last boom year before the financial havoc of the 2007 recession. As the big two have risen, the rest of La Liga has slowly sunk into the mire of the Spanish economy. Javier Tebas, president of the Spanish football league, compares the football market to the housing market: “The sector became inflated. It grew through debts. Then the crisis brought an end to all this money – and strangled us economically.” Professor José Maria Gay de Liébana of the University of Barcelona agrees: “Football is largely a reflection of what has been happening in our economy, with people spending way beyond their income, relying on fanciful growth forecasts and ending up with unsustainable debt and an asset pricing bubble.”

Football's asset pricing bubble has left much of La Liga in disarray. Many clubs have been through periods of governmental administration; almost all are heavily in debt. Professor Gay estimates that the debt of La Liga clubs was €3.5 billion, with half of them having negative equity (i.e. their reported liabilities are greater than their assets i.e. they're fucked). Around €700 million of this debt is owned in taxes to the Spanish government. With the bursting of the bubble, and the continued struggles of the Spanish economy, these debts have become a heavy burden for the league. For every club, excluding the big two (and Athletic Bilbao), footballing glory is no longer a target. They can only aim for survival.

Despite these problems, the clubs' chances of continued existence have improved recently. The first was the introduction, at the time of the last TV rights deal, of parachute payments for relegated clubs. Money would now be paid from the TV deal of the top division to those teams relegated into the second one, in order to help them deal with the far harsher financial realities one rung down the ladder. Francisco Roca, the chief executive of La Liga says that “If you get relegated in England, it is difficult. In Spain, it is catastrophic. You don't even get 10% of the revenue you used to have. We have doubled that amount, but we have to do more."

The arrival of necessary parachute payments came at a large cost: it was in this round of negotiation that Barcelona and Madrid quashed the Sevilla-lead rebellion and enshrined their televisual dominance. The problem the La Liga clubs face is that the big two's popularity is essential to making the league's TV rights seem appealing to prospective buyers. As much as Madrid and Barca are cannibals on their fellow clubs, these same clubs are parasites of the backs of the two behemoths. The clubs accepted a raw deal on TV revenues because they needed parachute payments to guarantee survival; they are trapped in a vicious circle that may well lead to increased big two wealth and popularity, and further little 18 financial jeopardy. All the parties know this, and Madrid and Barcelona use this knowledge to browbeat the league in negotiation. As Espanyol director Joan Collet puts it, “when Madrid and Barcelona stand before them, when Florentino [Pérez, the Madrid president] starts to talk, the other clubs shit themselves."

Nonetheless, there may be some hope for the future. Madrid and Barcelona (and Osasuna and Athletic Bilbao) may soon lose their tax advantage. The special status of the four clubs is under review by the European Commission's competition office, which is seeking to determine whether the tax-breaks the clubs' status allows qualifies as illegal government aid. So far, the commission has taken more than four years to come to a decision, and has still not announced what this decision might be (usually investigations with the same priority as this one are decided in one year, but the competition office have repeatedly overshot their deadlines). Increased pressure from several European clubs, most prominently Bayern München, however, has lead to the intervention of the European Ombudsman. The Independent reported that a spokeswoman of the EC competition office said that it was "in contact with the Ombudsman" over the issue of Madrid and Barcelona's member-owned status and expected "to take a position as regards state aid to professional sport in the near future".

The two outcomes seem to be either that the four clubs will lose their special tax privileges, or, as Inside World Football suggest, that the 1990 act imposing the limited company model on professional clubs will be deemed against the European Union's Directive on Services in the Internal Market, and will therefore be removed. Either way, the playing field should be slightly more level for everyone else.

There is some hope being generated by the clubs themselves. While it seems to have been a failure on a macroeconomic level, within the Spanish football market the policy of austerity is starting to have some success. La Liga teams have reduced their annual losses from €200 million in the 2011-12 season to under €40 million in 2012-13. Furthermore, the predictions for next year are good, with losses potentially falling collectively to just €10 million.

If La Liga continues to manage and reduce its debt, then there is hope that the teams can once again become more competitive with their divisional giants. At the very least, no longer being on the brink of annihilation should give the clubs a stronger bargaining position when the TV rights are next up for renegotiation.

The greatest source of hope, however, is the players themselves. Spain is currently enjoying an unprecedented quality and depth of professional footballers. One of the reasons Spanish clubs have been able to reduce their losses is the continual production of highly talented, and therefore highly priced, young footballers. Currently these players are being sold to fend off oblivion; in a slightly more stable economic environment, clubs may be able to hold onto their talented youngsters just a little longer. After all, Valencia had David Villa for five peak years; Málaga could only cling to Isco for two seasons. Isco is now only 21, and already cost Madrid €30 million. Undoubtedly, in classic Real Madrid style, he will be pretty good for a couple of seasons and then wastefully sold on abroad, at a loss, so the next idiotic president can splurge the next world-record transfer fee on the next unneeded glamour signing. Gerardo 'Tata' Martino, the current Barcelona manager, has recently said that Gareth Bale's transfer fee shows “a lack of respect for the world in general”, and he is completely right. The only problem is that Barcelona paid an equally disrespectful €57 million for Neymar.

Following the Money: Why Footballers are Prone to Bankruptcy

Her husband [...] had been one of the most powerful ends that every played football at New Haven - a national figure in a way, one of those men who reach such an acute limited excellence at twenty-one that everything afterward savours of anti-climax.

