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Sports Economy

1 June 2012

Sports Economy, is a « fair » model possible?

After the amazing positive response from readers on my first blog post, I wanted to write an article about some of my nice trips inside Thailand, but just while I was uploading a picture of me jumping in a circle of fire I have been told that my blog should be informative and less personal so let’s try to make people learn something! I am a student finishing his master degrees in marketing and economics, and even if it might seem boring those concepts can prove themself to be interesting as well.
Being entertaining and informative at the same time is really a big challenge. So I needed to brainstorm about it. Two solutions:

-Choosing an entertaining subject and dealing with it traditionally

-Choosing a traditional subject and treating it in an entertaining way.
For this post I will go on with the first option and in order to insure myself success, I am going with a classic: Sports!

(I promise that my next blog will be much more gender neutral!)

The economy of sport is a subject that everyone came across in life, whether it is your wife telling you “I don’t understand how they can win that much money by running behind a ball”, or you hoping that the team you support will spend the right amount of money for your favorite player. So even if you have no interest in this subject you might be facing a situation on which you will be talking about.

So, as I am a nice guy I will bring you some interesting stuff to bring out in this subject and you will be able to shine even if you do not know anything about sports!

Since 2007 Michel Platini (a former French football legend) is the president of the FIFA, which is organizing all the major football events in the world, and which decides the rule changes for every professional competition, and one of his main desire is to install a “Financial Fair Play”. Driven by the conviction that “small teams” should be equal to big ones he wants to install a new way of thinking which will put an end to clubs like Real Madrid spending hundreds of million euros on players while they are have around 400 million in debts.

Teams playing in big markets are claiming that this is impossible to accept and that will lead to the annihilation of what we know as modern football.  And every “star” player is refusing this option that will lead to lower salaries.

As I am from Europe, I can tell that one of the things European people LOVE to do is to brag about how they are much better than the evil capitalist from United States, but even if it can be surprising, the major sports league in the US are much better at dealing with such “inequality” issues than European football/rugby/basketball teams, because in order to not be bothered by those kind of problems, they managed to introduce a system that is leading to competitions where everyone can win. This is called the “salary cap” and the idea is simple, every team is allowed to spend the exact same amount of money to build their team, can you imagine a premier league where Manchester or Chelsea would have the same amount of money as “Wolverhampton” or “Middlesbrough”, wouldn’t it be much better to have equality between teams rather than going to the stadium hoping that your team will maybe be able to loose by less than 3 goals?

Of course this system is nearly impossible to adapt to Europe where teams are playing for different leagues … But when the “financial fair play” was announced, some of the most important teams talked about the creation of a “super league” where all the biggest clubs would leave the FIFA and create their own structure and adopt the salary cap system.

This might be a utopia for now but it might happen some day, and when it will, you will be able to say “I told you it would happen!”

Sportfully yours,

Benjamin Digne

Marketing Assistant

bendigne@broadgatefinancial.com