Major Soccer Leagues Destroy the Economy
By Ally Samuel
One of the most popular European soccer clubs, Real Madrid, is in tremendous amounts of debt and causing increasing possibilities of a complete economic collapse among all of the European soccer clubs. Each year, soccer clubs offer players ridiculously large amounts of money solely to claim them on their team and to make more money for their club. The most well-known soccer players that we know today make hundreds of thousands of dollars per week, which is one of the main reasons why the entire European soccer community may be at risk of falling under a never-ending pool of debt along with a destroyed economy.
The main ways that soccer clubs make their money is through three different sources -- television rights, ticket sales, and commercial income. The English Premiership is one of the top broadcasters of European soccer, and it ensures that even the worst teams in the league still get millions of dollars per year, and then gives the top teams even more. Clubs with bigger stadiums also make more money than the smaller ones, so the more fans that come to the games allows for more income for the club. Selling merchandise -- shirts, scarves, flags, etc. -- seem to be the simplest, easiest, and most common way to make money for clubs. 
Either way, the soccer clubs have numerous ways to increase revenue, but it never seems to be enough.
Real Madrid made some of their top record amounts of money spent on trades in 2009 on Kaka for $86 million and Cristiano Ronaldo for $123 million. In order to pay for these two players as well as a couple of others, the club had to sell their downtown training complex to the city of Madrid for $445 million. With spending so much money on one or two players, the soccer clubs have given up opportunity costs to spend that money on maybe four or five equally distributed players instead of just one or two amazing players that are over-priced. The people who manage those soccer clubs must believe that the benefits of having the players in the long run will outweigh the costs, which I find hard to believe. The video linked here shows us just a glimpse of one example of what all goes into the process of trading players, as well as how much money is spent on certain players.
This debt never seems to stop the clubs from giving out more money though. I’ve always wondered where the large amounts of money came from, and now that I know, I think that the whole trading and selling players situation is nonsense. While many of the soccer-junkie boys here at Pewaukee High School would disagree with me, I strongly believe that there is no reason to be getting in half-billion dollars of debt to buy a few players off of another team when the money could be spent on much more useful things. During the majority of the time, these clubs don’t have the money ready to be handled that they are offering many of these players but they commit to it anyways, which pushes their level of debt up that much higher. The players on the teams have gotten so greedy to the point where they don’t care about the economy, they only care about their income. Members of communities always wonder why their countries are in debt; maybe soccer clubs like these, and even the ones in the United States, are a big source of causing the country’s debt.
Works Cited
Karon, Tony. "Soccer's Billion-Dollar Players." Time. Time Inc., 3 Aug. 2008. Web. 9 Sept. 2014. <http://content.time.com/time/world/article/0,8599,1828967,00.html>.
"Real Madrid toys and merchandise - World of Sport ApS." World of Sport ApS. N.p., n.d. Web. 9 Sept. 2014. <http://worldofsport.biz/portfolio-view/real-madrid-toys-and-merchandise/>.
"Vizari Club Series Real Madrid Mini Soccer Ball - model 91684." -.... N.p., n.d. Web. 9 Sept. 2014. <http://www.soccergarage.com/Vizari-Club-Series-Real-Madrid-Mini-Soccer-Ball-model-91684.html>.
|, Leander. "Rolling out of control." ESPN. ESPN Internet Ventures, 22 Sept. 2010. Web. 9 Sept. 2014. <http://espn.go.com/sports/soccer/news/_/id/5580467/european-football-eating-itself>.
Ally, I completely agree with you. The ridiculous amount of money spent on athletes of not only soccer leagues but all professional sports leagues is insane. These teams are not making enough revenue to spend what they are on these top athletes. My idea behind solving this issue would be to make some type of total money cap that can be given to the these athletes. Therefore the team could spread this money out however they would like between their players but cannot spend more than that certain cap. I know the athletes would not appreciate this, but I think this distribution cap should depend on sport and teams income. Therefore the team cannot cannot spend more than what they have and cannot cause the country as a whole to many issues. The ridiculous amount of money spent on these athletes needs to come to a stop for the sake of the nations economies.
ReplyDeleteHello Ally. I would consider myself to be one of those “soccer-junkie boys” you referred to and I would like to elaborate and share my opinion on a few of your points. First of all, I would agree with you statement that these large clubs should not be going so far into debt. It should be noted that FIFA, the governing body of professional soccer, has implemented Financial Fair Play rules which limit these insane purchase fees. I will disagree with you on your point that these clubs do not deserve the money they receive. Fans willingly pay to go to games, to buy merchandise, and overall just support their club and so the clubs deserve to reap these profits. You also have to understand that the love for the game of soccer in these European countries far eclipses anything Americans have, in terms of sports. I do, however, agree with you that these large clubs manage their money very poorly at times, when it comes to buying world class players. Recently, Manchester United, the most successful club in Premiership history, played a lower-league side, MK Dons. One of Manchester United’s forwards, Wayne Rooney, is paid roughly 300,000 pounds per week, which equates to about $486,000. Conversely, MK Dons paid less than this to pay the transfer fees of their entire team. The funny thing is, MK Dons won the match 4-0. So, no, I do not think that these clubs are undeserving of their money, but they do need to learn to manage it better.