                                                                                            - The Great Gatsby, p. 11

Party at Gatsby's, courtesy of Baz Luhrman. Gatsby/footballers can't afford zebras forever. (from hollywoodreporter.com )

I learnt recently that Dennis Bergkamp is, due to his canny investments, the 500^th richest person in the Netherlands. He has an estimated personal wealth of €55 million, making him the second-richest Dutch footballer, behind Ruud Van Nistelrooy. In 2004, the BBC estimated his personal fortune at £37 million, second only to David Beckham in the UK. At 2004 exchange rates (roughly 1.5 Euros to the Pound), this means that his wealth hasn't changed value for seven years. Which may not seem that impressive, but when you remember that he's been retired for all of that period (although he does work as assistant manager at Ajax, it seems unlikely that his salary there is comparable to his salary at Arsenal) and that there has been a major recession in the interim, Dennis is doing pretty well for himself.

Bergkamp's successful wealth retention looks far better when compared to the unfortunate case of Kenny Sansom. Sansom, who played for Arsenal for eight seasons in the eighties, is England's second-most-capped left-back of all time, after Ashley Cole. Recently, the Sun revealed that Sansom was homeless, and struggling with alcohol and gambling addictions. “I've been living homeless for 10 days,” he said. “That's because I've got no money, I'm a drunk, I'm feeling not very well and I'm a gambler. I've been living on the street.”

The fact is that the retired lives of most professional footballers are far closer to Sansom's than Bergkamp's. The sporting charity Xpro estimates that up to 60% of footballers face bankruptcy within five years of retiring from the game. The chairman of the Professional Footballers' Association, Gordon Taylor, disputes these figures, claiming that bankruptcy rates are closer to 10%, but even this seems shockingly high for such a well-remunerated profession. Bankruptcy is not at all unusual for athletes: for example, Sports Illustrated estimate that “By the time they have been retired for two years, 78% of former NFL players have gone bankrupt or are under financial stress because of joblessness or divorce.” There seems to be something about young athletic millionaires that renders their wealth unstable.

In the case of Kenny Sansom and others like him (Paul Gascoigne comes to mind), the shortcomings are very obvious. Addictions like alcohol, gambling and cocaine can be ruinous to a player's bank-balance. Indeed, ex-pros may be especially vulnerable to these kinds of dependencies. Football has long had a culture of drinking in the dressing rooms as well as on the terraces. Worse, it has had a macho attitude that has disdained asking for help or admitting you have a problem. I suspect that footballers, due to the stress and prominence of their positions, and the deflating effect of such early retirement, may be unusually predisposed towards addiction, and the culture around them exacerbates this predisposition.

Football culture can be toxic in other ways. It's most obvious problem is extravagant, short-term expenditure. The Secret Footballer, for example, describes a night out in Las Vegas. Two groups of footballers are enjoying $5,000 minimum spend tables at TAO. Their “fixer” has arranged for high class prostitutes for the evening. When one particularly attractive call-girl appears, the Secret Footballer's table is outbid by the one behind, who offer to double the girls' fees. This financial humiliation provokes a "champagne war," where each side continues to gift one another bottles of champagne until one party can no longer pay. The eventual bar bill is “$130,000, excluding tip”. None of the players are going to see this money again, and none of them will be able to spend like this when they stop earning.

Such decadence is common-place, appearing weekly in our tabloids. Liam Ridgewell used £20 notes as toilet paper. Mario Balotelli commissioned a statue of himself. The QPR team, on a winter 'training camp' in Dubai, took the opportunity to party: “We had all day to ourselves. That meant shopping, the pool, nightclubs. We were on holiday, it was just a party. Some of the bar bills were enormous, huge, in the tens of thousands of pounds for one night. Two or three players couldn’t train the next day. It was that bad.”

Such spending is wasteful and likely to facilitate an addictive lifestyle. It is also completely unsustainable. Sports Illustrated quote American money-manager Michael Seymour: athletes buy $20,000 watches, "but if they invested in a five percent, Triple A insured, tax-free municipal bond for a period of 30 years that $20,000 would be worth $86,000 at that tax-free rate of return. And needless to say, they buy more than one $20,000 Rolex." What footballers fail to understand is that they are spending not just their current salary, but their future salary as well.

Furthermore, when players do try to invest their money wisely, they often make poor choices. This is mostly because they lack the interest and education necessary to manage a multi-million pound portfolio. There is a reason wealth-fund managers are so well paid. Managing large amounts of money is a skill, and it is not one taught in football academies, where subjects like basic maths, let alone risk management or economics, are mostly off the curriculum by 14 or 15. Simply speaking, footballers don't know how to use their money, and earn it so early in their lives that they never even have experience of managing their own budgets or of slowly scaling up their wealth. Asking a footballer to manage £20 million is like asking a ten-year-old to play in a Champions League match: they might be able to do it eventually, but they aren't prepared for it right now.

Footballers' financial naïvety is more often neglected or exploited by advisers than it is mitigated. Agents will try and take as much money as they can from a player. Many agents are not even professionals, but just the friends or family members of the players, with no expertise to justify their position. Such hangers on are potentially incapable of giving good advice even if they wanted to. Friends and contacts take the opportunity of a player's success to make some money themselves. The baseball player Torii Hunter gives an illuminating example (again in Sports Illustrated). Hunter looked at the financial statements of a teammate: "It turns out he was paying this guy [his financial adviser, an acquaintance from the old days in the Dominican Republic] $5,000 a month on insurance for two cars in the Dominican Republic," Hunter says. "I got three cars, and I only pay $250 a month. He'd been with and trusted this guy [for almost 18 years]!"

