Economic Theory explained by Football – Return on Investment


The news that the new £5.14 billion Premier League television deal hasn’t exactly gone down well in many quarters.  The winning bids represent huge investments made by the media giants, with the Premier League now undoubtably the richest league in the world.  Arsenal manager, Arsene Wenger commented that the TV deal, and the huge influx of cash that will flow to the twenty clubs will allow them to attract the best players in the world.  Everyone’s a winner right?

14327363682_aef7b6c31b_kBut both Sky and BT will need to recoup their investments, and that is likely to spell bad news for subscribers. Rival TV boss, Tom Mockridge of Virgin Media, told ITV News this week that fans who already pay the highest prices in Europe to watch live football as from 2016 prices will see further price rises.  Faced with increasing subscription costs, some fans will abandon their contracts and look at alternative ways to watch their football.

So whilst pubs and clubs may now see more fans coming through their doors to watch games thus increasing their profits, there is a real danger that the number of websites that provide links to illegal streams will increase significantly. The more people that choose to use these streams, the more the broadcasters will be forced to increase subscription costs to recoup their investments. On the other hand, any proactive measures they take to try to identify and remove these illegal streams incur costs too – it is a real catch 22 situation.

So whilst many football fans may bemoan any potential price rises, it is important to understand the impact these illegal streams have on the the genuine product.  Just like any in-demand or aspirational product, counterfeiters and IP infringers will look to satisfy low (or no) cost demand.  The end product in the case of watching streaming sites is often poor quality, whilst downloading any software associated with these sites brings its own set of dangers. The very fans who abandon their subscriptions because of the cost in favour of illegal streams are actually part of the problem rather than the solution. That is the theory of return on investment.

Willem, it was really something


“The rain falls hard on a humdrum town
this town has dragged you down
oh the rain falls hard on a humdrum town
this town has dragged you down

And everybody’s got to live their life
and God knows I’ve got to live mine
God knows I’ve got to live mine”

There’s not many places more depressing than a Dutch town centre at 10am on a Sunday morning.  That is unless it is also a National Holiday.  The excesses of the previous night’s hi-jinx were slowly wearing off, thanks to the cold rain as we wandered the streets of Eindhoven looking for somewhere, anywhere to get some breakfast.  We’d declined the €17 “all you could eat Continental” offering at the hotel,

Finally, we came up trumps.  The Restaurant De Volder was not only open, but the lovely waitresses were almost begging us to come into the warm, flashing their hot Dutch muffins at us.  We all remember the De Volder, right?  Well, perhaps not the restaurant itself, but its outside tables and chairs made a number of appearances across global media channels in June 2000 when England fans decided to use them to launch at the Dutch fans and police prior to the European Championship game against Portugal.  Dave was tempted to re-create the scene but we pointed out that he simply didn’t have enough Stone Island on to be taken credibly.

I can see a hand up at the back. Yes?  Ah, why were we in Eindhoven on a National Holiday I hear you ask.  Well, pull up a seat and let me explain.  Danny said it was what we had to do.  “Stu, do you know Holland has gone craft beer crazy?”  I assumed he had just discovered that Heineken also made Amstel, but no, he was right.  His book “Which countries have gone craft beer crazy” list The Netherlands as a new entry in the top five, pop-pickers.  So that was it, I was sold.  So too was Kenny Legg, hot-footing it from Berlin and a new addition to our gang, Dave who coming from Manchester, had grown up from a teet-filled with Boddingtons.

Oh, and there was the small matter of some football too.  The original plan involved seeing the holy trinity of Dutch football.  PSV, Ajax and Feyenoord.  But then pesky TV coverage got in the way and we had to make some difficult choices with conflicting priorities.  But there was still going to be beer, so it was all right.

16599055966_cfb0bb8745_zSaturday morning and Danny & I met our advance party, who had arrived 24 hours earlier and taken in the Eindhoven FC game, in a bar obviously.  Nothing unusual about that, nor was drinking 9% beer at 2pm.  Seemed a strange choice from Kenny and Dave.  Then we saw the attraction.  A steady stream of young ladies coming through the doors and making their way to “the back room”.  Our minds were racing, Kenny was already pulling on his “hot fireman’s outfit” (his words, not ours) and grabbing a bottle of baby oil.  Alas, the steamiest thing happening in the room was the teapot in the middle of the table.  Ladies who luck, Dutch style.

