How The Global Financial Crisis Changed Football
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How The Global Financial Crisis Changed Football

October 8, 2019


If ever a sport reflected a certain disconnect
with its audience, it is surely football. Players’ wages continue to climb, the big
clubs remain cash cows and the competitive imbalances that have plagued the game for
the past decade show little sign of levelling out. In contrast, most of professional football’s
client base enjoy very modest lives. When the global financial crisis broke in
the last quarter of 2008, some experts undoubtedly contemplated the end of the period of growth,
less wage inflation and a lack of potential investors looking to boost the financial power
of Europe’s most prestigious clubs. While it did not impact the gargantuan clubs
too much over the medium term, indeed it added to their number, the financial crisis did
make life more difficult for smaller clubs. Since 2008, we have seen the creation of an
elite band – a bulge bracket, to use financial market terminology – that is standing astride
domestic football – Real Madrid, Barcelona, Bayern Munich, Juventus, Paris Saint-Germain,
Manchester United and City, Chelsea, Liverpool, Arsenal and Tottenham.
The post-crisis environment has created new giants in the form of PSG and Manchester City,
and due to the soaring TV fees enjoyed by the Premier League, a cluster of English clubs
have also joined the upper echelons. In 2008, Manchester United generated € 324
million in revenues and nine years’ later, with many corporates struggling to maintain
profitability and importance, their revenues were € 676 million – more than double.
Just consider that US insurance giant, AIG, who were United’s shirt sponsor in 2008,
have seen their revenues drop by 40% in a comparable period. United’s neighbours,
Manchester City, have gone from €102 million in 2009 to € 528 million in 2017.
Deloitte, at the time of the crisis, commented that, ”the unique nature of the football
industry will enable major clubs to be relatively resistant to the economic downturn.” Most
analysts felt that football’s business models were unconventional and always laden with
debt. Like many businesses, they relied on bank lending but when the banks rolled into
trouble, access to credit became a problem. Football has always had a certain “bread
and circuses” value to it. Certainly, politicians and businessmen try to avoid sending any club
to the wall. While many went into administration, very few were allowed to go bankrupt. The
fall-out of a club failing could be catastrophic for individuals pushing a club into extinction.
In Spain politicians, both local and national, do everything in their power to ensure they
are not connected to a club that may go bust. Spain, who in the eye of their own storm won
the European Championship twice (2008 and 2012) and World Cup (2010), went to extraordinary
lengths to assist its illiquid clubs. In the national’s team’s golden period, 20 clubs
in the top division received € 332 million in direct public aid and € 476 million in
indirect (tax and social security debts) support. The Valencia region, for example, pumped some
€ 169 million into its four clubs. Spain’s economic woes – trade deficit
reaching 10% in 2008 and GDP retracting for the first time in 15 years – may have been
frightening, but their teams lifted the gloom. Nevertheless, some of their clubs were in
dire straits. Valencia, from Spain’s third most important city, became a symbol of excess
spending and their new stadium was all but abandoned because they could not afford to
complete the structure. The country’s big two eventually rose from
the crisis stronger and more defined than ever before. Spanish football has since become
the dominant force in European club football – since 2008-09, La Liga clubs have won
13 out of 20, including nine of the last 10, European prizes. And in money terms, Real
Madrid and Barcelona are consistently at the top of any studies on football finance. It
should be recalled, though, that both clubs run high levels of debt, over half a billion
euros between them. The Premier League, however, remains the most
lucrative competition, although the top bracket has become a league within a league. One club
that certainly went through some angst during the period was West Ham United, whose owner,
Bjorgolfur Gudmundsson, was chairman of the troubled Icelandic bank, Landsbanki, at the
height of the crisis. The club was put up for sale and while a new owner was sought,
no further money could be pumped into West Ham. In 2011, the Hammers were relegated.
With Europe suffering more than other areas of the global economy, new sponsors and owners
from regions classed as emerging markets would help to provide fresh financial impetus, rather
like Roman Abramovich had with Chelsea in 2003. In England, Manchester City were bought
by the Abu Dhabi United Group in August 2008, which elevated one of the country’s under-achieving
clubs and created the City Football Group, an organisation that represents the controversial
multi-club ownership model. As with Abramovich at Chelsea, City were in a precarious financial
position before being taken over. In 2011, the Middle East also invested in Paris Saint-Germain
in the form of Qatar Sports Investment, creating a wealthy, successful club in the French capital.
While Spain became stronger and France got its first international club for some years,
Italy was going through mixed experiences. Serie A, once the model envied by all other
leagues, continued its decline, but Juventus developed into a club with a very modern outlook.
As the Milan duo fell away from their long-time position at the head of Italian and European
football, Juventus recovered from scandal to reinvent themselves. They made the right
decision in owning their own new stadium, which allowed them to benefit from revenue
streams that had previously been restricted. Juventus have dominated Italian football over
the past seven years and are currently the only Italian club that can compete on a European
scale. For a long time, Italian football was proud
that its clubs were owned by local companies and families. But as Italy’s financial crisis
deepened (high unemployment and 5.5% shrinkage of GDP in 2009), the seal was broken. Thomas
Di Benedetto, a US private equity investor, became the first foreign owner of a Serie
A club in 2011 when he bought Roma. All over other parts of Europe, there were
signs of deep problems. Greece, one of Europe’s most stressed countries, and the symbol of
the sovereign debt crisis, saw attendances drop from an average of 6,200 to 4,000 and
witnessed the bankruptcy of AEK Athens. Clubs could no longer be relied upon to pay their
players – in 2011, 70% of Greek footballers surveyed said they had not been paid at some
point. Other clubs, such as Panathinaikos and Olympiakos have also had their financial
problems. Ten years on, though, the so-called “big
five” appear in robust shape. Crowds in England, France, Germany and Italy are higher
than they were in 2008. Clubs, out of necessity, have created global “franchises” that
have embraced new supporters and developed brands that are instantly recognisable across
the continents. This is a reflection of the shift in the global economy but also of a
determination to build dominant clubs that can extract maximum value from a more diverse
audience. In the past six years, Europe has been the
property of PSG in France, Bayern in Germany, Juventus in Italy, Real and Barca in Spain
and Chelsea and City in England. It’s not particularly healthy, but it does prove the
law of the jungle prevails in football. In some ways, football – thanks to technology,
social media and the rise of a new generation of fans – has become even more vital to
the population than it was in 2008. The percentage of disposable income that fans spend in support
of their team has, arguably, increased over the past decade. In many parts of the world,
the financial crisis continues to affect the daily lives of people, so football, which
has been described as “the most important of unimportant things”, remains the great
distraction. But with many smaller clubs struggling for their existence, the question remains
about imbalances and whether at the highest level, football could overheat and burst the
bubble. No industry is immune from excessive behaviour that can threaten its long-term
success and as the financial crisis told us, no longer can we take anything for granted.
At some stage, this theory may get tested once more.

