Twice a year, with every transfer window, comes another reminder
that big money makes things happen in football.
While that’s nothing new, for a brief moment it looked like things might actually change.
Remember back in 2020, when the pandemic hit?
When we were all looking forward to a whole new football world?
Without fans in stadiums, it seemed like this whole house of cards would come toppling down.
It was a chance to change things.
As my definitely not overly optimistic colleague Pascal asked back then…
What if we abolished the transfer market altogether?
Many hoped the pandemic would have a silver lining and reform football.
Plenty said the same about politics, or our whole society.
A new, better world was in the making!
But the world stopping in its tracks didn’t make a dent. Especially in football.
Football survived two world wars, it survived economic crisis and shocks.
It’s opera for the masses.
It's proven time and time again that a bit like Freddy Krueger,
every time you hear rumors of its death,
even when it looks like its dead and buried, it comes back to life.
I am eternal!
Just what is it about football that makes it bounce back faster than almost any other industry?
Two years after the pandemic, and money doesn’t just do the talking in football.
It’s talking louder than ever.
The top 5 leagues have already spent 4.5 billion euros on transfers this season,
including a record breaking 2.24 billion from the Premier League alone.
I mean, 115 million Euros for Lukaku just to loan him out a year later, in this economy?
So, let’s have a look how the crisis had the opposite effect of what many of us expected.
The super rich often get richer no matter what.
During the pandemic, the 10 richest dudes in the world actually doubled their wealth.
And the Prem is the Jeff Bezos of soccer leagues.
But just how did they position themselves to profit from the crisis?
Much of this boils down to the insane concentration of wealth among football’s elite.
And that spreads way further than just the Premier League.
You don’t need to be an accountant to see this pattern, the proof is on the pitch.
Over the last 10 seasons, only 16 teams have won championships in Europe’s big 5 leagues.
Unsurprisingly, 14 of them are among the top 20 most valuable in the world.
But there’s even inequality within Europe’s elite,
and we don’t mean Florentino Perez’s Super League.
The Premier League is the European Super League.
And whilst at the ultra-elite level, Barcelona and Real Madrid can compete
with Liverpool and the two Manchester clubs and Chelsea…
If you compare the revenue of the side finishing 9th in the Premier League
to 9th in Serie A to 9th in La Liga,
what we are seeing there is, the Premier League blows everybody else out of the water.
Except for a few extremely notable exceptions, no one packs the financial punch of the Prem.
And even other European elite teams are lagging behind.
So just how did the league pull ahead?
These days, football clubs are essentially massive global brands that happen to field sports teams.
When it launched in 1992, the Premier League was first to build bridges with potential fans
around the world by offering discount deals on TV rights from Asia, to Africa, to the US.
It's the equivalent of a drugs dealer being outside a school
giving away dime bags and then getting everybody addicted
and then they have to start paying the market rates.
Sounds like how Amazon stuffed their pockets shipping packages
while everyone was stuck at home in the crisis.
Or how our addiction to social media got even worse during the lockdown.
Which was fine with Zucks.
By the late 90s, fans around the world were getting high Premier league football,
and the Prem was hooked on equally addictive TV cash.
More than half of league revenue now comes from broadcast deals!
The US is a good example, with exponential jumps in prices
every time the Premier League signs a new deal.
That's not bad for what many Americans think is just a Ted Lasso spin off.
And similar jumps were happening all over the world.
International broadcast revenue has now overtaken domestic intake.
And thanks to streaming, that TV cash isn’t drying up anytime soon.
Even if we’re all a bit exhausted of the streaming wars
and needing 23 different platforms just to watch everything we want,
sports is the one thing that people need to watch live, wherever they are.
Revenue in the big 5 has steadily climbed in the last decade.
But the other four leagues don’t even come close to touching the Premier League,
which actually used the covid crisis to boost its financial lead over the competition.
This makes the Prem an even more appealing investment for the ultra rich,
who have reshaped the league in recent years, and will only continue to do so.
It's a very attractive product for high net worth individuals.
It's also attractive to sovereign wealth funds,
and we I think are starting to see the increased interest from private equity.
So there's been major sea changes as far as the sport is concerned.
English football has consistently been a frontrunner on global trends,
and it’s gotten to the point where only a few clubs in the world can even keep up.
Just like our favourite billionaires, the Premier League ensured
that when everyone else was worrying about economic collapse,
they’d be ready to sit back and watch the cash come in.