Our first destination for the weekend was Sittard, a 45 minute (2 can strategy) train ride away, home of Wim Hof or “Iceman” as he is known as, not because of his cool composure under pressure, or the fact he is a look-a-like from Top Gun.  But because he once walked to within 7km of the summit of Mount Everest wearing a small pair of shorts.  It is also the home of Francine Houben, creator of Mecano.  Sittard is a rocking place I can tell you.  Danny had done his research and our first pre-match warm-up location promised a craft beer list as long as your arm.  For sake of brevity, below is an edited conversation that took place between Danny and said landlord:-

“Do you have any of these beers?” Danny shows a list on his phone

“Yes”

“Which ones?”

“Which ones do you want to try?”

“Well, if I know which ones you have then I can let you have them”

Enter Stuart - “Danny, they have Maximus on draft.  That’s on the list”

“We don’t have any Maximus.  The beer pump is just for display”

Danny, sighing..“Do you have a beer list?”

“No….you really do not understand how craft beer works, do you?”

Enter Kenny with a beer list that was on every table “Can I have four Le Trapp Blonde’s?”

“Yes”

As we speak, world-famous playwright and good friend of this website, Patrick Marber, is writing a script for a play that will be put on at the Domnar Warehouse based on the very scene in Sittard.

16434882400_07987e219f_zA few other craft beers later, all of which were on the beer menu, we headed to the Offermans Joosten Stadion, a significantly better name than its previous identity of the Trendwork Arena.  I may not be selling it very well by saying it is an out-of-town, out of the box, identikit stadium with no soul or character.  The club, having survived numerous financial problems seem rooted in the Eereste Division, the second tier of Dutch football, having been relegated from the top tier in 2002 – the Sheffield Wednesday of the league if you like.  The fans, wrapped up warm on a cold and wet night in the far corner of The Netherlands made their way to the stadium, with hope rather than expectation, of a win against the visitors FC Almere City.

Fortuna Sittard 1 FC Almere City 2 – Offermans Joosten Stadion – Saturday 21st February 2015
The Fortuna Sittard website summed up this game perfectly when they said “Op uiterst onfortuinlijke wijze heeft Fortuna Sittard de thuiswedstrijd tegen Almere City FC verloren.” Or, we were robbed.  An 88th minute winner for the away team was rough justice perhaps, but Fortuna paid the price of not putting their chances away.

16414595207_b709b20dfe_zBeing a Dutch ground, we had to get munted up before we could indulge in some traditional refreshments.  These strange plastic coins almost serve no purpose when you think about it. 2 munts cost €1.  A beer costs 2 munts, therefore why not simply charge €2 for a beer?  Logic?  We didn’t complain though, although the walk to the top of the stand holding four of them, plus a couple of Frikadelle in each pocket was problematic.

The home fans tried to raise the team’s performance but ultimately they fell short (the team not the fans).  Almere took a 24th minute lead when Bode Wine (brother of Red and White) scored from close range. Somewhere in the stadium a few away fans made some noise, but that was drowned out three minutes later when Connech equalised, following up like all good strikers should when a shot hit the post.

Alas, there was (almost) last-minute heartache for the 2,000 fans when Ahannach scored from close range and sent the away coach, Fred Grim into frenzied delight that his name suggests.

Despite it only being 9.30pm, Sittard was officially shut.  The only source of heat was a Dominos pizza.  Saturday night appears to be a non-event in these parts.  Our only option was a train back to Eindhoven.

Of course, Eindhoven delivered in large dollops, with the hedonistic delights of Stratumseind delivering on every level.  We turned our back on the ear-splitting Europop bars, taking solace in the 100+ different beers in the BierProfessor and The Jack.  Heck, we even indulged in the Dutch’s third most popular past time, football being the first, the second being….well, we’ve all seen the window displays in Amsterdam.

So back to the future on Sunday morning in the cafe.  Our original plan for the weekend was PSV at home Saturday, then a trip to see Willem II v Ajax on Sunday lunchtime then Feyenoord on Sunday evening.  The reality was essentially all three ending up playing at the same time.  Logic would have seen us make the 10 minute walk through the city centre to the PSV Stadion, but we don’t do logic so we were heading to Tilburg to watch Ajax play on and off the pitch.

16434816068_621aca3d46_zIf Eindhoven was dead, then Tilburg at midday was in Rigor Mortis.  We knocked up a bar owner, not in THAT way – he was in his mid-fifties and well passed his child-bearing years) before heading down to Koning II Stadion.  Ajax’s fearsome reputation seemed to have been lost on the locals who were happily going about their Sunday afternoon, cycling and eating pancakes. But the closer you got to the stadium, the more the atmosphere built.  In the club bar, with the obligatory Europop playing, fans were discussing the recent revelations about match fixing (well, that’s what it sounded like over a soundtrack of Melissa Tkatz and Franky Gee).  In early 2015, journalists from the publication Volkskrant revealed that Willem II had been involved in games that appeared to have been influenced by an “Asian gambling syndicate” in regard to games against Ajax and Feyenoord, played over five years previous. Not much the current owners, players and officials of the club can do about that now.

