Tuesday, May 15, 2012

Soccernomics: Financial Fair Play

The final day of the English (and Welsh) Premiership had lots of drama.  FIrst and foremost was the stunning comeback by Manchester City to win the title in the dying moments of their game against Queens Park Rangers.  Closer to home (mine, that is) the Arsenal made us Gooners sweat it out but managed to secure 3rd place and thus guarantee a Champions League spot for next season and, even better, pip Tottenham at the line and beat them to the spot.  Also close to home but on the other end of the table, despite QPRs loss at Man City the woeful Bolton Wanderers could only manage a draw at Stoke and thus QPR get to stay in the Premiership another season.  Let's hope that this allows them to ad some more quality to the squad.  

There is actually lots of economics in all of this. First, the ascendancy of Man City was due to the garish spending spree that the new owner, Sheikh Mansour, commenced after purchasing the team in 2008. Never was a title more clearly bought since way back in 2010 when Chelsea won the title thanks to the deep pockets of Roman Abramovich.  But all this may change under the new Financial Fair Play rules of UEFA.  The idea is that a club cannot spend more than it makes, it has to stay in the black.  So a wealthy owner cannot just spend his/her own money willy nilly to buy top players.  It is an interesting idea but seems unlikely to change much.  If an owner wants to funnel money to the club, they can just book it as revenue under some sponsorship deal, for example.  If it does have some teeth, however, Arsenal stand to gain as they are one of the only top clubs currently in line with the new rules. 

And speaking of Arsenal, the one last goal of the season, scored by Laurent Koscielny, was probably worth more than £40 million to the club in the added revenues from Champions League participation.  And for QPR, stokes last goal against Bolton was probably worth £37 million.

And thus blow the winds of soccernomics...

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