Given that athletes are so vulnerable to exploitation from their own friends and family, it is no surprise that they are targeted by professional fraudsters. A particularly interesting case is that of Luigi DiFonzo, an author, convict, con artist, businessman, FBI snitch and pretend Italian count. DiFonzo “looked like a pimp”, according to his attorney, and served a three-year sentence for defrauding a dead friend's widow out of her $120,000 inheritance. In 1996 he founded a company called DFA Italia to defraud potential investors. DiFonzo would particularly target athletes because they were highly visible and easily trickable millionaires. He even recruited a former pro-football player, Duval Love, as a salesman to make the pitch easier to other athletes. To add to his allure, he posed as a member of the Italian nobility. He and his crew laundered the fraud-money through the MGM Grand Hotel and Casino in Las Vegas to reduce the paperwork; presumably the gambling milieu provided both the glamour DiFonzo craved and a welcome pool of potential investors. (All DiFonzo information from here.)

DiFonzo's writing partner, Jesse Kornbluth, described him as a “Sicilian Gatsby”. I find the image curiously poignant. Gatsby is a fantasist, a triumph of delusion over reality. “Gatsby, who represented everything for which I have an unaffected scorn. If personality is an unbroken series of successful gestures, then there was something gorgeous about him” (F. Scott Fitzgerald, The Great Gatsby, p. 8 (London: Penguin, 2000; fist published 1926)). Gatsby, who money-voiced Daisy can never love; Gatsby, whose riches diffuse with drops of his blood in his unused swimming-pool.

Gatsby is an apt symbol for our bankrupt athletes. He and they were never meant to be rich, born in deprived areas and parachuted like lottery winners into the dangerous lives of multimillionaires. To lament the problems of the ultra-rich may seem churlish, but it doesn't mean they don't have problems. Footballers can all too often be gross caricatures of modern consumer capitalism, wasting money without Gatsby's elegance or pretensions. Their lives can be nasty, brutish and short. It is this brevity that gives it poignancy. They only earn for, at most, twenty years, but they insist on living as if the present will last forever. Perhaps they have to, to avoid thinking about a bleak retirement. A retirement where they will face constant scams and the worst faces of society. A retirement where their standard of living will, mostly likely, sharply decline, and where the temptations of powders and potions may prove too strong to resist. A retirement where they will no longer be able to do the only thing they know how to do well.

The saddest thing of all, however, is that their wealth is not the only thing that fades. The single biggest factor in athletes' bankruptcy is divorce. Divorce rates are between 60% and 80%. The diminishing lifestyle faced by a post-retirement lack of income tends to cause and exacerbate problems in relationships. For too many, the end of the good life is also the end of their love life.

“They were careless people, Tom and Daisy – they smashed up things and creatures and then retreated back into their money or their vast carelessness, or whatever it was that kept them together, and let other people clean up the mess they had made” (Gatsby, p. 170). Footballers cannot retreat into their own carelessness. The money runs out and they can't replace it. It's been wasted away, on champagne and hookers, yachts and skis, depreciating properties and bad investments. Worse, it's been taken away, by parents and agents, brothers and brokers, wives and children. I find it hard to blame these men for their plight. They were never ready for their wealth, never prepared, never capable. The misery they suffer is the result of a system that ceases to care when they leave the pitch, of clubs and businessmen more interested in trophies than pension plans, and of a culture that overvalues material success over education, ephemerality over sustainability.

‘An education’, or a footballing education?

               A few weeks ago, academy-graduate Matthew Pennington signed a professional contract with Everton. The official announcement on the club’s website pointed out that, remarkably for someone at a dedicated football academy, Pennington had also been awarded ten A* grades at GCSE. But when asked about his academic achievements, he insisted that football had always come before his grades. ‘Hopefully,’ he said, ‘I won’t need them at all and I can make a career in the game’. Obviously he does not believe that education can contribute to his career in football, something that might well be true as long as we are talking about time spent as a player. Being able to mathematically determine what proportion of Brendan Roger’s face is made up of nose will obviously not help Pennington become a 20-goal-a-year-striker (especially as he is a defender).

                But what about when his playing career is over? Let’s say Pennington wants to make the transition from player to manager as seamlessly as Alan Shearer - will an education not come in handy there? On the surface there are few areas of a manager’s job that do not look like they would benefit from the skills gleaned from an education. We as a society value education not for the specific knowledge that it imparts, but for the broader proficiencies that come with it: it helps us to express ourselves effectively, think critically and logically and to understand the complexities of the world around us. All of this has obvious relevance to the career of a manager. They are at the helm of extremely rich and popular businesses. Many play a central role in directing the investment of capital on new players, and every manager is the most important point of media contact between the club and the outside world. If you look outside of the football industry, anyone else who occupies a similar position of importance in finance or public relations is expected to be highly educated and trained in their area of expertise

