Dear Readers,
We’re excited to bring you some bonus coverage from our friend Wolf Hertzberg this week! While we’re focused largely on American sports, Wolf is taking us across the pond for an in depth look at some of the structural issues plaguing European sports. As always, please get in touch if you have any feedback, and we will happily pass it along to Wolf. We’re at caldermchugh@gmail.com and ian.ward.97@gmail.com. Happy reading!
-Calder and Ian
How Europe’s Oligarchs Have Plunged Football into a Competitive Nightmare Scenario, and What Can Be Done to Fix It
Jurgen Klopp, the talismanic manager of Liverpool Football Club, gives extremely interesting press conferences. Klopp’s public addresses are distinguished by their candor, a rare trait among English Premier League managers. In April of 2019, for example, Klopp told the press that his players should either win or “fail in the most beautiful way,” and this year, he upbraided a pundit who had criticized his team’s performance by telling him that he must have been watching a different game. But at a pre-season media stakeout this past September, the fifty-three-year-old German surpassed even his own high standards of bluntness. Asked by a reporter if he was concerned that Liverpool had failed to match the lavish summer spending of rival clubs, Klopp took aim instead at the global plutocracy. “We live in a world, at the moment, with a lot of uncertainty,” he said. “For some clubs it seems to be less important how uncertain the future is—owned by countries, owned by oligarchs . . . We're a different kind of club. It was always the same.”
Klopp’s central if understated point was that some clubs, like his own, are run like normal businesses, and others are not. Among the characteristics of being a normal business is a certain level of susceptibility to fluctuations in the global economy. At the time of Klopp’s comments, Europe was starting a sluggish recovery from an international economic crisis brought on by a global pandemic. Conventional revenue streams like ticket sales and television deals had dropped to zero and showed few signs of rebounding any time soon. In the midst of this unprecedented disruption, Liverpool put most of its transfer plans on ice as it attempted to shore up losses and balance its books. Meanwhile, the owner of Chelsea F.C., the Russian oligarch Roman Abramovich, bought six marquee summer signings for a total of $272 million, and Manchester City’s Sheikh Mansour al-Nahyan, a member of the Emirati ruling family, blew through $180 million of his own on seven new players.
Such discordant displays of largess were made possible by the very same dynamics that Klopp drew attention to: extreme wealth—like the kind that funds multinational football clubs—is recession-proof. In fact, severe economic crises often create an opportunity for the uber-wealthy to further consolidate their wealth. Abramovich, for example, made billions of dollars from Russia’s “shock therapy” privatization scheme during the late 1990’s, even as his country’s social state was collapsing.
Such wealth does not belong to the economy that the average person participates in, or even to the rarified economy that props up the financial elite. The source of Liverpool owner John W. Henry’s $2.5 billion fortune, for example, is the humble hedge fund. (Henry unceremoniously shuttered his investment firm in 2012 after six years of diminishing returns on the firm’s assets.) Yet even Henry, whose other franchises include the Boston Red Sox and the Boston Globe, has felt bound by the basic economic rules that govern the sports.
By contrast, the unfathomable wealth that supports other clubs—Manchester City’s al-Nahyan’s net worth is estimated to be $15 billion dollars—exists in a shadow economy of state-backed assets and taxhavens, a financial black hole that exerts its pull on an ever-expanding share of the world’s legitimate economic capital. As a result, a portion of that capital is apparently spirited out of existence every year. In the last two decades, some of that disappeared wealth has been periodically reappearing on the balance sheets of mid-level football clubs, which are transformed overnight into powerhouses: Chelsea, Manchester City, Paris St. Germain.
Football’s governing bodies have tried and failed to level the financial playing field. In February of 2020, the Union of European Football Associations (UEFA) announced that it had taken the unprecedented step of banning Manchester City from European-wide competition for two years for systematically violating the Financial Fair Play (FFP) rules by exceeding the maximum share of a team’s budget that is allowed to come directly from that team’s owners. The FFP is designed to force clubs to behave like normal corporations with diverse funding sources rather than as the whimsical playthings of their oligarchical benefactors.
For a few brief months, it looked as though UEFA’s action had dealt a decisive blow to the kind of “financial doping" practices which Manchester City and other uber-rich clubs routinely exploit. But then, with an air of dismal inevitability, came another announcement: in July, the Court of Arbitration for Sport in Lausanne had granted City’s appeal to overturn UEFA’s ban. The court’s ruling was based on a due process objection which left the actual substance of UEFA’s charges against City undisputed. Tottenham F.C.’s manager Jose Mourinho called the court’s decision “disgraceful,” and Jurgen Klopp, with characteristic frankness, condemned it as “bad for football.”
