The English FA Cup has a long tradition extending all the
way back to 1872, and no team has secured a greater winning margin in the
showpiece final than Manchester City, which on Saturday beat Watford by 6-0
(though in 1903 Bury beat Derby County by the same
score). Indeed, City’s performance was superb although given the quality of
footballers at their disposal this came as no real surprise. City’s position at
the top of the English football tree bears no comparison to Bury's in 1903.
City became the first club to win the domestic treble of trophies in the same
season and as a measure of their current pre-eminence it is worth noting that
although the club has existed in its current form since 1894 and won a total of
18 domestic trophies, 10 of them have come in the past 8 years.
Whilst football success is often cyclical, the key ingredient in City’s success is money – and lots of it. According to transfermarkt.co.uk, Manchester City has spent a whopping £1.35 billion on transfer fees over the last 10 years – 13% more than their nearest domestic rivals Chelsea. They have also recouped significantly less in transfer fees with the upshot that their net outlays over the past decade exceed £1 billion – 90% more than Chelsea. The club is owned by Mansour bin Zayed Al Nahyan, a member of the Abu Dhabi royal family whose personal net worth is estimated at £17 billion whilst his family fortune is reckoned to be around $1 trillion. It thus comes as no surprise that City can afford to buy the best.
Of course, clubs that spend most on transfer fees are not guaranteed to be the most successful. Neither Manchester City nor Paris St-Germain (the next largest net spender over the past decade) has ever won the Champions League. The relationship between wages and trophies won tends to be much closer (here) since it a better reflection of a players’ quality. Ironically, latest data suggest that average wages at Manchester City are around 8% lower than at their cross-town rivals Manchester United (which won nothing this season). But City’s manager Pep Guardiola, widely regarded as the best in the world, is the highest paid manager in English football earning £15.3 million per year (and a recent report suggested that the club’s hierarchy are considering raising that to £20 million if he signs a new 5-year contract).
In short, Manchester City has bought its success by purchasing the best players, paying them well and employing the world’s best coach to manage them. A similar pattern is observed across the other four major European football leagues with the club that paid the highest average wages winning the title in 2018-19. Even more astonishing is that in all five major leagues, the club winning the championship this season also won it last season (Barcelona, Bayern Munich, Juventus, Manchester City and PSG). Last year’s champions in Austria, Scotland and Switzerland also retained their titles. For the record, in Scotland average player salaries at champions Celtic, which recently claimed its eighth successive title, were 84% higher than those at second-placed club Rangers. It appears that money doesn’t just talk – it screams loudly.
All this raises the question of whether the footballing rich are simply getting richer at the expense of their weaker competitors. There were certainly plenty of commentaries in the wake of Manchester City’s FA Cup demolition of Watford suggesting that City have ripped up any pretence at a level playing field (here, for example, or here). But to assess whether that is really the case, let us look at the evidence.
Whilst football success is often cyclical, the key ingredient in City’s success is money – and lots of it. According to transfermarkt.co.uk, Manchester City has spent a whopping £1.35 billion on transfer fees over the last 10 years – 13% more than their nearest domestic rivals Chelsea. They have also recouped significantly less in transfer fees with the upshot that their net outlays over the past decade exceed £1 billion – 90% more than Chelsea. The club is owned by Mansour bin Zayed Al Nahyan, a member of the Abu Dhabi royal family whose personal net worth is estimated at £17 billion whilst his family fortune is reckoned to be around $1 trillion. It thus comes as no surprise that City can afford to buy the best.
Of course, clubs that spend most on transfer fees are not guaranteed to be the most successful. Neither Manchester City nor Paris St-Germain (the next largest net spender over the past decade) has ever won the Champions League. The relationship between wages and trophies won tends to be much closer (here) since it a better reflection of a players’ quality. Ironically, latest data suggest that average wages at Manchester City are around 8% lower than at their cross-town rivals Manchester United (which won nothing this season). But City’s manager Pep Guardiola, widely regarded as the best in the world, is the highest paid manager in English football earning £15.3 million per year (and a recent report suggested that the club’s hierarchy are considering raising that to £20 million if he signs a new 5-year contract).