                I know what you are thinking. But what about Harry Redknapp? For those of you that don’t know, dirty ‘arry is currently the manager of the recently-relegated Queen’s Park Rangers. He has had a long and patchily-successful managerial career, presiding over the ruination of Portsmouth as a footballing institution at his worst and taking Tottenham Hotspur to the Champion’s League and setting himself up as bookies’ favourite for the England job as his best. This career is no more or less illustrious than the vast majority of working managers, suggesting that Harry is, at the very least, competent. But then, in 2012, Harry stunned the world with his in-court arguments against charges of tax fraud. His defense, in a nutshell, was utter incompetence. In his own words he ‘writes like a two year old’ and ‘can’t spell’. Neither can he work a computer or send a text. As a result he ‘doesn’t keep anything’ and at work ‘couldn’t even fill a team sheet in’. He also told the court that he was a terrible investor of money, losing 250,000 pounds of his own money when ‘persuaded… at very short notice… to buy [shares in] Oxford United’.  So, this man was entrusted with  control of a club worth roughly 300 million pounds when he openly admits he is a terrible businessman, unable to communicate through standard long distance methods and not capable of even basic tasks like filling out a bit of paper with his player’s names on it. I don’t need to expand on how absurd that is or how a man like that would not be allowed anywhere near a PR or finance job in the real world.

                Or do I? When I say ‘Harry stunned the world’, I’m lying. It caused nothing like the stir it ought to have, and, though Harry was out of work at the time, he was quickly hired as a manager at a new club. I know. Mad. So why does no one care that Harry has these obvious deficiencies? Why was no one surprised?

Harry wonders who he can persuade to write his team sheet

                The answer lies in a widespread belief in the footballing world that the only preparation you need to be a manger is ‘a footballing education’. The idea is that you can pick up all the skills needed to manage through playing football and watching your manager at work. If, as a player, you never learned to read and write, well these are obviously not skills a manager needs! In fact, this is such a strongly-held view that it is actually very difficult to get a job as a manager if you haven’t played football at a high level. The only problem is that it’s obviously not true. A squad needs to have absolute faith in the manager’s decisions and to obey his commands unthinkingly. Thus it is vital that a manager keeps his players completely separate from the decision-making process and even discourages independent thought on managerial matters - if players were party to things like transfer policy it could obviously have a serious effect on their performance. So, if this is true, how is it possible for a player to learn anything meaningful from their manager? Analogy  exposes the absurdity of the idea – would you employ a builder as an architect because he claimed to have worked with Brunel? In fact, a footballing career is, in many ways, a bad starting point for a managerial career, especially in regards to money, because the culture that surrounds footballers is fundamentally detrimental to their ability to deal with their finances (as Timothy Kennet discusses in a forthcoming article on bankruptcy). 

                So, if this is as obviously false as I claim, why do so many chairmen swallow it and appoint people who are obviously not qualified for the roles they fulfil? A slightly uncharitable explanation is that most chairmen are too stupid to know any better. Stupid is unfair; not stupid, but, like the managers they appoint, fundamentally unsuited the role they fulfil. Remember, anyone can buy a football club – the only ‘qualification’ they need is a hatful of money. Normally, the assumption is that this money is indicative of a high level of business acumen in some area of life that can be transferred across to the successful running of a club. This again is clearly not correct, no one appoints a toothpaste magnate to the head of their Hollywood studio; different industries require a completely different set of skills - none more than football.  Case in point is Mr Fernandes, proud owner of budget airline AirAsia, who funded an insane spending spree at his newly-promoted club QPR to try and keep them in the premiership. He sanctioned the spending of nearly 70 million pounds on transfers in 2011/12 and 2012/13 season, mainly on older players with no resale value and high wages. They were promptly relegated at the end of last year with a shamefully low points score and are in a messy financial situation in the significantly less-profitable Championship. He is also the man who hired Harry Redknapp.

                Fernandes, to his credit, recently came out and admitted that in some ways he had ‘could have done it better’. However, he then went on to claim that the reason for the relegation of his team was that he had not spent enough time directly involved in the running of his business compared to the time he spends at his aviation company - ‘If I spent… every day at Loftus Road [the QPR ground], I dare say it would have been a bit different’. Unfortunately, I worry it wouldn’t have made a lick of difference; as long as Mr Fernandes equates the football business with the aviation business he is going to make no progress whatsoever. He needs to recognise that it is an industry in its own right and approach it as such. How can a self-admitted amateur be expected to hire the best person to do an extremely technical job?

                Further evidence that chairmen are not able to exercise the appropriate judgement in the area of managerial appointments comes when we look at the early career of Redknapp’s successor at Tottenham, André Villas-Boas. In 2010 the young manager submitted an application for the vacant managerial post at Burnley which was described by chief executive Paul Fletcher as ‘Amazing. Even by today’s standards there was some complicated stuff in it, with some things that I didn’t understand.’ But Burnely turned him down. The club was relegated at the end of the season whilst AVB went on to have an undefeated treble winning year at Porto, his next team. And why was he turned down? Fletcher explained it this way: ‘Tommy Docherty used to say he never said anything to his players his milkman wouldn’t understand. I don’t think any milkman would fathom the meaning of a lot of André’s presentation.’ Perhaps thirty years ago, when Docherty was in his prime, football was a very different place, a place in which all a manager had to do was to explain simple tactics in babytalk to his players. However, in today’s footballing world that is simply not an acceptable selection criterion for a role as complicated, multifaceted and demanding as managing a football club. The idea that someone as woefully as unqualified as Redknapp managed to sneak into a managerial position no longer seems all that surprising.


