Economics And Soccer Today

We all realize that the coronavirus has had major economic impact in virtually every corner of the industrialized world, and we should not be surprised to recognize that even the very rich owners of major sports franchises are feeling the pinch. There are fixed costs that an owner has to endure as a result of his ownership whether or not there is ever a game played. Some examples are:

  • Lease costs for venues
  • Interest owed on money borrowed
  • Wages paid to core workers who are not furloughed
  • Insurance premiums
  • Legal fees

I got to thinking about those sorts of things in my abundant spare time now that my long-suffering wife will not allow me to set foot outside of our abode “in an abundance of caution”. And that led me to wonder if any owner might need to sell his franchise in order to shore up his finances in the area that got him enough money to buy a sports franchise in the first place. Then, I wondered if any owner might be feeling a double whammy here:

  1. His sports franchise is not bringing in any money
  2. His “core business” is also in a bad way

I could only come up with one example like this one. Micky Arison owns the Miami Heat; they are in lockdown at the moment. Micky Arison achieved his net worth of approximately $5B as the chairman of Carnival Crop which gets its money from Carnival Cruise Lines and that is not exactly a booming business as of April 2020. Let me be clear, I am not suggesting that the Miami Heat may be on the market nor am I suggesting that Arison is having any sort of “solvency issues”. He is, however, involved in two large and visible business areas that are stalled for the moment.

The virus continues to push back sports scheduling for this season. MLS has abandoned its hope to restart its season in mid-May; their current projection is that they will start up again on June 8 and they now acknowledge that they will not be able to get in a full season.

In England, the EFL – that is all the pro soccer leagues below the Premier League but not including the Premier League – also hopes to resume action in early June. That sounds like good news, but it comes on the heels of some dire reporting recently. Sky Sports says that there are EFL clubs that are “days away from going bust” and the BBC reported that there could be a dozen or more “insolvencies” among the EFL clubs.

Meanwhile, the clubs in the Premier League have not targeted any date for a restart there. However, there is some financial news attached to the Premier League. Newcastle United is in the process of being sold to “British businesswoman Amanda Staveley with a large Saudi Arabian backing”. The report says that the price for Newcastle United is $391M.

There is at least one Premier League team that would seem to have a nice cushion in these times of restricted revenues. Manchester City sold the naming rights for its home stadium a couple years ago to Etihad Airlines and that deal brings in a tidy $27.4M annually for the club.

Leaving the financial world but staying with news regarding soccer, Sepp Blatter is back in the news. The former major domo of FIFA – he is banned from the institution based on corruption – was interviewed by a German magazine and he says that the US could host the World Cup in 2022 instead of 2026 if FIFA decides to move the games out of Qatar.  There are multiple reasons for FIFA to consider such a move including:

  • There is evidence that the selection of Qatar was based on FIFA members taking bribes in exchange for a positive vote for Qatar.
  • The games would need to be staged at “the wrong time of the year” because it is too hot to play in Qatar in June/July/August.
  • The working conditions in Qatar for those building the venues has been likened to slavery. [Aside:  Even as venal as FIFA execs have shown themselves to be, they do not like being associated with anything that has the word “slavery” attached to it.]

To be sure, Blatter’s pronouncements have no weight within FIFA anymore. What he was doing here was musing about what might happen if such a change of venue were to take place. He said that Germany could host the tournament because it has all the infrastructure needed for the tournament already in place – – but since the World Cup in 2018 was in Russia, that would put two consecutive World cups in Europe and that would not be a good thing for the international sport.  He also recognized that the US too already has the infrastructure in place to host this event and the US is gearing up to do just that in 2026.

This is an interesting proposition. Holding the World Cup here in 2022 would be a nice shot in the arm for the US economy; waiting until 2026 would mean that the US would host an expanded tournament consisting of 48 teams and not merely 32 teams. Six of one – – half dozen of the other…

Finally, Dwight Perry of the Seattle Times dug out this piece of news:

“A 9-year-old Belgian boy is set to graduate from Eindhoven’s University of Technology.

“It would’ve been 8, but he redshirted his freshman year.”

But don’t get me wrong, I love sports………

 

 

6 thoughts on “Economics And Soccer Today”

  1. As far as other owners who are taking double hits, you just mentioned the Steinbrenners with the Yankees and the YES TV network, or the Dolans with the Rangers/Knicks, Madison Square garden, and THEIR cable network. the Dolans do have a large cable TV business as well though, while I think the Yankees are by far the Steinbrenner’s biggest holding.
    (Still being as papa George bought the team for under 10 million back in the day, he made a few bucks….

    You may have a few others who are heavily tied in to the franchise and a cable network that lacks programming. We do not need the Celerino Sanchez Yankeeography (biographies of former players they use as filler on YES)

    1. Ed:

      Agree the cable industry has been on the decline for a while – – but that sector looks robust today as compared to the cruise lines and travel industry.

  2. Oh, I looked up that kid… apparently when they would not let him graduate before he was 10 and set a new record, he became the youngest college dropout….

  3. They could hold the 2022 Word Cup in the SEC stadiums. No need to spread the teams out.

    1. William Hickman Beckner:

      Welcome aboard.

      Indeed, the SEC venues would be able to accommodate the events. The main argument against that idea would be thatthe southeastern part of the US is not where there is the greatest interest in soccer in the US. It would be like playing a worldwide baseball tournament here in the US; probably the best place to put that would be in the Northeast simply because baseball is most popular in that region. Now if the World cup were “football” instead of “futbol”, I would agree that putting it in ASEC country would be a great idea.

Comments are closed.