Only registered users can comment.

  1. Tifo misleading as usual. There were fewer competing clubs before 2008 financial crises than after it. Man Utd won like 90% of EPL before. So I don't know wtf he is talking about. There were only four big clubs now there are six. Moreover, since the financial crises no club has won EPL consecutively. While before 2008 Man Utd won the EPL three times in a row twice! Man Utd was basically a PSG of EPL.

  2. Your content was flawless as usual. But sad to see United doesn't show up in the final description of Europe best clubs of past 6 years! Sad but indeed true!

  3. Absolute class channel, as a Celtic fan we dwarf the scottish league in terms of budget, big fish small pond, but that’s what happens to us in europe, wee fish big pond. We just splashed 9m in the summer on Odsone Eduoard, breaking our transfer record. Big clubs can spend 20 mill plus on a player and it’s chump change for them. The game has changed in the last decade as mentioned, and anyone who denies it is just a liar.

  4. @Tifo I was wondering, why there is only one piece of content (the Super League article) that addresses Football Leaks.
    Regardless: Love your videos! Great quality

  5. Just the kind of video i needed before i present my masters thesis today on the economic crisis of 2008 and its apparent effects on sport.. Great video Tifo!

  6. This is all still happening in a bubble which will eventually burst. When it does, the effects will be catastrophic for the top clubs.

  7. Such an informative video about the finances of the game. Really understands why Serie A has dropped off in recent years to when I was growing up. Great video. There's so much to the game from what happens on the pitch

  8. Make a video where you show a potential transfer market “cap” per year to try and make the playing field even…as well as league team salary cap model in the EPL. I think it’s the only way to stop people from “buying league titles”.

  9. do a video about eredidvise and the rumor that the powerhouse of dutch league will ‘donate’ their money to lesser club,does that mean only 3 club will compete for the title?what about the club that ‘receive’ the donation beat the team that ‘donate’ the money?

  10. These videos are really great and educational I love how you touch upon every aspects of football, not just what happens on the pitch. BUT do you think you could leave the sources you use in the description? That would be great for those who want to look into the subject further

  11. I believe that Real Madrid is debt free now, because they earned a lot by winning the UCL multiple times while not spending much. They relaeased a press report

  12. I would like to see a video on how Bayern manage their finances and their model. It seems to be very successful and unlike many of the other big clubs are not in debt. In fact, they have paid back their Stadium loan and even paid BVB Dortmund to help them avoid bankruptcy. I want to know how do they manage this.

  13. How about what Suning is doing with Inter? Reconstruction of it’s structure and with growing world exposure especially in rising Asian markets is helping raise revenues every year.

  14. Do a video about FC Steaua Bucharest (or FCSB) and their current situation, the problems between the controversial owner Gigi Becali and The Army.

  15. Your video themes include politics, history, finance, etc
    Such a diverse category for a channel related to football. Brilliant!

  16. Very interesting. Being a West Ham fan that was definitely a dark time in our history. Whatever you think of our current owners in Sullivan & Gold they moved mountains to change us from a championship club at the time to a solid premier league club.