Willem II Tilburg 1 Ajax 1 – Koning II Stadion – Sunday 22nd February 2015
This was certainly the hottest ticket in town, with the game sold out.  The sun was shining, the fans were singing and the beer was flowing.  You can’t beat a day out like this.  A draw was a fair result as both teams seemed to struggle to break down each other’s midfield.  Champions Ajax came into the game off the back of a tricky Europa League tie in Poland just three days previous and took the lead in the first half when Milik’s low shot found the corner of the net.

16621235692_d41fdf74cc_zAfter the break Tilburg upped their game and grabbed an equaliser when Messaoud and could well have gone on to win the game.  At full-time there was the usual confrontation between the two sets of fans across two sets of security fences and police but it was all good-natured (as good-natured as it can be in these parts anyway).

Our night, well afternoon really, was young and we headed for the bright light of the city centre (there is only one – Cafe Kandinsky) for a couple of well-earned beers before heading back to Eindhoven. One last tip – if you ever find yourself in Eindhoven, forget the bars in Stratumseind and head to Van Moll for one of the best evenings ever, surrounded by over 50 beers.  Lovely stuff – not my words, but those of Kenny “AITINPOT” Legg.

You see – it’s not always about the football…..

The Lord’s work


14718895028_80db023387_zWith the snow gently falling in South London a few weeks ago and another Rooks game coming under threat I looked around for alternatives. Having been away for the past few weeks I thought it might be a good idea to have my Plan B as sitting in front of TV with a warm cup of tea. Scanning the fixtures I noticed that Real Madrid were playing Real Sociedad at 3pm. That’ll do me I thought but then I couldn’t find any details of the game when scanning through the Sky Sports schedules. The media giant televises a Ronaldo sneeze, and with British interest not only in the form of Gareth Bale but also in David Moyes, now managing the Basques, surely there had to be a mistake?

Alas not. Television companies in England are not allowed to show a live game between 2.45pm and 5.15pm on a Saturday. The ruling dates back over 50 years and was the result of a petition raised by the controversial Burnley chairman at the time, Bob Lord with the Football League. He argued that televised matches on a Saturday afternoon would have a negative effect on the attendances of other football league games that were not being televised and as a result reduce their financial income. Fifty years ago this made sense, but today is it still relevant?

In the last few months Ofcom have become vocal about reviewing the legislation after a complaint by Virgin Media, who feel that the restriction means the bidding process for TV rights is artificially high. The Football Supporters Federation have weighed in, lending their support to keeping the Saturday blackout.

“It’s very important to retain the 3pm window and we’d have major reservations about a further significant increase in televised football,” said Clarke. “A 3pm kick-off on Saturday is part of the tradition of English football.”

Of course this ignores the fact that on most weekends half of the games are played outside the blackout window for television purposes (more when the weekend falls after a European club competition week) yet nobody is objecting to that. Whilst I can see an argument for the blackout for games in England, why should it extend to European competition?

The same rules do not apply in other countries and other sports. The best supported football league in the world is Germany’s Bundesliga with an average attendance of over 43,000, 20% higher than the Premier League yet they show a live Saturday afternoon game. The ability for the broadcasted to choose more games to screen increases the rights, with more flowing down into the lower leagues. Germany’s football league structure is similar to England’s and a comparable ranked league to the Ryman Premier League such as the Regionalliga will still see crowds of up to 1,000 on a Saturday afternoon. BT Sports and Sky Sports also screen live rugby union at 3pm on a Saturday without any complaints despite arguments that it could cannibalize both rugby and football attendances.

You only have to look at the situation over Christmas to see the negligible effect of the ruling. With a relatively full programme on Boxing Day (Friday) and on Sunday 28th December, Sky were able to show live matches between 2pm and 5.30pm despite other games being played at the same time without any impact on attendances. Nobody threw their arms up in the air at the fact they screened Southampton v Chelsea AND Newcastle United v Everton on the 28th December whilst six other Premier League games kicked off at 3pm.

This archaic ruling is the source of controversy around the grey area of pubs and clubs showing live games from overseas broadcasters at 3pm on a Saturday. Technically, they are free to show games as long as they have purchased the equipment and subscription legitimately, but are in breach of the blackout regulations rule if they use it to show a game live at 3pm.