In short, Manchester City has bought its success by purchasing the best players, paying them well and employing the world’s best coach to manage them. A similar pattern is observed across the other four major European football leagues with the club that paid the highest average wages winning the title in 2018-19. Even more astonishing is that in all five major leagues, the club winning the championship this season also won it last season (Barcelona, Bayern Munich, Juventus, Manchester City and PSG). Last year’s champions in Austria, Scotland and Switzerland also retained their titles. For the record, in Scotland average player salaries at champions Celtic, which recently claimed its eighth successive title, were 84% higher than those at second-placed club Rangers. It appears that money doesn’t just talk – it screams loudly.
All this raises the question of whether the footballing rich are simply getting richer at the expense of their weaker competitors. There were certainly plenty of commentaries in the wake of Manchester City’s FA Cup demolition of Watford suggesting that City have ripped up any pretence at a level playing field (here, for example, or here). But to assess whether that is really the case, let us look at the evidence.
The table shows football equality indices and concentration
indices in the big-5 European leagues.
The equality index is defined as
the number of individual clubs winning the title relative to the number of
seasons contested. The higher is the index, the more equal is the competition;
if a different club won the title every year the index would be unity. I use the
birth of the Champions League in 1993 as the cut-off point and compare the
pre-1993 and post-1993 samples. The evidence suggests small changes in England
(negative) and Italy (positive) and a larger increase in Spain. But the big
changes are in Germany where the dominance of Bayern, which has now won seven
consecutive titles, is quite startling whilst in France it has risen sharply.
As a cross-check I created a concentration index calculated as the proportion of total league titles won by each club (again split between the pre-1993 and post-1993 samples) and the table reports the highest indices for each country (the higher the index, the more dominant is any one club in winning the league). The results show a marked increase in concentration ratios with the biggest increases in England and Germany. This is partly a sampling problem, in that the pre-1993 sample is much bigger than the post-1993 period, but the magnitude of the increase is notable. The data suggest limited evidence of increased inequality (except in Germany) but higher concentration indices, indicating a rise in the frequency with which the same teams win their domestic title. In other words, the data appear to reflect a rise in an elite group of clubs which can expect to compete for the title – generally those which also compete in the Champions League – and a widening gap to the rest.
Given the importance of external sources of money to fund sports teams (which I will look at another time), there is a danger that broadcasters and sponsors will gravitate towards the top performing teams over the longer term. This will enable the top teams to continue paying out the most on wages and consolidate their positions. Ironically whilst this is a major concern in European football, it is less true of American football which does not even operate a system of promotion and relegation. Only seven teams have won the Super Bowl on consecutive occasions and none has managed three straight wins. Moreover, 20 different teams have won it in the last 53 seasons. In the same period only 12 clubs have won the English Premier League whereas just 7 have won Spain’s La Liga. Given the amount of money flowing into the NFL, this does not suggest that huge monetary inflows necessarily stifle competition: It is where it flows and how the authorities channel it that matters. Premier League take note.
As a cross-check I created a concentration index calculated as the proportion of total league titles won by each club (again split between the pre-1993 and post-1993 samples) and the table reports the highest indices for each country (the higher the index, the more dominant is any one club in winning the league). The results show a marked increase in concentration ratios with the biggest increases in England and Germany. This is partly a sampling problem, in that the pre-1993 sample is much bigger than the post-1993 period, but the magnitude of the increase is notable. The data suggest limited evidence of increased inequality (except in Germany) but higher concentration indices, indicating a rise in the frequency with which the same teams win their domestic title. In other words, the data appear to reflect a rise in an elite group of clubs which can expect to compete for the title – generally those which also compete in the Champions League – and a widening gap to the rest.
Given the importance of external sources of money to fund sports teams (which I will look at another time), there is a danger that broadcasters and sponsors will gravitate towards the top performing teams over the longer term. This will enable the top teams to continue paying out the most on wages and consolidate their positions. Ironically whilst this is a major concern in European football, it is less true of American football which does not even operate a system of promotion and relegation. Only seven teams have won the Super Bowl on consecutive occasions and none has managed three straight wins. Moreover, 20 different teams have won it in the last 53 seasons. In the same period only 12 clubs have won the English Premier League whereas just 7 have won Spain’s La Liga. Given the amount of money flowing into the NFL, this does not suggest that huge monetary inflows necessarily stifle competition: It is where it flows and how the authorities channel it that matters. Premier League take note.
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