All the fans tired of money in football, of the crass inequality, of being seen as customers,
thought that this moment was an opportunity for change.
Stadiums were empty, the world economy ground to a halt,
and it looked like whether they wanted to or not,
football clubs would finally have to reign in their spending.
Financial experts KPMG predicted a €10 billion hit to the transfer market!
By now, we know this didn’t happen.
At the highest level, football has proven recession proof.
If we look at the transfer spending of the big 5 leagues over the years,
we can see that the 08 recession was barely a blip, and things are bouncing back from covid.
BUT looking closer, the Premier League drove this trend, accounting for nearly 40% of spending!
It turns out being rich as hell makes weathering a financial downturn just a bit easier.
The value of the Premier League TV rights is so big
that it's effectively acted as an insurance policy.
I wouldn't say it's a trampoline, but it's a sort of a soft landing
when football was hit by COVID.
Whereas if we take a look at the other big four leagues in Europe,
the value of the rights is that much lower.
This, along with the state bailouts– just as we saw with big companies,
helped the Premier League dust itself off.
Given the financial woes of other leagues, it was primed to dominate the transfer market even further.
Like the rest of the economy, while the 08/09 recession and the covid downturn
wreaked havoc on the average joe, they actually lined the pockets of the already rich.
We can go back to the last economic recession in 2008.
And, you know, people around that time, analysts around that time in football,
were talking around, the bubbles got to burst. And it never did.
And then we kind of look at where we are now.
And we say, you know, okay, we're in this situation, again, is the bubble gonna burst?
Plus, even as other industries suffer, football is uniquely insulated.
While factories shuttered and cargo ships stopped, football barely slowed down.
Football is an addictive product. So therefore, I would rather sacrifice going out for a meal
than I would for missing a football match.
And because of that addictive product relationship that we have,
and also because of the brand loyalty that we have in football,
every car manufacturer, every alcohol manufacturer,
they would give their right arm to have the degree of brand loyalty.
Hard to compete with that, unless your business model is shipping goods
while retail stores are closed down.
In soccer, we saw that no matter what, the ball keeps rolling.
And in hard times football can offer relief and escape for the struggling masses.
If that just happens to line the pockets of league’s and club owners, so be it.
During the pandemic, the hardest hit clubs were those down the leagues,
without the financial reserves necessary to weather the storm.
With the cost of living crisis brewing and a recession looming,
football fans are wondering how they’ll heat their homes
while elite clubs keep dropping millions on new signings.
But will that hurt the big boys?
There might be some minor casualties.
That has been the case historically, the big clubs are in such a strong position,
and the sovereign wealth funds will continue to underwrite those losses,
the private equity companies, they are always one step ahead of the administrators in sport.
At the lower echelons, I think those are the organizations which will be struggling for eyeballs,
will be struggling to get people to attend.
The big clubs will get bigger and the smaller ones are in danger.
It’s the big clubs that have hedge funds feeding them from above
and whole countries covering them from below.
Regardless of what happens in the economy at large,
slowing the concentration of wealth at the top of the football world seems impossible.
The danger is that now we're kind of coming out of the pandemic,
we've got fans back in stadiums and things are operating more normally again.
The danger is that we just return to the status quo.
Attempts at financial fair play have been watered down,
and there’s little reason to think a new reform to regulation starting this year will be different.
And while fans showed how critical they are of a super league,
the reality is elite clubs lead by the Premier League essentially already have one.
In the Bundesliga, for example, this has led to ever louder calls
to reform the fan-ownership 50+1 rule to keep the league competitive.
Even big clubs with storied histories are faced with the choice
of leaving their fans behind by focusing fully on financial growth,
or getting left behind themselves by the big spenders.
And without some kind of systemic change, things are only going to get worse.
I think we will continue to see the domination of the Premier League.
PSG because they're funded by sovereign wealth funds.
I think the two main Spanish clubs, especially Real Madrid will be fine.
Other than that, there'll be fighting over the scraps.
So I think it will be reflective of society as a whole in that income inequality,
which was reduced perhaps in the post World War Two period and then started to reverse,
that reversal will accelerate as we go across the next decade.
If we don’t do anything about massive income inequality in society as a whole,
what hope do we have of addressing it in the football world?
But the sport is as popular as ever.
Maybe fans truly are happy just to watch their teams fight over scraps.