Harry and André embrace

                But you know what? I’m not even convinced that Harry Redknapp is that unqualified. The truth is that I absolutely don’t buy the defence of incompetence that he gave in court - there is just no way a man like that could survive in a footballing institution. Recently, Everton gave the world a peek at the ferociously complex and comprehensive scouting network that served their now ex-manager David Moyes[1]. Sure, Moyes is commonly considered to be ahead of the curve when it comes to the thoroughness of his managerial style, but I would be amazed if other clubs didn’t have similar systems in place. When you remember that this is just one small part of what a manager does you realise how vast their responsibilities are. Even Harry must be hard working, capable of processing vast amounts of information and able to communicate effectively. So why present himself as an ignoramus? Obviously not wanting to be convicted of tax fraud was part of it, but I believe that this incident is actually part of a wider trend. The sad fact is that presenting yourself as an idiot is actually no bad thing in football – it may even be a positive attribute (in the footballing culture of the United Kingdom at least).

                Let me explain. One of the reasons football is so fantastically popular is that most of the people involved present themselves as no different from the average man. If he looks no cleverer or more talented than you as a supporter there is nothing to stop you disagreeing with him and even coming up with your own (apparently) equally informed solutions to his problems. This is why football is such an easy thing to talk about and spawns so many discussions in the pub. Only in football do we have supporter organisations of such vast size and with such strongly held views, and only in football do chairman with no qualifications feel in a position to make important decisions. Unlike entertainment industries in which you are supposed to sit back and admire superior talent, football encourages the supporter to imagine himself as a part of it. By cultivating a false atmosphere of accessibility, football has become as close to interactive as any fixed consumer activity ever has. No wonder, therefore, that managers who refuse to join in with this semblance are criticised for being cold and inexcusably arrogant. But realistically, these men do an extremely complicated job; those that do it well have every right to refuse to pretend to be no better than the average supporter. So I don’t for a second accept Harry’s self-presentation.

                But what does this all mean in relation to education and managers, should they be well educated? Well yes and no. They absolutely do need the skills mentioned earlier that are granted by education, no doubt about it, but they don’t necessarily need to obtain them in that way. It is notable that most uneducated managers devoted large amounts of free time in their playing days to developing these talents though other avenues: looking for extra responsibility within the team, investing their own money and participating in the club’s PR programmes. The only difference between these men who have worked hard to educate themselves and their more formally educated co-workers are that they may find it easier to portray themselves as the average man they are not. But I don’t for a second think there is anyone as fundamentally incompetent as Harry pretends to be working in as a manager in the Premiership. Chairmen, on the other hand, are definitely idiots.

 

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[1] http://www.independent.co.uk/sport/football/premier-league/scouting-system-that-reveals-david-moyes-mind-8756011.html

Why Transfers Don't Really Matter.

Gareth Bale: worth an obscene amount of money, has nice thighs (from mirror.co.uk )

The proposed transfer of Gareth Bale to Real Madrid is insane. (If you haven't been following this 'saga'¹ in the off-season and don't know about it yet, good for you, you aren't missing out on much, mostly rumours and guesswork, a desperate mire of awful journalism and crushing fan expectation.)

Madrid have reportedly made an offer of something like £93 million. £93 million, for a single player. Over a presumed five year contract, and assuming a competitive salary of around £150,000 a week (and this seems low!), that makes a deal for Bale worth around £26.4 million a year (fee + wages, excluding any bonuses, signing on fees, image rights etc.). The risk is phenomenal. What if Bale breaks a leg? What if he never recovers the same form he's shown this season? What if he becomes, like so many players before him (Michael Owen, Kaká, Fernando Torres), a shadow of his former self as he ages and loses some of his pace? The risk seems even greater when you recall that Madrid really don't need another goal scoring attacker. In addition to the excellent Ángel Di María and the sublime Mesut Özil, both, I think, somewhat under-rated, Madrid boast 120-goals-in-109-games-under-Mourinho Cristiano Ronaldo. They have for rotation Kaká, the wonderkid Isco and Luka Modrić, as well as the two highly-rated young academy players Jesé Rodriguez and Álvaro Morata. This is an area of the team that doesn't need strengthening.

The deal makes even less sense from Tottenham's point of view. Daniel Levy, the chairman, has reportedly turned down Madrid's initial £86 million bid, holding out for something worth either £96 million or €115 million. To put this in context: Tottenham are currently valued by Forbes at $520 million (roughly £339.8 million or €391.5 million). That means that Levy currently values Bale at slightly less than one third of the value of the entire club. The entire club. (It should be stated that the Forbes valuation is probably not just an assessment of current asset worth but rather a guesstimate at the price the club could raise if sold, which would take into account not just the worth of current assets but also the value of current revenue streams and the potential for growth of said streams, as well as the perceived value of the brand internationally and the potential for growth. To be fair to Levy, he might think that Gareth Bale – and keeping him – were of such importance to the value of the brand that selling him would always be uneconomical.) Or, to use a different context, Tottenham's turnover for 2012 was £144.2million, meaning that Bale's transfer would increase turnover for 2013 by almost two thirds.

