Re: The Barclays Premiership / Champions League Thread
Commentary by Matthew Lynn
June 16 (Bloomberg) - It’s as if the credit crunch never happened in the soccer world.
Real Madrid has just blown all the transfer records, paying more than $220 million for the services of two players: Manchester United’s Cristiano Ronaldo and AC Milan’s Kaka. That looks like unleashing the mother of all transfer sprees, in which hundreds of millions of euros and pounds will flow between Europe’s clubs.
At the same time, the world’s other big-money sport, Formula One motor racing, has been demonstrating the virtues of going back to its roots, creating a season in which passion and determination count more than check books and financing deals.
Soccer needs to learn that lesson. It’s time to restore some sanity to the sport by capping transfer fees, limiting foreign ownership, and forcing teams to get more homegrown players onto the field. If it doesn’t, even the world’s most popular sport may not have a future.
Real Madrid is determined to regain its status as Europe’s leading club by spending on an epic scale. Last week, it agreed to pay 80 million pounds ($131 million) for winger Ronaldo. True, the Portuguese star may be the 2008 World Player of the Year, but he will still need to score a lot of goals to justify that fee. Only a few days earlier, Madrid paid AC Milan 68 million euros ($94 million) for Brazilian playmaker Kaka. Soccer is now like an arms race. One big gun is met with another of equal force. The potential outcome is the same: mutually assured destruction.
Spending Spree: This European summer looks like it will be dominated by a series of mega-transfers. Manchester United will recycle much of that 80 million pounds into a replacement for Ronaldo. Likewise, AC Milan will want to find someone to fill Kaka’s boots. The English clubs will be looking to match that spending. Russian oil tycoon Roman Abramovich has already spent more than $1 billion on his Chelsea team. He might need another billion to make sure his side can beat Real Madrid.
Manchester City, now owned by the Abu Dhabi royal family, will spend big over the summer in pursuit of its rather eccentric ambition to turn one of the perennial underachievers of the game into one of Europe’s elite clubs.
And yet while soccer appears to be intent on single-handedly ending the global recession, Formula One has just been electrified by doing precisely the opposite.
Dreams and Hunger: Britain’s Jenson Button and the Brawn Formula One team have been the surprise hit of the season, cruising to victory after victory. Ross Brawn bought out a second-rate team when Honda Motor Co. withdrew its sponsorship. He then put Button, a driver everyone assumed was a has-been, at the wheel. Very little money went into its initial victories, just dreams, hunger and passion. In truth, Button represents everything that we find inspiring about sport, and Real Madrid everything that we find depressing. The collapse of big-money sponsorship has reinvigorated Formula One, transforming what was a dull contest over who could squeeze the most cash out of a bank or mobile-phone company into a surprising contest.
Soccer can do the same. Here are five steps that could bring the game back down to Earth.
One: Ban shirt sponsorship. One of the reasons clubs are willing to spend so much money on players such as Ronaldo is because companies will spend even more to get him in a jersey with their logo on it. Without that right, advertisers would be far less interested in soccer.
Two: Outlaw foreign ownership. Tycoons used to buy titles to establish themselves in society -- and newspapers to make themselves important. Now they buy soccer clubs. The clubs really belong to the communities and fans who created them. If ownership was made as local as the support base, Russian oligarchs and Middle Eastern dynasties would have to find some other way to amuse themselves.
Three: Cap salaries. Nobody says footballers shouldn’t be allowed to earn a decent living. Yet the escalation in salaries is distorting fair competition. Only ceilings on what the top players earn can level the playing field between clubs.
Four: Limit the number of foreign players. Sepp Blatter, the president of the sport’s governing body FIFA, has already proposed restricting foreign players to five per team. That’s the right move. Only by restoring the link between teams and their localities can the loyalty of fans be maintained.
Five: Lower transfer fees. Banks have already shown us what happens when people and companies stop living within their means. And we have learned from the financial system that it is better to fix a crazy business model before it blows up. Clubs should be limited to spending only an amount equal to their ticket and television revenue on transfers. If they can’t earn it, they shouldn’t be allowed to spend it.
Soccer is badly in need of the same injection of romance and honesty that Button and Brawn have just given motor racing. The last thing it needed was another summer of inflated transfer fees. Fans want an equal contest between teams of players committed to their clubs and communities, not a contest in which financial firepower determines the winner. Formula One was almost ruined that way. And soccer is coming close.
(Matthew Lynn is a Bloomberg News columnist. The opinions expressed are his own.)