Is there a political economy of football?

Football often likes to see itself as a world apart from society and politics, but it is susceptible to political economy analysis, says Wyn Grant.

The ‘world of football’ and ‘football people’ are terms often used in discussions of the game of football. They signify a wish for football to regulate itself and to deal as little as possible with societal forces outside the game. However, given the importance of football economically and socially this stance is becoming more difficult to maintain. There is both an opportunity and a need to deploy a political economy toolkit to analyse the game of football, even if we accept the special characteristics that football claims to exhibit.

Exactly which political economy toolkit depends on one’s stance, but the focus here is on the interaction between technology, market structure and regulation.

Football has long been resistant to the use of new technology. Floodlights transformed the game in terms of when it could be played, but their adoption was relatively slow. Recently, it has taken a long time to adopt goal line technology, despite the fact that equivalent technologies have been used in other sports.

Although football has generally been truculent in the face of new technology, one technological innovation really has transformed the game: that of satellite broadcasting. It has created a new financial dynamic in the game and created a situation in which ‘followers’ become more important than ‘fans’.

Satellite broadcasters need content that attracts and retains subscription payers. Blockbuster movies can be bought on DVDs or downloaded. Live sport is a very good seller of subscriptions, particularly to key demographics for advertisers, such as young males.

It is satellite broadcasting that has created the riches of the English Premier League. The price paid has been forced up again next season by the fierce contest between BSkyB and BT Vision. What really worries BT is Sky undermining its broadband market. Having live football content is a way of fighting back against Sky.

Market structure has also changed. It needs to be recognised that there have always been big clubs and that the local (invariably male) businessmen that owned them were often wealthier than was suggested by the homespun image they often cultivated. Even so, satellite broadcasting and globalisation have transformed the game.

The big growing market for Premier League football is now in Asia, in part because of its attraction for gamblers. And, as middle-income households grow in Africa, that market is going to become more important as well.

Clubs like Manchester United, acquired by the Glazers through a leveraged buy-out, sell their merchandise across the globe. They have sponsorship contracts tailored to each national market – including a paint sponsor, for example, from Japan.

Foreign investment in the game has grown. Most football clubs run at a loss and the only way you can make money is through capital appreciation, itself hazardous. Most foreign investors are prestige-driven, trophy investors. Roman Abramovich has spent £1 billion on Chelsea and he cannot expect to get anything back, but it is a small dent in his fortune.

There is a dark side to globalisation. Talented players move from Latin America and Africa to Europe, although in the case of Latin America the trend appears to be slowing. In the case of Africa shady intermediaries engage in a form of human trafficking.

Steps are being taken to regulate the wealth in the game, in part because clubs do not want to see increased television revenues going to players and agents. But regulation can be used by existing dominant players in a market to protect their positions. To an extent that is what is happening with both Uefa’s financial fair play regulations and the Premier League’s own new regulations. Both sets of regulations need to be tested in implementation.

Nevertheless, it may be that transfer fees and player wages have peaked in real terms. A growing supporters’ movement seeks to see fans run clubs. But it is difficult to see a Premier League club being run in this way and there is plenty of potential for tension between the expectations of fans and the professionals who run such clubs on a day-to-day basis.

The state has been very reluctant to get involved in football, although the European Union has been more active than its member-states. This creates a tension between EU notions of solidarity and the market ethos of much of football. But the truth is that in many respects football is a highly distorted market which bears all the hallmarks of ‘crony capitalism’.


Visit his political economy of football blog for more on this topic.

This post originally appeared as a speri.comment on the Sheffield Political Economy Research Institute (SPERI) website.

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