ReplyDeleteI completely agree on how large amounts of money are being spent on players, when a good majority of that money could be used to be helping out throughout the country. Later on, these people are going to have enough money, and not know what to spend it on, so they will be spending it on useless items. These teams should not spend more than what they already have, because it's going to make them struggle as a whole more than reducing the amount of how much the players are being paid. With these athletes making large amounts of money, how much of that money is being spent for the good, like donating it somewhere that needs it, instead of spending it on huge houses. So it is out of the question that they are spending more than what they have, to keep players, and hurt the country, or the company more. These teams are giving up what helps them, to keep the teams and the players going. Yes, they may get a lot of revenue from fans and merchandise, but does it benefit the economy and company as a whole, or does it just benefit the players? It's more of a benefit to the players than anything.
ReplyDeleteAlly, I absolutely agree with you 100%. I've always felt like that professional players, no matter what sport is, get payed a ridiculous amount of money that in all honesty, they don't even need. I also agree with Macauley in making some kind of money cap for all professional players. There should some type of revenue where they have to give back to the economy in some way. The amount of money they get is an incredible amount that they would still be able to have a ridiculous amount left after doing something for the economy. After all, the love they have for the sport should ultimately be enough, there is no need for the ridiculous amount of money they get paid.
ReplyDeleteThis is definitely a very realistic concern, and I think you are dead on when you say that these players really just aren't worth it. Sometimes I feel like these clubs are just paying for the name even more than they are for the actual player, and the publicity that this name brings to their team. However, if they are spending more money on these players than that publicity can return them, it seems like a stupid idea to continue to invest in something so short-sighted. However, I also feel like there is the issue of club pride here, and the people that run the clubs aren't terribly concerned about the debt that they are racking up because they value the reputation of their club as the one that has _______ (insert player name). In the end, though, I agree completely with you, I think that this action is definitely selfish, both on the parts of the players and the club board members.
ReplyDeleteEverything you said in your entry I agree with! The insane amounts of money that are spent on all these athletes is absolutely crazy, and almost unnecessary. Money has completely changed the game, because now these athletes are playing for their pay check, not the love they have for the game. Although money is an important part of one's life, you have to think about the effect that it may have in the long run. For example, one thing that really surprised me was when you talked about how Real Madrid had to sell their training complex in order to obtain Kaka and Cristiano Ronaldo. The fact that this team would go through all the effort just to have two players on their team is quite insane. Yes, they will benefit them now, but when these players retire, they have to pay the cost of not having a downtown training complex. Which is why I completely agree with what Macauley said about having a total money cap, this way teams can’t spend more than they have, limiting them from falling into deep debt. Overall, decisions need to made towards these issues, before it’s too late, so that economies aren’t permanently being damaged. Great job with this post Ally!
ReplyDeleteAlly, I have to admit that until this moment I did not think that one of the most popular European clubs could be in so much debt. However, now that I am taking into account all of the expenses that these clubs make in order to keep some of their world renowned players, there’s no doubt that they are just drowning themselves in more and more debt. In fact, Real Madrid has recently spent 108 million dollars on World-Cup superstar, James Rodriguez, and from an outside perspective it seems as though all Real Madrid is doing is just adding on to their $457 million debt. As a result there is a lot speculation in whether Real Madrid’s decision to transfer James Rodrigues was a mistake or not. At first glance, this decision seems like a terrible one; however, there is a twist to the story. Considering that Real Madrid is one of the most famous clubs in Europe, this also makes it a brand. It makes sense that this club wants to bring in the most popular players of the moment in order to get more publicity, but most importantly, more fans. More fans means more ticket purchases and merchandise purchases, etc, etc. And although I definitely agree that Real Madrid needs to manage their money more wisely, maybe paying for these hot soccer stars is just one of their strategies to increase their revenue and pay their debt.
ReplyDeleteThis was a very interesting topic to read about because I did not have much knowledge on how much it costed to keep players or trade them to different teams. As someone who loves soccer just as much as the next person, I would agree with you that the economic cost outweighs the benefits; no player is worth $123 million dollars. While these players may draw in more fans, therefore more income from jerseys, tickets, etc. I highly doubt that this income makes up for the debt the teams are now in because of their desire to get the best players in the league. Overall it is an economically poor decision to try and keep or receive higher ranking players because it results in serious debt, not only for these teams, but for the economy of the country as a whole.
ReplyDeleteI never really thought of all the money that is spent on these athletes and now that I see how much they have spent on them, I definitely have to agree with you on everything you have said and thought about it! I also did not know that these European clubs are in so much debt. All these players just want to get their paychecks and play for the money because they are making a lot where Madrid had to even sell their training complex downtown which I was really in shock too because they are giving up a training complex just to keep these two players on their team so they are paying them so much.