  17. CAN YOU PLEASE DO A TACTICAL ANALYSIS OF FRANK LAMPARD'S MEN AT DERBY COUNTY…THAT WOULD BE A GOOD ONE!! THANK YOU TIFO, I LOVE YOUR VIDEOS!

  18. What be great if you could look at Solari's tactics. There's only been a small sample size but he sets up the team with more structure than Lopetegui.

  19. is it possible to do a video on rb salzburg, rb leipzig, and other rb teams? idk if you did one yet but it would be an interesting video

  20. Such a great take on the financial realities of football in the modern age. I do think some smaller teams can still gain traction and become viable clubs in Europe and beyond. Wolverhampton got new owners and they have gone from Championship side to potential mid-table finishers in the EPL. I know German ownership is 50+1 but Hoffenheim are doing pretty well for a club of their size too.

    It's all about growing the game globally. I do think the "super league" idea is absolutely stupid and uncalled for. And I am an American fan. Things like the preseason in the US are great however and I really don't see an issue if Spain wants to play a single game or two in the United States either. It's a global enterprise now and I would pay to see Valencia vs Villarreal in Miami or New York. I even follow EFL Championship football and teams like West Brom, Derby County, etc. I guess there is a reason why the EFLC is the most successful second tier in the world.

  21. Football clubs have been helped immensely by all the cheap money pumped into the economy via QE, it's no coincidence that some clubs have ballooned since the cheap money first appeared. Just look how Man United have refinanced their debt to a lower interest rate. My worry is with rates rising clubs will struggle to rollover debt without a big increase in the interest rate.

    That, however, isn't limited to football. Corporate debt will be the mortgage backed security of the next financial crisis.

  22. Y’all Europeans need to try to bring back competitive football somehow. Most of your top leagues are too predictable & boring.

  23. will be interesting how MLS, the polar opposite European football's structure, will turn out in comparison of it if these financial disparities continue, or even if the whole market bursts

  24. Please do a video on why English fans are not as flamboyant in comparison to many other European clubs, for example this season sky were saying wolves are creating the highest amount of noise at games but still is nothing like some European clubs (e.g Belgrade

  25. The Roman empire knew what people wanted, circus & bread. It worked 2000 years ago & still today through football with & without corruption ⚽🏟️😀

  26. I just cant blv that clubs main objectives is rise in social media followers and fans buying merchandises through websites, the world football of 2008 ks way different from today . Shocking

  27. Maybe we could lessen the teams of the top leagues???? Just saying.4 are way too many. Scale them back to 3.They are more than enough.

  28. Hey tifo you guys should make a what went wrong series that looks at what went wrong with managers like conte players like Torres etc etc

  29. Hi Tifo Football. I'm a great admirer of your work. Could you make a tactic video on Parma?? They're excelling in Italian top flight. Please!

  30. watched some of the 8 minutes Man City ad so you get the revenue you deserve, mine probably wouldn't matter but guys watch full ads for this channel pls

  31. You guys rightfully get lots of praise, but I dont think it’s been pointed out that the music in your episodes is also top notch.

  32. this is not 1998 or 2008, why do people still pay so much to watch football on TV? it's too expensive, there is very very few football stars, there are so much more other entertainment, honestly I stopped watching 10 years ago except some of the quarter finals and beyond matches.

  33. And now owners want Super League to separate rich clubs from passionate but poor dirt clubs and make even larger profits. It's all about profits, not about sport. Exclusive League for super rich clubs and you'd have to sell your family to get tickets to their future matches.

  34. Nobody explained this to me better. I was 10 back then so its better to understand it now. And the issue is that a lot of the smaller clubs lost wealth and the bigger ones gained is crazy.

  35. i support AEK ATHENS.. the first st years after bankruptcy was difficult..we got relegated to 3rd division but now we are in the championsleague. i don say that we are wealthy but at least we are economically healthy

  36. What are your sources for Spanish government direct and indirect aids to Spanish clubs and more particularly Valencia?

  37. uff viejo hice tremendo mojón y ahora tape el baño de mi casa pero cada vez que le bajo a la palanca en vez de irse se llena mas de mierda , que hago ?

  38. How about a video about Borussia Dortmund who went from almost bankrupt in to a consistent Champions League Club

  39. The west can have their own european league, mind you this is what it's coming to. Clubs from the East should come together and do the same.

  40. I hope Serie A becomes the greatest league in the world again. Inter and AC Milan deserve to be at the top again. There's some great players in Serie A, and I just hope they drag it out of the ashes and to European glory.

  41. Football especially champs league n europa is corrupt seeded teams is a word for a fixed draw which is corrupt

  42. VAR is turning football into an american style sport stop start every 5 mins nxt managers will b aloud to call for time outs

  43. Very nice!

    Could you do a video about what you said in this video, with Serie A being envied by the other leagues? I didn't know that and i'm curious to learn more.

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