Despite the absurdly high price, many fans and commentators seem to think that Bale leaving would be disastrous for Tottenham (opinion is less certain about whether it would be good for Madrid or not): that, with Bale, they are within reach of a challenge for the league title, but without him they will probably miss out, again, on Champions League football. The perceived wisdom seems to be that Bale, alone, will somehow account for 15 or so points to bridge the gap between 5^th and 1^st in the league, and that any players purchased to replace him will be incapable of having the same impact. I would say that this argue is completely spurious. Bale apparently 'earned' 24 points for Tottenham last season, presumably meaning that, if all of his goals were subtracted, and every 1-0 win dependent on a Bale wonder-strike stricken from the records, Tottenham would have been 24 points worse off. The argument that, in his absence Tottenham would genuinely have lost 24 points, however, seems absurd: obviously the loss would be mitigated substantially by all of the other players. It's not like Tottenham would have to play with ten men. Hell, Rooney apparently 'earned' United 15 points last season, but does anyone seriously believe United would finished 15 points worse off this season if they sold him?

I would argue that whether Bale stays or goes will have very little impact on their league position. With or without him, I think Tottenham are likely to finish 4^th - 6^th in the league, with a points total somewhere around (+/-3) their previous season's total of 72.

The reason is that football is a squad game. As Simon Kuper and Stefan Szymanski argue in Soccernomics,² transfer expenditure correlates very poorly with league performance. What correlates well is wage bill. And the reason why wage bill correlates so well with performance is that it reflects the quality of the squad overall. It does this far better than total transfer cost of the squad because the wage market is far more efficient than the transfer market i.e. there are fewer insane deals like the previously discussed Bale one where clubs stubbornly value players at two or three times their worth for reasons beyond the financial. Jonathan Wilson makes a compelling argument that, for the biggest teams, expensive transfers have become necessary for their own sake, to show financial might and 'ambition'. Bale is essentially the gigayacht or Versailles Palace of modern football. Even two or three Gareth-Bale-quality signings are unlikely to significantly improve the overall quality of the squad, no matter how romantic and exciting they may seem. By the same reasoning, losing one player of the highest quality is not going to be a disaster.

Historically this fact is fairly apparent. Manchester United sold Cristiano Ronaldo, indisputably one of the world's very best players, for £80 million in 2009. They re-invested the money fairly unexcitingly, bringing in Antonio Valencia in that same window (along with Mame Diouf and Gabriel Obertan!), and Bebé, Chris Smalling, Chicharito and Anders Lindegaard the next year. Yet despite the loss of Ronaldo, their squad retained roughly the same quality, winning the League Cup in the 2009-10 season, and the Premier League in 2010-11 and 2012-13 (as well as achieving excellent European performance in those seasons, including one final).

Other recent examples are numerous: Dortmund's continued success despite selling their most important players (Şahin then Kagawa); Inter Milan's treble after the sale of Zlatan Ibrahimović;³ Porto and Benfica's continued excellence despite perpetually selling their best players;⁴ Atletico Madrid's success despite selling first Torres, then Sergio Agüero, and now Falcao; Arsenal's ability to cling near the Champions League spots, and remain the third or fourth best team in the Premier League, despite notoriously becoming a 'selling club'.

There is some truth to this last barbed jibe: that 'selling clubs', in Europe's best leagues, cannot remain competitive. They are running to stand still; glory will not be theirs. I think this is generally true: because transfers are so inherently risky, no club can continue to be excellent if they consistently lose their most excellent players over an extended period of time. But the reasons they lose them are the reasons they are selling clubs in the first place: cold economics. Clubs that cannot hold onto their players, in most cases, can't because they lack the money and status of their richer rivals. Small clubs stay small, midsize teams stay midsize and giants remain giants. Very few clubs have the potential to grow from one level to the next,⁵ and even fewer the sufficient financial shortfall (i.e. billionaire money) to realise that potential.

The transfer market isn't miraculous. No one window is going to shift the quality of a squad significantly up or down, even one as active as Monaco's. Sustained investment over several years can raise quality, as teams like Chelsea and Manchester City have shown. One-off sales of star players aren't going to destroy a team's chances; continued sales over five or ten years might hinder their ability to rise above their current level. Indeed, one-off sales at market or above-market prices may even be beneficial in the long term: the sale of one unusually talented player could fund the purchase of five or more new players, who will provide a greater increase in overall squad quality (as well as, potentially, being able to develop into saleably good players themselves). Which brings us back to Bale: buying him probably won't change how well Madrid do next season, but selling him could allow Tottenham, in the mid- to long- term, to get a lot better.⁶

1 One of the many bad things about the transfer season is the flaccidly overblown language used to describe it: a three way negotiation between two employers and an employee is hardly a full-on Icelandic saga. At best you might argue that some transfer 'sagas' come close to the feud element of actual sagas, but this is stretching it a bit. Other words that should never be used to describe player trading but are, constantly: 'battle', 'swoop', 'race', 'capture', 'hunt', 'on the radar'. It seems to me that metaphors based on hunting or combat are inappropriate for any activity mostly conducted by high-paid lawyers in Savile Row suits.

2 See esp. Chapter 3. (N.B. The book is entitled Why England Lose in the UK.)

3 I Am Zlatan (N.B. this is the best thing in this article): http://www.youtube.com/watch?v=g9m7m8_2t4Y

4 SL Benfica have sold, amongst others Axel Witsel, Javi García, Fabio Coentrão, Ángel Di María, David Luiz and Ramires in the last three years; FC Porto Hulk, Freddy Guarín, Falcao, Raul Meireles, and João Moutinho. How they manage it is sort of astounding, but dependent on dubious third party ownerships and Portugal's immigration laws.