For its own part, Liverpool, who has dominated English football for decades, is by no means poor. Neither is it innocent of self-interested financial maneuvering. On a number of occasions, the club has thrown its weight behind efforts to form a break-away league composed of only the richest clubs from across Europe, and just last month, Liverpool’s owners proposed a reform to the Premier League’s revenue distribution system that would have further inflated the fortunes of the league’s richest teams. (The proposal failed in a first vote but could be reconsidered by the league at a later date.) If Manchester City represent the .01 percent of global football, Liverpool flesh out the one percent.
But that Liverpool can legitimately be considered a scrappy upstart against the new-money football “establishment” is a testament to the severity of the inequality within the global football system. Ultimately, the difference between a club like Liverpool and clubs like Manchester City or Chelsea is not only one of scale but also one of capability. Liverpool’s more recent record of success—they won the Premier League last year—is built on decades of competitive acumen and shrewd business decisions. Their executives have constructed an enormously successful team while keeping net-transfer spend low. Henry has been either unable or unwilling to follow the “Galactico” model pioneered by Real Madrid in the early aughts, which consists of uber-rich clubs spending insane amounts of money to build super-clubs composed of the world’s most talented individual players.
But at the end of the day, business acumen doesn't matter so much when other clubs’ owners are willing and able to pay world-record transfer fees. In one particularly glaring stance, the elite French club Paris Saint-German, after failing to attract Brazilian superstar Neymar by conventional means, simply bought out his contract from Barcelona F.C. for €222 million ($268 million), a 125% increase on the previous global transfer record. The unprecedented display of financial might was swiftly condemned by football pundits the world over. The enormous success of clubs like PSG, despite their abysmal lack of strategic business dealing, is a testament to the unassailable positions that their owners have purchased for them. The former arrivistes now possess an air of aristocratic right all their own, one which no amount of blundering can cause them to lose.
Just as they have done to much of the global economy, the mega-billionaires in charge of Europe’s mega-clubs have broken football. The clubs one rung down on the financial ladder are the only ones with a prayer of competing, and, faced with an increasingly steep climb to the top spot, have shown themselves to be more willing to pull the ladder up behind themselves rather than to try to make the system fairer. If it’s true that soccer explains the world, it does so by embodying and magnifying every pathology that lies at the heart of our modern crisis of global capitalism: unchecked financialization, high-level corruption, the prostituting of public goods to private interests, and widening inequality of wealth and opportunity.
So, maybe we need to return to Henry’s chosen manager. Klopp, who found his first managing gig at a second-division club in Germany and whose father was a traveling salesman, is the only major figure in European football who has publicly questioned “the way things work.” In addition to his criticism of the Premier League’s financial inequality, Klopp has called for more money of the EPL’s profits to be distributed to the lower leagues, and he has obsessively advocated for reducing the number of games on the calendar to protect the health of his players—a move which is in direct opposition to the financial interests of owners, football’s governing bodies, and the broadcasting media.
Klopp is free to say all of these things because he has secured a record of success as the longest-serving manager in one of the world’s most profitable and competitive leagues. Just like Liverpool, he has beaten the odds. He is now concerned with making sure that there are odds to beat—that it would take a statistical anomaly rather than a statistical impossibility for a smart club that doesn’t have the backing of a petro-oligarch to win a Premier League title.
-Wolf Hertzberg
Go Deeper
For background into Manchester City’s UEFA ban and why it was overturned: “Manchester City v Uefa final score: New Money 1 Old Money 0 (aet)” by Barney Ronay in The Guardian (July 13, 2020).
For an opinion on the increasing corruption in European Football: “The Politics of Now” by David Runciman in the London Review of Books (June 21, 2018).
Fantastic piece! Definitely the acquisition of certain clubs by certain individuals posed some questions when that has happened. It is worth noting that to the crisis that is going right now ( or maybe a result of it) is also the disappearance of the concept « the sport for the masses » as it was known in the Eastern Bloc. Clubs were owned by the factories or by certain governmental institution. Stadiums were present everywhere and communities were rallying around their town’s teams. Small towns were able to have incredible teams, such as Flacara Moreni from a small industrial town who qualified for UEFA cup in ‘88 and played against FC Porto.
Unfortunately when the Iron Curtain was destroyed, so did the concept of sports for the masses. The humbleness of players was soon replaced by huge desires for profit, for expensive cars, clothes, etc. The stadiums which were public and accessible to all were privatized, taken over or completely destroyed.
Sport was no longer accessible to the masses, but in order to do it, you needed money. Or you had to be extraordinarily talented and be lucky enough for someone to spot you.
Interesting read. I wonder how your essay would incorporate the underdog success of a team like Leicester City -- was it a Cinderella story or perhaps can the money be triumphed? Additionally I think it would be interesting to take a statistical analysis of the how much money is spent by a time vs how successful their results are. I would assume of course there is a correlation, but potentially it could be diminishing returns.
Finally, I would be interested in a comparison with draft-like sports in the USA. Do balanced teams result in more exciting games? I personally enjoyed watching Messi, Suarez, and Neymar play, which can only be made possibly by the exuberant wealth of a team like FCB.