‘Money is the same to the football industry as blood is to humans’

Erasmus School of Economics

In two articles from De Correspondent, sports economist at Erasmus School of Economics Thomas Peeters explains why money is both a blessing and a curse to the football industry. Furthermore, he uses the notorious Super League to explain why.

As Peeters puts it: ‘There are not many industries that are as logical in an economic sense as football. Almost anything that happens in football, is coordinated by money’. To explain this, he draws a comparison between other sports and football. In the United States for instance, a system is used to draw new basketball players. In this system, it’s a game of pure chance whether a basketball team gets to pick their player of choice. This causes the system to be very inefficient in the case of finding and acquiring new super talents, since there is no (financial) incentive to seek the best players that aren’t yet discovered. In football, it is of vital importance that the best talent is scouted by a club and offered the best opportunities in order to excel. Take Lionel Messi: he has been given growth hormones to become the phenomenal player that he is. In other sports, this most likely wouldn’t have happened. Peeters: ‘I think that football appeals to the biggest talent pool worldwide, has the biggest audience and is the best at accompanying talent to the top, wherever this talent is located’.

The downside

The Super League would have led to the best players of the world being even more concentrated in a few clubs. This makes the play between these clubs attractive to watch. However, the setup of the Super League and football in general at competitive levels is wrong. The intention of the initiating clubs was to evade competition: degradation wouldn’t have been possible, which would have taken away the incentive to seek talent in a manner as efficient as possible. Conclusion: football needs competition to be beautiful and enjoyable.

The current situation isn’t ideal either: TV deals make up a great part of the revenue of many football clubs. Because TV revenues are distributed unevenly, a vicious circle is set in motion. Because some clubs receive a lot more money, they are able to acquire better players. Years of bad policy don’t matter, since the financial wealth compensates for it and leaves other clubs with no chance to outperform them. It’s a well-known fact that the Premier League is a very wealthy league, which leads to English clubs dominating European football. This dominance stems from the decision to stop sharing TV revenues with lower leagues. It’s no coincidence or surprise that both finalists in the Champions League are from the Premier League. To put the wealth of the Premier League in perspective: the TV deal of the Dutch league, Eredivisie, is 80 million euros. The TV deal of the Premier League: 3.1 billion euros.

The rise of super rich clubs

Even the hope that is caused by an exceptional performance such as Ajax, turns out to be a deception. Ajax will never be able to consistently compete with rich super clubs. The method of apportionment of the prize money of the league is partly determined by past performance. So even if a super club isn’t able to deliver in one year, it can still count on a disproportionate amount of prize money. When Ajax reached the semi-finals of the Champions league by beating Real Madrid in the quarter finals, Ajax received a nice amount of 78 million euros. Real Madrid? They made 85 million euros, despite losing to Ajax. Peeters’ analysis of the situation is concise but catchy: ‘UEFA doesn’t oppose the Super League at all. It wants to organise the Super League itself’. However, in order to reach a more enjoyable and fair situation, the situation first has to become untenable: the Premier League has to become absolutely invincible.

Associate professor
More information

You can download the full articles from De Correspondent above. 

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