When Jeff Bezos bought the Washington Post (“Democracy Dies in Madness”), financial analysts were puzzled. Newspapers were going through a hard time, with the internet making it harder to monetize their content. Some financial analysts thought Mr. Bezos must have a master plan to make the Post profitable, but I didn’t think so. I didn’t think Mr. Bezos, like other billionaires before him, purchased media outlets for profit; I thought he was buying influence. Over the past decade, we are seeing the same phenom in the world of Association Football.
Influence Through Soccer
Beginning with the purchase of Manchester City Football Club in 2008 by Sheikh Mansour of the United Arab Emirates, the era of irrational spending in football accelerated. This has been spearheaded by two clubs, Manchester City and Paris Saint Germain, that look to spend far above their revenues. The annual losses of both clubs are enormous, with no profit in sight for the foreseeable future. At first this seems irrational—why lose money for a decade and more—but that assumes the primary purpose of those clubs is to make a profit. In truth, both clubs exist to buy influence.
Manchester City acts as an influence platform for the United Arab Emirates, while Paris Saint Germain does so for the State of Qatar. Enormously wealthy from the hydrocarbons beneath their sand, both tiny nations use football clubs as traveling shows for their countries. Thus, spending about 500 million Euros on a player (Neymar da Silva), is not irrational in this context; not when the Emir of Qatar is showing his spending power. This is the equivalent of exuberant spending by a medieval monarchy.
Football with Chinese Characteristics
Perhaps envious of such a clever scheme, the most populous nation on Earth wants in the action. Chinese President Xi Jinping declared football success a national priority in 2015, and since then spending on the Chinese league has exploded. The spending spree has been driven by indirect—and corrupt—financing by the Chinese state. (The Chinese clubs are owned by large corporations that don’t mind losing money on the teams, because the state gives them preferential contracts). As long as President Xi gives the scheme his approval, the Chinese league can continue to attract some of the best players in the World with outrageous salaries.
As long as it gets China in the news in a positive way, the Chinese leadership won’t mind the financial loses. They are buying influence abroad and providing entertainment at home. If the Chinese League ever becomes self-sufficient and influential, the Politburo will be happy, no doubt. But that’s not why they subsidize football today.
Lessons
The increase spending in Football teaches us to avoid assuming the profit motive when old-fashioned pageantry better fits the case. The rulers of the United Arab Emirates, Qatar, and China look to improve their hold on power, not to increase profits for its own sake. An Emir killed by an enraged mob is still as dead, and if buying a football club increase his chances of survival a billion dollars or two won’t matter to him. When it comes to human motives, profit is not the all.
