Sprinkling local football clubs with money won’t make them sustainable endeavours

The domestic football season has come to a dramatic close, with two sides from the North West jostling for the title and four London teams competing frantically for the coveted spots in Europe.

Since its inception, clubs from these two areas have dominated the Premiership, especially over the past twenty years.  

Perhaps it is something in the local water that accounts for this regional dominance? Regrettably, the answer is much more mundane. In a word, money.

The average salaries of first team squad members at the two Manchester clubs, Liverpool, Chelsea and Arsenal are typically well over double those of the rest of the teams in the Premiership.

In the textbook model of economic theory, workers are paid their marginal product. We can loosely translate this as meaning someone is paid the value of his or her output. Better workers get more. In practice, of course, there are many nuances to this story. But its basic premise holds. A player on £7m a year – the average at Manchester City in 2019/20, the season before Covid – is likely to be better than one on a mere £1m.

There’s the obvious point – football is a team sport – and a group of highly talented individuals might not gel with each other. But even then, across professional sports, there is a strong correlation between the amount spent on the team and success on the field.

And success breeds success. The more successful the team, the more the club attracts sponsors, the more it receives in prize money.

It is against this background that last week the government issued the fan-led review into football that it had commissioned.

A key recommendation is that clubs in the Premiership should give more money than they currently do to support teams lower down the hierarchy.

On the face of it, this seems a good idea. But the risk is that most of any such additional money would simply disappear out of the clubs in the form of higher wages for the players.

Most professional football clubs are very unusual types of company. Instead of trying to maximise profits, they maximise costs. Success is not judged directly by how much profit they make, but by how well the team do on the field.

The extra cash will just trigger an arms race, with clubs paying even more to try and attract players from their immediate rivals.

It would be much better to ring fence a lot of the money so that, for example, clubs have to spend it on the education and skills training of their young players. For every successful football career, there are many failures. Large numbers of youngsters, identified as talented at any early age, more or less give up on school work for a career as a player. Many of them get nowhere, and are kicked out jobless with no qualifications.

Teams in the lower leagues themselves need to evolve and diversify their offers. Developing new revenue streams around, say, women’s and wheelchair teams and working with local FE colleges may prove a firmer foundation in the long-run than relying on extra handouts from the giants.

Relying on subsidies from richer areas has not served the UK well generally. The same is true for football – and it certainly shouldn’t be with a no strings basis.

As published in City AM Wednesday 4th May 2022
Paul Ormerod
Image: Piqsels

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ALEX O’BYRNE

Associate

e: aobyrne@volterra.co.uk
t: +44 020 8878 6333

Alex O’Byrne, Associate at Volterra, is an experienced economic consultant specialising in economic, health and social impact, economic strategy, project appraisal and socio-economic planning matters.

Alex has led the socio-economic and health assessments of some of the most high profile developments across the UK, including Battersea Power Station, Olympia London, London Resort, MSG Sphere and Westfield. He has significant experience inputting to EIAs and s106 discussions as well as drafting economic statements, employment and skills strategies and affordable workspace strategies.

Alex is also experienced at economic appraisal for infrastructure. He was project manager of the economic appraisal for the City Centre to Mangere Light Rail in Auckland. He also led the economic and financial appraisals of the third tranche of the Transport Access Program for Transport for New South Wales, in which Alex developed and employed innovative methodological approaches to better capture benefits for individuals with reduced mobility.

He is interested in the limitations of current appraisal methodologies and ways of improving economic and health analysis to ensure it is accessible to as many people as possible. To this end, Alex recognises the importance of transparent and simple to understand analysis and ensuring all work is supported by a robust narrative.

Alex holds a BSc (Hons) in Economics from the University of Manchester and he was a member of the first cohort of the Mayor’s Infrastructure Young Professionals Panel.

ELLIE EVANS

Senior Partner

e: eevans@volterra.co.uk
t: +44 020 8878 6333

Ellie is a partner at Volterra, specialising in the economic impact of developments and proposals, and manages many of the company’s projects on economic impact, regeneration, transport and development.

With thirteen years experience at Volterra delivering high quality projects to clients across the public and private sector, Ellie has expertise in developing methods of estimating economic impact where complex issues exist with regards to deadweight, displacement and additionality.

Ellie has significant experience in estimating the economic impact across all types of property development including residential, leisure, office and mixed use schemes.

Project management of recent high profile schemes include the luxury hotel London Peninsula, Battersea Power Station and the Nova scheme at London Victoria. Ellie has also led studies across the country estimating the economic and regeneration impact of proposed transport investments, including studies on HS2 and Crossrail.

Ellie holds a degree in Mathematics and Economics from the University of Cambridge.