Soccernomics. Simon Kuper

7,000,000 8,800,000 Walcott 12,000,000 9,240,000 Nasri 12,800,000 14,080,000 Arshavin 15,000,000 14,520,000

      There are clearly some big differences here. No wonder, as transfer fees are almost never officially disclosed, only leaked to the media by the club or the player’s agent, generally with a spin. Nonetheless, and given these caveats, the Pay as You Play index does quite well at explaining the variation in team performance in the Premier League for the years covered.

      That’s hardly surprising. A club that spends a big transfer fee buying a player will almost always also spend a big sum on his wages. So in this sense, in the very short term, transfer fees can be almost as good an explanation of success as wages. However, real success in the transfer market means buying cheap and selling dear. For that you need to know a club’s net spending, which shows very little correlation with team performance. The transfer market remains far from efficient.

       THE WORST BUSINESS IN THE WORLD: WHY FOOTBALL CLUBS HAVEN’T MADE MONEY

      A man we know once tried to do business with a revered institution of English football. ‘I can do business with stupid people,’ he said afterwards, ‘and I can do business with crooks. But I can’t do business with stupid people who want to be crooks.’

      It was a decent summary of the football business, if you can call football a business. People often do. William McGregor, the Scottish draper who founded the English Football League in 1888, was probably the first person to describe football as ‘big business’, but the phrase has since become one of the game’s great clichés. In fact, McGregor was wrong. For almost all the game’s history, football was neither big business nor good business. It arguably wasn’t even business at all. But that may now be changing. For the first time ever, the world’s biggest clubs are starting to turn into decent-sized and reasonably well-run businesses.

      ‘BIG BUSINESS’

      Few people have heard of a British company called BBA Aviation. It started out in 1879 making conveyor belts in Dundee, but over time it morphed into a supplier to the aeroplane industry. Mostly it now helps fuel, clean, repair and maintain planes. This is pretty unglamorous work, and BBA is an unglamorous company. It’s in the FTSE 250, meaning that it ranks as one of the 250 biggest companies on the London stock market. In 2016 it had revenues of £1.59 billion, and operating profits of £123 million. But BBA, whose headquarters are on a quiet street in Mayfair, is not big business. For comparison: in 2016 the biggest company on the London market, Royal Dutch Shell, had revenues that were 106 times larger.

      But compared with any football club, BBA is a behemoth. Manchester United’s revenues in 2015/2016 were £581.2 million. That’s a tidy sum, the highest any English club has ever achieved. However, it’s just over a third of BBA’s revenues, and 0.3 per cent of Shell’s. To put it very starkly: in terms of revenue, Manchester United would still only be the 74th largest company in Finland. (Just ahead of them on the Finnish list is something called Raha-automaattiyhdistys.)

      Because hardly any clubs are quoted on the stock market anymore, it is hard to work out their value. But we can certainly say that not even Real Madrid or Barcelona would get anywhere near the S&P 500.

      And if we ranked clubs by their profits, the results would be embarrassing. Most clubs make losses or meagre profits, and fail to pay any dividends to their shareholders. They are chasing glory, not riches.

      Whichever way you measure it, no football club is a big business. Even the world’s biggest clubs are dwarfed by BBA. As for all the rest, the author Alex Fynn noted in the 1990s that the average English Premier League club had about the same revenue as a British supermarket – not a chain of supermarkets, but one single large Tesco store. True, Premier League clubs have grown a lot since then. However, Fynn’s comparison still remains relevant. UEFA’s Club Licensing Benchmarking Report for the financial year 2016 stated that there were 48 clubs in Europe that had annual revenues above €100 million. Well, Tesco’s 45 superstores in the UK have average annual sales of around the €100 million mark. Europe’s ten biggest clubs probably have about the same revenues as the world’s ten largest hypermarkets, but below that clubs are typically much smaller than supermarkets.

      A good way to visualize the size of the football industry is to visit the headquarters of UEFA, the European football association, in the Swiss town of Nyon. The building has a lovely view of Lake Geneva, but it looks like the offices of a small insurance company. Football is small business.

      This feels like a contradiction. We all know that football is huge. Some of the most famous people on earth are footballers, and the most watched television programme in history is generally the most recent World Cup final. Nonetheless, football clubs are puny businesses. This is partly a problem of what economists call appropriability: so far football clubs haven’t been able to make money out of (haven’t appropriated) more than a tiny share of our love of football.

      It may be that season tickets are expensive and replica shirts overpriced, but buying these things once a year represents the extravagant extreme of football fanaticism. Most football is watched not from £1,500 seats in the stadium but on TV – sometimes at the price of a subscription, often at the price of watching a few commercials, or for the price of a couple of beers in a bar. Compare the cost of watching a game in a bar with the cost of eating out or watching a movie, let alone going on vacation.

      Worse still, football generates little income from reruns of matches. And watching football (even on TV) is only a tiny part of the fan’s engagement with the game. There are internet sites to be trawled and a growing array of video games to keep up with. Then there is the football banter that passes time at the dinner table, the bus stop and above all on social media. All this entertainment is made possible by football clubs, but they cannot appropriate a penny of the value we attach to it. Chelsea cannot charge us for talking or reading or thinking about Chelsea. As the former Dutch international Demy de Zeeuw said, ‘There are complaints that we [players] earn too much, but the whole world earns money from your success as a player: newspapers, television, companies.’ In fact, the world earns more from football than the football industry itself does.

      BAD BUSINESS

      Football is not merely a small business. It has also historically been a bad one. Until very recently, and to some degree still today, anyone who spent any time inside football soon discovered that just as oil was part of the oil business, stupidity was part of the football business.

      This became obvious when people in football encountered people in other industries. Generally the football people got exploited because people in other industries understood business better. In 1997 Peter Kenyon, then chief executive of the sportswear company Umbro, invited a few guests to watch a European game at Chelsea, the club he would end up running a few years later. After the game, Kenyon took his guests out for dinner. Over curry he reminisced about how the sportswear industry used to treat football clubs. Before the 1980s, he said, big English clubs paid companies like Umbro to supply their clothing. It was obviously great advertising for the gear makers to have some of England’s best players running around in their clothes, but the clubs had not yet figured that out. And so sportswear companies used to get paid to advertise themselves.

      In fact, when England hosted the World Cup in 1966, it hoped merely that its usual supplier would give it a discount on shoes and shirts, ‘particularly in the opening ceremony … with the Queen present,’ writes Mihir Bose in The Spirit of the Game. As it happened, the English did even better: Umbro offered to supply