This is for all of you who follow the other football...this article talks about how one of the world's most famous sport clubs is on the brink of collapse because of debt accumulation by the owners of the club. One of the problems that has been brought up by the Glazer ownership of Manchester United is that England allows foreign ownership of their sport clubs whereas other European clubs, despite operating in the same European Union economic regulations, only allow domestic ownership. This, coupled with the massive debts incurred by Manchester United and fellow football clubs, has led to fears that these 'superclubs' will collapse and destroy a large part of the sport in England.
For those of you who follow English football, these developments could be very disheartening and need to be watched. For those of you who are more interested in American sports, one of the things that have been argued for to control costs in Premier League and other European clubs is the concept of a salary cap. Since the ownership structure in leagues such as the NFL and NHL is more centralized than the virtually anarchic, winner-take-all system in the EPL, a salary cap is more difficult to enforce. How to reconcile the decentralized structure with the need to control costs is also an interesting thought for any system, be it a nation or a group of soccer teams.
3 comments:
This could either be a tip of the iceberg or just one case of unfortunate money investment which may not spread any further. The counter-case for this one would be the Chelsea incident, when Abramovich, the Russian billionaire, bought a club, which also happened to be from English Premier League. As far as I know Abramovich has been investing millions into the club ever since, which is being paid off through the winnings.
Abramovich is a different case because he basically has unlimited funds - people aren't going to stop needing fossil fuels any time soon. The problems with Liverpool and ManU are all related to debt and deficit-spending. If they followed a more sensible business model instead of trying to snap up all the good players, they'd be in a better situation.
It is also interesting to note that one of Man U's chairmen essentially dismisses the Glazer family from refinancing the massive debts they have almost single-handedly caused the club. Their current situation is nearly a mirror image of MLB teams (with no salary cap) also being owned by wealthy families. Being from Ohio, this draws to mind a time when the Cincinnati Reds essentially forced owner Marge Shottenheimer to sell her team due to her inability to field a competitive team and also due to an immense financial burden she had placed the team under from a still-pending Hamilton County taxpayers lawsuit against the team. Strangely, both cases show how some professional sports organizations, when viewed as economic systems, absorb enormous sunk costs (by preferring the family to leave rather than refinance their massive debts) not so frequently seen in other systems.
Post a Comment