ReplyDeleteHi Ally. I completely agree you with 100%. I have always thought that any professional player, no matter the sport, always get paid a ridiculous amount of money. I agree with Lauren in that making a ridiculous amount only leads to spending that money on useless items. Teams shouldn't spend so much money on one person , especially if it puts them in debt. A team is a company and therefore needs to make money in order to continue to stay alive. Teams need to stop spending so much and if the players truly love the sport, they would be ok with smaller pay check.
ReplyDeleteThough you make a compelling case that too much money is spent on too few players, I would have to disagree. The revenue generated for Real Madrid in acquiring players like Ronaldo much exceeds the cost of the acquisition. For example, in less than one year after his transfer, over 1.2 million Real Madrid Ronaldo shirts and/or jerseys were sold. This amount, which if constant over the length of his contract, is on pace to more than offset his transfer fee. And that is without taking into account money or prestige that he brings to the team on the field. Therefore, the soccer teams are not pushing themselves into debt buy purchasing the high prestige players; they are instead pushing themselves out.
ReplyDeleteStatistic found at: http://metro.co.uk/2010/04/15/cristiano-ronaldo-shirt-sales-have-already-paid-off-80m-fee-to-manchester-united-real-madrid-claim-242129/
Ally, everything here that you said I 100% agree with! It is absolutely crazy the amount of money that the soccer clubs spend on trading players, when all that money could go towards something more beneficial for the team. Until now, I really had no idea how professional soccer clubs earned their money and were able to afford to pay their players. Now that I know why the Real Madrid soccer club is in debt, I believe that they should rethink how they spend their money and the opportunity costs it has.
ReplyDeleteIf the marginal costs of spending an equal amount of money on two or three excellent players versus on five or six mediocre players is equal, would it not rely only on the marginal benefits then for analysis of the better decision? If, as you say, merchandise is the most common and easiest to collect revenue, wouldn’t merchandise items, such as jerseys, of excellent players such as Christiano Ronaldo and Kaka make a substantially more amount of money than those of mediocre soccer players? I feel that few fans would spend triple-figure dollars to purchase the jersey of an ordinary player, but nearly any fervent soccer fan would go out of his or her way to go purchase a Christiano Ronaldo jersey. Therefore, managers of these soccer teams might be looking solely for the largest profit margins when making these decisions. Nevertheless, you have brought up several interesting points about the economic decision-making of soccer teams, and it proves to create lasting effects on economies in the cities as well.
ReplyDeleteThis is a very interesting piece. This situation reminded me of the movie Moneyball were Brad Pitt and Jonah Hill used economics and statistics to find the most efficient players without breaking the bank. I believe that if the soccer teams can produce that much money that if they want to can play the players but if the team cannot afford it they should do as the Moneyball people did. By the way you did a super fantabulous amazing super cool job.
ReplyDeleteHola Ally! being one of those "Soccer-junkies" I would have to kindly disagree with most everything you stated in your article. Seeing that you looked into this whole situation with short sight I would like to broaden that line of vision. When you stated that the club sold their athletic complex for "X" amount of dollars to help with the debt they were now in due to the players they have acquired, you seemed to of left out the large amount of revenue that both of those players bring in through that so called "Only way they can make money" comment. Not having taken personal offense to the bashing of a historical past time, I would like to leave you with one last thing. If the income of the entire club is accumulated through ticket price, commercial products, and television rights, where does soccer fit in? If a bulk sum of money is given to a player such as Christiano who in turn makes that full amount back and then an additional profit due to his ability to produce (Bring fans, Win tournaments, Win Championships.. etc.) then yes it is quite reasonable to make a large investment in which your money could be flipped ten fold.
ReplyDeleteAlly I enjoyed reading about your view on professional soccer and the impacts it has economically, however I would have to disagree. Although clubs go into debt by getting some of the top payed players in the world, they also make a lot more revenue because of them, and the fan base of their team increases greatly due to the one big name that everybody knows. I do believe that the debt is just an opportunity cost, and that the benefits of having Ronaldo or Kaka would highly outweigh them in the long run, bringing in a ridiculous amount of profit as the fan base widens. Although I see your point, and agree that they should not get themselves in as deeply as they do, I also see their point, and agree that those players are worth more to the program than they cost.
ReplyDeleteAlly, I absolutely agree with you 100%. I've always felt like that professional players, no matter what sport is, get payed a ridiculous amount of money that in all honesty, they don't even need. I also agree with Macauley in making some kind of money cap for all professional players. There should some type of revenue where they have to give back to the economy in some way. The amount of money they get is an incredible amount that they would still be able to have a ridiculous amount left after doing something for the economy. After all, the love they have for the sport should ultimately be enough, there is no need for the ridiculous amount of money they get paid.
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