5 Arsène Wenger remarked that Paris Saint-Germain are uniquely well placed in terms of their potential fanbase, because Paris is Europe's only major city with just one top-level football team – so PSG benefit from a larger (and pretty rich) potential local fanbase to prop up their matchday revenues, and can boast a captive market for advertising to commercial partners. (Incidentally, 'commercial partners' is one of those corporate phrases that really sucks the joy out of anything, even football.)

6 I actually suspect that Tottenham have already started doing this with the anticipated Bale-revenue, given that they've spent roughly £62 million already this summer, and it's not entirely clear where this money is all expected to come from, given that last year they made a £4.3 million loss despite making a £9.2 million profit on player sales.

TV Rights

Live streaming over the internet: game changing. (from marketingweek.co.uk )

Over the summer I enjoyed some of my team's pre-season friendlies on a free, direct stream on the club's website. My Everton-supporting friend has to pay $3 a friendly, so I think I got a better deal than him. And now the season has started, I've been enjoying more free streaming thanks to BT Sports (I was lucky enough to already have BT internet, so now I can watch it and stuff on my computer). Binging on football has become easier than ever before.

Now, I should confess: before was really quite shady. I have no great respect for intellectual property laws. Nor am I sufficiently wealthy to have a Sky subscription. The natural, inevitable result of these two factors is that I have, in my time, tried to watch dodgy streams of live football online. Mostly in Arabic. Or Russian. Not once has the experience been satisfying. And the streams often, somewhat alarmingly, cut out while your watching them.

The clubs are lucky that what they sell – the rights to live games – are one-offs. Few people torrents football matches. But they aren't taking full advantage of this. Sure, they sell TV rights to companies around the world. But why have that middleman? Why don't clubs sell their matches online directly to fans worldwide?

Football is notoriously bad at business. Apparently in the seventies some of the sports companies managed to convince the clubs to not only pay for their strips, but to pay a premium for them. The clubs didn't realise that the advertising space on their shirts had value. The incompetence is staggering.

They're in a similar situation with broadcast rights at the moment though. The current situation is bad for the fans and it's bad for the clubs. For starters, streaming online would increase the revenues of those clubs – like, say, Swansea – who are not 'big' enough to have their matches shown on TV all the time, and it would allow all their fans to see all their games, even if they couldn't go to the stadium.¹

It would also allow for a massive swelling of fanbase. This has already been a trend of football in the last twenty years, with clubs like Manchester United and Real Madrid becoming global brands. These clubs have millions of fans around the world who aren't capable of attending games. They would, and do, watch games though – and could surely be convinced to buy online 'season tickets' allowing them to view every match.

The reason Facebook is valued at more than $80 billion not because they have high revenues (roughly $1.2 billion a quarter, but increasing rapidly) but because they have a vast customer base. The theory is that it is easier to 'monetise' – rip off – customers you already have than to acquire new ones. Football clubs are in a similar position. They have large, loyal customer bases around the world. They need to get on it.

1Although it is true that fans in other countries perversely enjoy more Premier League matches on TV than British fans do – NBC bought the rights for every single Premier League game this season in America, for example. I suspect, though, that most foreign fans, with the exclusion of a limited number of expats, are fans of the top seven or so clubs in the league.

Brodgers Watch: Luis Suárez Transfer Special, or, What do you think they're smoking over there at Emirates?

Brodgers Watch is a regular feature where we enjoy the management-speak idiosyncrasies of Brendan Rodgers's press-conferences. In our first edition, we take a bumper look at some of Brodgers's quotes on the Luis Suárez Transfer.

The B-Rod, brooding. (from goonerhead.com )

18^th July 2013: "There has been lots of speculation about Luis moving to another club but, as I said, he is very much a Liverpool player". [I like this because the second clause in no way confutes the first. The tenses are very strange. There “has been” lots of speculation about a transfer – playing down the possibility of this transfer happening in the future by making the speculation itself seem old and outdated. But, “he is very much a Liverpool player”. Which, of course, everybody knows. No one would be trying to transfer him from Liverpool if he wasn't already a Liverpool player. And him being a Liverpool player doesn't mean that he won't be someone else's player in the future. Is this a clever hedge by the B-Rod has he tries to placate his fans, or an unwitting reveal of his future plans?]

25^th July 2013: "The support he has received from the supporters [just say this clause in your head a few times: the support he has received from the supporters. In the abstract, it's a great tautology. What else do supporters do but support?] and the people of the city of Liverpool has been unrivalled," Rodgers added. [It seems quite absurd to suggest that the people of Liverpool who aren't supporters of Liverpool F.C. are in any way involved in supporting Suárez. Why does he bother? Is he just trying to upset those Liverpool-dwelling Everton fans who have no love at all for Suárez? I think it's part of Rodgers's larger rhetorical strategy, where he represents Liverpool F.C. as an important pillar of local community, a shining symbol for solidarity and love in the city, a source of glory and pride for Liverpudlians. In Brodgers's eyes Liverpool is some kind of populist moral champion, rather than an American-owned sports multinational. Whether this is actually true is debatable. N.B. Some fans sent Suárez death threats.]