The new TV rights deal for the Premier League will be for 168 games a season, up from the existing 154 matches.  The additional 14 are being created by shifting some games in non-European club competition weeks to a Friday night, which will mean 44% of all of the games in England’s top division will be available to watch live – which by a simple deduction means at the maximum, 56% will be shown at 3pm on a Saturday.  Friday night football was the norm back in the 1980’s when live games first hit our TV screens but the new deal will cause pain to most away fans.  The police will be loathed to allow the high-profile local derbies to be held on a Friday night due to the drain on resources from policing the alcohol-fuelled High Streets of broken Britain, and the TV companies will not want their prestigious games to be shown when people traditionally go out for the night.  But then again,  the Premier League has long held the actual logistics of getting to and from games with as much regard as the Football Association with their legendary scheduling of FA Cup Semi-Final matches so that one set of fans cannot actually get home.

So for now it’s fingers crossed that the snow doesn’t settle and we will have a game to watch. Otherwise I may be forced into a trip to Bluewater – now that’s definitely something that should be banned at 3pm on a Saturday!

Economic Theory explained by Football – Part 10 – The Theory of Just Pricing


Back in 1261 whilst waiting for the medieval equivalent of Super Sunday to start Thomas Aquinas picked up his quill and started to draft the first ever transfer policy for his as-yet unnamed football team. He had studied the way that his local market worked and mused that “no man should sell a thing to another man for more than it’s worth”. In that one statement he tried to explain the collective transfer value of Andy Carroll.

4766163428_f4f73b243f_bAccording to prevailing economic theory, there is no such thing as a rip-off or something being over-priced. The price of anything is simply the market – if someone is prepared to pay then it is a fair, market price AS LONG AS there are alternatives (monopolies such as train companies do not adhere to such a model of course). So if someone wants to pay £25million for a route-one target man with a dodgy knee and an even dodgier ponytail then it is a fair price. Nobody forces a football club to buy any player – they have three choices. Try to negotiate a lower price perhaps throwing in a few players who aren’t good enough for them, spend the cash on something else such as a new fleet of Bentleys for the existing player or go and buy an alternatively crocked player with a bad haircut elsewhere.

The transfer market should establish a fair price for every player as no one has an intrinsic value. So they may have played for their country a hundred times, scored the winner in a World Cup Final, kick with both feet and can head the ball fifty yards – all great characteristics but irrelevant if you are looking for a goalkeeper. Clubs who slap a price tag on a player are trying to create a false economy that will never prevail.

Aquinas suggested the concept of a “just price” – the price the buyer is willing to pay with the right amount of knowledge of the product. So if a club knows Carroll has a dodgy knee/ankle/ponytail, the price they are willing to pay should be different to that without the information. He also saw those people who sold with recognised avarice as evil people – something that could certainly be levelled at the ticket pricing strategy of football today, or dare I say it, football agents.

So there we have a brief explanation as to how a 13th century Italian monk came up with the first, truly fair rules of the transfer market. That ladies and gentlemen, is the theory of just pricing.

Is Figo the man for FIFA?


It is official, Portugal legend Luis Figo is in the running to be the next FIFA president. The 42-year-old will certainly face a battle to unseat the incumbent president Sepp Blatter when his latest term comes to an end in May but he is backed by a number of influential figures in the game and he has the credentials to do the job.

Ordinary Fans

FigoFor us ordinary football fans, the FIFA presidency seems distant and it is hard to get too concerned about an election which seemingly has little to do with our playing or watching experience. Indeed, if the football betting experts at blue sq and other sites are to be believed, it is already a foregone conclusion.

Reputation

As the world governing body, FIFA have had to deal with allegations of scandal after scandal in recent years and have also been alleged to have allowed money to become the dominant consideration. The awarding of the World Cup to Qatar could be viewed as a prime example of where finance has overruled common sense. It also seems that the thoughts of fans, players and coaches have been completely disregarded by those in power in this case.

Pragmatism

Figo, as a seasoned international with experience of having played in two World Cups and three European Championships, would bring pragmatism to the presidency. If not necessarily knowing what fans want and need, he at least knows the views of players. He would not have allowed the World Cup to be degraded in such a way.

Strength of Character

In his first announcements as a presidential candidate, Figo has set the right tone. Unlike others who may have interests inside the organisation already, he recognises that FIFA’s reputation needs rebuilding and recognises that at this stage it is an organisation synonymous with alleged scandal. If Figo is to be successful, he will need to show guts and determination. He will need all of the strength of character that he showed when he left Barcelona for Real Madrid in 2000. As football fans there is little we can do to influence the outcome of the election but, for the future of our game, we must hope desperately that Figo, or a man like him, is able to succeed.