One of the more interesting aspects of the current spat between the European Union’s competition commission and football’s governing body, Fifa, over players’ transfer fees is the way in which it re-opens the debate over how we value our top personnel.
If the EU gets its way – and Fifa’s post-match analysis won’t alter the fact that the commissioners appear to have scored a home win in Brussels last week by ruling that transfer fees contravened free-movement labour laws – then one outcome is likely to be ever-expanding pay packets for top players. We’re well on the way, according to a City analyst at Williams de Broe, to the first £100,000-a-week football stars.
This won’t quite put the likes of Real Madrid’s Luis Figo or Manchester United’s David Beckham on a par with top Formula One motor-racing aces such as Ferrari’s Michael Schumacher. But there are fewer Grand Prix in a season at £1m-per-drive than there are weeks in the football season and so, even if players draw less during the off-season, they are beginning to reach similar remuneration status.
There is some natural justice in that. Footballers may not risk their necks in the same way as gladiatorial F1 drivers, but the Carling Premiership in Britain and its equivalents on the Continent, with their sponsorship deals and television-rights packages with the likes of BSkyB and ONdigital, are emulating the global business that Bernie Ecclestone has built for F1. Market forces, in the shape of advertising and sponsorship rates that are prescribed by media reach, establish an inherent profitability for the industry, which in turn rewards its top attractions.
Unsurprisingly, the elite of football clubs prefer the prevailing system, in which they collect handsome transfer-fees for players bought out of their contracts by clubs made cash-rich through the very same system. This is inherently inflationary, encourages a cartel-mentality among the top football leagues and, oh yes, contravenes European labour laws that require free movement for employees within the EU. It’s really all over bar the shooting – or in the case of Fifa, which doesn’t seem to be blessed with the strongest case for the defence, the dribbling. So clubs are just going to have to find ways to retain their stars, with loyalty bonuses, higher wages, better conditions and so on.
That’s no different to what the rest of industry has to do at the moment to retain its top performers. Not that it has been allowed an easy ride in doing so. The “Fat Cat” public debacle now seems a long time ago – and I suppose it is, three years being a very long time in politics. Fat-cattery was undoubtedly driven by politics, the dimmer factions of New Labour seeing it as further short-term opportunity to associate the Tories’ stewardship of the economy with sleaze and greed. It was a short-term policy because, as its brighter factions appreciated, New Labour in power would have to work with industry – particularly to implement the now widely forgotten “windfall tax” on the privatised utilities allegedly “excess” profits.
Back in the mid-Nineties, British Gas chief executive Cedric Brown became the whipping boy of this political movement for an ineptly managed announcement about an annual income-package of a little more than £750,000, most of it in performance-related bonuses. In passing, it’s worth noting that, despite a low inflationary environment since then, this doesn’t seem the kind of money that anyone would get so worked up about anymore. I suspect that the funny-money of the dot-com gold-rush has done much to inure the populace to vast sums of personal wealth, quickly acquired. In that, we now resemble the US more closely.
But it’s also worth noting that, once the self-serving transfer system is abolished in football, some parts of the City are predicting that star players will be earning a “Cedric Brown” package in seven-and-a-half weeks. They could play as few as three home games, fail to make training in week eight, develop an alcohol habit and still pick up more than the chief executive of a FTSE 100 company.
I say this without passing judgement. At the time of the Fat Cat campaigns, it was often remarked that the electorate could become highly agitated at the sight of executives, responsible for the employment of tens of thousands and for hundreds of millions of pounds-worth of shareholder value, receiving six and seven-figure incomes, but turned not a jealous hair at the wealth of football and pop stars.
And what happens when the burgeoning football industry is forced to drop what may amount to a restrictive practice in a cosy industry cartel? Why, natural market forces appear to push the incomes of the top performers up, not down. Yet, while there are those who might feel it’s rather silly for a footballer to earn more in a season than the market capitalisation of some AIM-listed companies, there is no demand for governmental intervention to end this “greed”.
Nor should there be. Bryan Gray, chairman of the first division’s Preston North End, quoted in the Financial Times at the weekend, made a very sound point: “While transfer fees are important to smaller clubs, the cushion they provide hides the reality that clubs need to operate sound businesses. If football doesn’t have a long-term future as a business, then it doesn’t have a long-term future as a sport.” Amen to that.
George Pitcher is a partner of issue management consultancy Luther Pendragon