The last few weeks have seen a myriad of different discussions about regulation and forms of ownership in football, following the furore over the proposed European Super League. The response has been sadly predictable; many were quick to blame the excesses of capitalism, while the government and opposition immediately called for more regulation of the sport.
The hot take is football needs reform, but the Super League debacle shows it really doesn’t. A group of clubs proposed a new product, the market communicated that there was no demand for the product, and the product was scrapped. That is the free market working.
Prior to the inception of the Premier League and the flood of money brought with it, football was in an awful state. Thuggery was ubiquitous, stadiums were dingy and for a couple of years in the 1980s, there wasn’t even a television deal. The game-changer was the Premier League and the influx of media and commercial revenue. This allowed clubs to improve their stadiums, to buy better players from abroad, and diversify their product i.e. by hiring foreign managers. All of this was, and still is, to the benefit of the fans.
The accepted wisdom entrenched quickly: the Super League was a product of excessive American sports capitalism, there is a need to import something like the German 50+1 rule into the English game, and the Government needs to be more heavily involved in football itself. All three are bad assumptions.
American sport organisation (the blueprint for the Super League) is no capitalist dream. Competition in Major League Soccer (MLS) is non-existent, the market is distorted by rules on player movement and individual clubs cannot gain advantage according to demand for their product.
We know that MLS teams use this structure so they can artificially hold down player wages. This is just part of a wider protectionist theme within the MLS. Teams are given exclusive territorial rights, and even if there is demand for a second team in a huge city, they may not be granted access to the MLS because its members operate a closed shop.
This limits competition, creates high barriers to entry and means there is no promotion or relegation. The evils of American sports capitalism are not to blame for the Super League idea, the evils of American sports socialism are.
The German 50+1 model has been gaining a lot of traction as a potential way forward. This approach simply means that fans own 50 per cent of shares, plus an additional share in their club. It means private investors can never have the majority stake in a football club. Proponents of this model should note that it is hardly a tonic for competitive football. The same team, Bayern Munich, has won the Bundesliga, Germany’s top division, every season since 2012-13 and they are on course to win again this season.
The evidence that the 50+1 model works is mixed. Fan owned clubs often have slow decision-making processes due to differences of opinion among supporter factions. They struggle to raise capital to survive hard times or to compete with bigger and more successful clubs in terms of transfers and wages, as private investors typically don’t want to spend their money on a minority stake in a club. On the other hand, the Premier League has seen previously lesser teams such as Blackburn, Chelsea, Manchester City and Leicester win the league by embracing private investment.
The Government has been gleefully stating that it can use its power to regulate football, but this would be a mistake. Such a system would be costly and would likely promote the same kind of market distorting policies seen in the MLS.
Regulation should only be used to solve a market inefficiency, but in the case of the Super League, the market corrected itself. Any government interference would be to the detriment of both the taxpayer and fans.
On a wider level, the evidence is that owners are becoming more financially responsible with their spending. For example, the amount Premier League clubs spend on wages as a proportion of their income is currently 59 per cent and at its lowest level since pre-2003.
This is clear evidence that the football market has adjusted and is self-regulating against the dangers of excessive spending. Teams are diversifying their sporting strategies, focussing more on data to gain a competitive advantage, developing young players to sell for a high profit and conducting more in-depth and wider scouting to try and find cheaper hidden gems both at home and abroad. This is testament to the ability of the market to do a better job at providing fans a viable product than a closed shop or more regulation ever could.
So no, wholesale reform of football is not needed. We should be grateful to capitalism for the competition and investment in the Premier League, which has made it the product it is today. The market will continue to reject American sport socialism, we should be wary of the competitive impact of a 50+1 model, and we must reject any form of government intervention. Sometimes, the best thing we can do is nothing.
