Football in the recession

hammer_to_piggy_bankAny regular followers of this blog will know that updates have been few and far between since May. As the football season has reached its dramatic climax and the transfer window has reopened, the world of work has come under an enormous and ever increasing amount of pressure from the recession. My day job is looking after the marketing for a company called FreshMinds, and our recruitment arm has been at the coal face of the heavy hit job market. So there’s been plenty in the office to keep me busy.

Why then, you might ask, is the transfer market still so robust? While there are announcements of mass redundancies, record levels of unemployment and fewer opportunities for 20-something graduates, the likes Kaká, Cristiano Ronaldo and even Gareth Barry can expect enormous pay rises and staggering signing on fees for their respective transfers to Real Madrid and Manchester City. “Vulgar” – that’s how England and Manchester United legend Sir Bobby Charlton has described Ronaldo’s £80 million transfer fee. And in the context of the wider economy, that’s exactly how the summer silly season feels.

Of course, there are good reasons for this almost counter-cyclical reaction to the recession in football. Firstly, the financial clout of clubs like Manchester City, Chelsea and now even Sunderland is funded through the personal wealth of just one individual. Yes, Roman Abramovich has seen his fortune hit to the tune of more than three billion pounds. But he still has an estimated £7.7 billion – or enough to buy 96 Cristiano Ronaldos or 642 Gareth Barrys. Now Real Madrid is a different kettle of fish, because the Spanish club is built around a membership model with the president (the closest equivalent to an owner) elected by the fans. So the cash for Kaká and Ronaldo has not come from Florentino Pérez‘s back pocket. Indeed, the source of their new found wealth isn’t entirely clear. However, it’s probably safe to assume that it’s derived from a mix of leveraged debt, government backing and Pérez’s promise of an epic volume of shirt sales.

We are also very lucky in this country to have fans who value the sport so highly that they are willing to sacrifice a great deal else in order to support their teams in the Premiership, Championship and league. Even in the midst of the deepest recession since the Second World War, preliminary sales of season tickets have remained pretty healthy, while the top Premier League teams can expect sell outs at the vast majority of their games. As a result, these clubs are able to generate a huge regular income to entice new players and pay the existing ones. What’s more, they are also able to attract wealthy backers (queue Abramovich, the Glazer family and Ellis Short) as going financial concerns.

Admittedly, there are signs that the good times are coming to an end. Setanta‘s failure to pay the Premier League for television rights is an indication that the appetite to watch football is no longer enough to sustain a business. Then there’s the plights of Southampton, Leeds United and notably Luton. Leeds are an interesting example, not least because they suffered their darkest days during the height of the boom – perhaps a better example of financial mismanagement than a victim of the credit crunch. Newcastle take note. But for every Man City or Real Madrid out there, it is worth bearing in mind there’s probably also a clutch of smaller football clubs on the edge. With less of their games on show after the near collapse of Setanta, and fewer opportunities for young British footballers, the true impact of the recession is likely to be felt much more in the grass roots of the game than at football’s top table.

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3 Responses to Football in the recession

  1. […] Original post by View from the Terraces […]

  2. […] Football in the recession « View from the Terraces […]

  3. chrisutd07 says:

    i think something obviously has to be done. maybe not copy the americans completely but we can most defintely take some of their concepts and apply it to football. (salary caps, spending limits, luxury tax, etc)

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