Top sport has degenerated into a huge entertainment industry. The club with the best talent scouts no longer heads the league table but the one with the largest purse. This has led to a shift in the balance of power with players going where they can earn the most, even if this means transferring to a previously insignificant club. ‘To a certain extent, success can be bought’, says Ruud Koning, professor by special appointment in Sports Economics at the University of Groningen.
In 2003, Russian oil billionaire Roman Abramovitsj bought Chelsea, an English premier league club. Koning: ‘Now there is a new trend: a rich Russian such as Suleiman Kerimov simply buys a local club and looks for suitable players for it. During the last transfer period, his Dagestan club, Anzhi Makhachkala, bought players for a total of € 90 million. To put this into perspective, Ajax’s total turnover in the 2009-2010 season was slightly less than € 70 million.’ One of the players Kerimov bought is Samuel Eto’o, who will receive an annual salary of € 20 million. This makes him the best-paid player in Europe. Balázs Dzsudzsák, formerly of PSV, also joined the Russian’s team after it paid a transfer fee of around € 14 million. Koning: ‘These are incredible sums of money, certainly for Dutch clubs trying to keep up. Two years ago, nobody had even heard of Anzhi. Now they’re buying this category of player as a matter of course.’
Obviously, this is creating a change in the football world. ‘Players now go where they can make the most money’, says Koning, ‘professional football players are professionals; they just want to get rich. That is understandable but it also means that the size of the market and the presence of local financiers is becoming increasingly important’. Manchester City used to be a mediocre club too. Thanks to the intervention of Sheik Mansour, it is doing much better now, simply because they can afford better players. Of course, Koning also recognizes the advantages of this development. ‘It is good for the players and the supporters. It’s fun to watch so many top players. But from a Dutch perspective, it would be nice if Dutch clubs could again become serious contenders in international competitions such as the Champions League’.
Koning is not pessimistic about Dutch chances in the next European Championships, despite the developments in the sports industry. ‘It is already clear that the results of international matches are very different from club results. Although Dutch clubs no longer compete at the European top level, the Dutch national side is world class. Dutch top players play for top teams, but abroad.’ Internationalization thus deeply affects European football, and the Bosman ruling has stimulated this development. Clubs are no longer restricted in the number of EU players they can line up. ‘The result is that a club like Arsenal, for example, can sometimes field a team without a single English player’, says Koning.
The football associations FIFA and UEFA are intending to check this development with a supervision model. Clubs would then no longer be the private hobby of rich individuals – they'd have to balance their books. Football clubs would have to be structured like normal businesses, and some player salaries, particularly the highest, would have to come down. There are players today who earn between € 100,000 and € 200,000 per game, which has plunged many clubs into debt. At the moment these debts are sometimes paid off by rich financiers, but in future clubs must be able to pay their expenses out of their normal revenues instead of incidental contributions.
Financial Fair Play will be fully implemented in 2013-2014 and be based on data collected in this and the coming season. In principle, a club’s expenses (e.g. player salaries) must not exceed its revenues in the form of TV royalties, ticket sales, prize money and sponsoring. The supervision framework is also intended to prevent fraud. ‘There are plenty examples of players playing somewhere in Europe who do not get their salary. Suppose PSV sells a player to a Spanish club, which subsequently fails to pay the remainder of the transfer fee. In such cases, UEFA could take more stringent measures under the supervision framework’. Koning expects the supervision model to give players and clubs more security. ‘The best-paid players will have to take a salary cut but all the other players will definitely benefit. UEFA is doing its best to tackle this problem properly. The goal is to bring the many clubs that have made a mess of their finances to heel and thus, hopefully, to level the European playing field a bit’.
Ruud Koning (1966) studied Econometrics at the University of Groningen. In 1995 he gained his PhD from the same university. Between 1994 and 1998 he was university lecturer at the department of Econometrics of VU University Amsterdam. He returned to Groningen in 1998, and became professor by special appointment in Sports Economics in 2004. His research concentrates mainly on sport, economics and statistics.
Article by Barend Abeln and Jan Jacobs on the website of the ESB (Economic Statistical Reports)
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