"In this period of time he's missed a lot of games for the club through various reasons. [Minor pedantry, but the “through” is agrammatical. He means 'for'. Through should be used to describe geography, or, slightly more abstractly, the sort of metaphoric geography of networks, as in 'I met him through Brendan Rodgers.'] The people have stood by him like a son and really looked after him. [This sentence is the worst offender in the 'presser' (Liverpool F.C.'s website refers to press-conferences as “pressers”, which makes me want to weep). Firstly, “people” is a plural noun, and the people (plural) are acting like a “son” (singular). But the reason for this grammatical failing is that Brodgers has failed to use his simile correctly. What he meant to say was, presumably, that the people stood by Suárez like he was their son. And we won't even go into what, exactly, the people of Liverpool have done to look after Suárez. Perhaps they are, as a city, getting together to provide Luis with nursing care, valet service, happy ending massages, maid services, kitchen work and so on.] Whatever happens in the coming weeks that will be in his mind because it's something you can never forget."

4^th August 2013: "I was surprised," said the Liverpool manager of Arsenal's second bid for Suárez. "I've got to say I've always associated Arsenal as a club with class and so there was a wee bit of a game there.” [I've got to say, this seems like a low blow. It's not entirely clear to me what exactly lacks class about bidding on a player. Unless it's the specificity of the £40million + £1 bid, thus revealing contact with the agent. But given that earlier in the summer Liverpool bid Henrikh Mkhitaryan's release clause, causing him to fail to show up to Shakhtar's pre-season training, this hardly seems a fair accusation. Notice how the accusation is more subtle than the newspaper headlines made it out to be, however: he was “surprised” because “I've always associated Arsenal as a club with class”, implying, not stating, that Arsenal are lacking class.]

"The owners have been brilliant. If it was another club needing the money or desperate for the money it could have been a different story. But John Henry and Tom [Werner, the chairman] have been first class [After receiving Arsenal's bid, John Henry tweeted “What do you think they're smoking over there at Emirates?” This seems to me to be a reasonable and classy response to a previously private transfer negotiation.] through the whole process, so there are no arguments there and it gives you the confidence they are not in any hurry to sell because they understand we are trying to build here." [I don't really have a lot to say about this last series of clauses other than they have appalling diction, and the “no arguments there”/“we are trying to build here” juxtaposition makes Anfield seem a very geographically confused area.]

“We're focused on Luis being here and getting more in so we are part of the conversation about being at the top of the table." [This I actually like: Brodgers's doubly distances Liverpool from winning the title. They are not “at the top of the table”, they are “part of the conversation about being at the top of the table.” Excellent expectation management, saying that Liverpool will be challengers while admitting that, realistically, they won't be very strong challengers.]

8th August 2013: "There were no promises made and no promises broken," insisted Rodgers. [To suggest there were no promises is very disingenuous: clearly, a contract is a promise, and by signing it Liverpool and Suárez both agreed to keep to it.]

"The club and his representatives had several conversations and he knew exactly where he was at.” [“where he was at” is a common Brodgers idiom that I really dislike, and not just for its agrammaticality. Evidently, Suárez knew where he was located; just as evidently, he did not know very well what his contract situation was. If he didn't think a transfer was likely, his behaviour would just seem self-destructive.]

"My job is to fight and protect the club. The conversations I've had with him he knows I've had, and they will remain private." [A beautiful tautology. One of the reasons it sounds so stupid is that Brodgers has chosen to only use the first person pronoun, essentially eliminating Suárez from the conversation as an active participant. Presumably, if this is calculated, it is to make the manager seem more powerful: “conversation” here is a euphemism for Brodgers telling Suárez exactly what's going to happen, and Suárez listening meekly. Although, to be fair, I'd imagine that a conversation with Brodgers would be a fairly one sided one, with lots of B-Rod monologues.]

9^th August 2013: "It's been a difficult period for him but it's my job to protect the group," he said. "Once he's back with the spirit he'll rejoin the group." [I assume Brodgers meant to say 'when Suárez gets his attitude sorted he'll return to being a valuable team member', but it isn't exactly clear. Unfortunately, it sounds like Suárez is going to be baptised or something.]

17^th August 2013: "At the minute, the concentration is on the players who are available to play. [I like the use of concentration as an active noun. It is not Liverpool's concentration, or Brodgers's concentration, or even the fans' concentration; it is just the concentration, the abstract entity.] Luis is doing his work and there's nothing to be said there. For us, it's about continuing with the momentum coming through from last season and winning games, which is what we're here for.” [Again, this sentence has dire diction. There are problems with Brodgers's use of the verbal participle “coming through” as a preposition, which throws the clauses off-balance, creating ambiguity over how separate a clause “winning games” is, and therefore over which clause the sub-clause “which is what we're here for” refers to.]

"He's a part of our team and a part of the club. The supporters are a class act here - the classic Liverpool Way is to always support the players and the manager. [It's clever of Brodgers to include the manager in the list of always-supported untouchables: it could make some fans feel guilty when they abuse him if results become poor, like they did to poor Roy Hodgson.] That's what they always do."

Rodgers continued: "I won't be saying anything on Luis Suárez [this seems an odd thing to say midway through a fairly large monologue about Suárez] and it's only purely out of respect for the players that are working hard at the minute.

"All I will say is I am very satisfied with how everything has been resolved and we as a club are now looking to the future and moving on." [This is a nice positive note to end on. We'll see you next time for more Brodgers Watch.]