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European Soccer: The Last Bastion of Free-Market Capitalism?

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European Soccer: The Last Bastion of Free-Market Capitalism?
(Photo by Vittorio Zunino Celotto/Getty Images)

“A distinction should be made that [American] football is democratic capitalism, whereas soccer is a European socialist [sport].”

—Jack Kemp


With all due respect to former Senator Kemp—who is currently fighting a battle with cancer—his is not the only voice to echo such thoughts.  I could have easily have posted similar quotes from Rush Limbaugh or Curtis Silva.

It is fashionable among conservative circles to bash soccer as a socialist sport, because after all it is "European" and we all know those Europeans are nothing more than a bunch of big fat socialists.

Socialist, the words itself, has always seemed to be a buzz word for the American right, few of whom realize what it actually means.

However, as conservative as we might think, we are as a nation or in terms of our economic policies, there is one place where true capitalism reigns supreme.

Top flight professional European soccer.

Not only is European soccer played at the highest levels as capitalistic, but American professional sports, and in particular the Holy Grail of all that is truly American, the National Football league is in fact...

...socialism.

Oh No! Not, El-Rush-Beau's favorite sport. The opiate of the masses every Sunday in the fall is one of the world's biggest socialist enterprises.

Look at professional sports, each team is in fact a business who exists to make money for their owners.

Capitalist theory tells us that the teams who make money do so by being successful, by investing in capital expenditures (in this case players), because it is human nature that people love winners. Winners sell tickets, beer, concessions and merchandise, which put money in their team's coffers.

If professional sports teams are businesses, then the leagues they are a part of are the governing bodies (or the government if you will), whose job it to regulate the commerce within the league?  In this case the National Football League and English Premier League in fact act as a government.

How then is the NFL socialist and the major European soccer leagues capitalist?

There are four major factors that account for this paradox (with thanks to University of Houston business professor Sergei Boukhonine).

 

1. Salary Caps and Free Trade

"Most economic fallacies derive from the tendency to assume that there is a fixed pie, that one party can gain only at the expense of another."

-Milton Friedman

For the past 15 years the NFL has restricted free markets by engaging in a salary cap, which is the antithesis of free market economics.

In a free market, the market that decides worth through supply and demand.

For example if the market bears that an employee or capital expenditure (depending on how you want to view a player) is worth a certain amount then a business will pay that to acquire that player's services.

Except in the NFL, where teams can only spend a set amount on players thus meaning the governing body not the market decides the worth of a player.  This because teams can only spent a set amount on player salaries.

Even more socialistic is the reasoning behind salary caps, it makes the sport more competitive. In other words, "It's not fair that all the rich teams get the best players."

European soccer has no such restrictions and the free market reigns supreme. If Manchester United wants to pay one million Euros’s a week (1.3 million) for Cristiano Ronaldo, so be it.

Sure many soccer fans in England complained when Russian oil billionaire, Roman Abramovich, "bought his titles" at Chelsea, but nobody in the EPL ever asked for the rules of commerce in English soccer to be changed.

Why not you might ask? Free trade or in soccer terms, transfer fees.

If Chelsea "bought" their championships through acquiring players from other clubs, which means someone profited from Abramovich's spending.

Why are the "lesser clubs" in England (even in the Premiership) don't complain about the big club's spending? Because they are making money.

In the NFL you would never see the Vikings sell Adrian Peterson to the Giants for $25 million, however earlier this season Manchester City paid nearly $40 million for Robhino.

The NFL tightly controls the movement of players through trade restrictions (often based on the salary cap) and free agency. 

However, in European soccer employees may be bought and sold (and well compensated as well) almost at will.

 

2. Revenue Sharing

"From each according to his ability, to each according to his need."

-Karl Marx

Marx made this statement in 1875; however, it could have just as easily been made by any NFL executive.

One of the things that former NFL Commissioner, Pete Rozelle, did that was so "revolutionary" was to pool all of the revenue made by every team and divide it equally with no bias.

This is why the Detroit Lions, Cincinnati Bengals, and until last season Arizona Cardinals were so dreadfully bad for so long. They didn't have to be successful in order to succeed.

Financially speaking, the winless Detroit Lions received as much gross revenue for the 2008 season as the Super Bowl Champion Steelers.

This should be even more despicable any believer of free markets. The Steelers have been, both financially and competitively, one of the NFL's best franchises over the past four decades, while the Detroit Lion's have been the NFL's worst.

Rozelle's theory behind revenue sharing wasn't only that every team should profit but also that revenue sharing promoted parity, meaning that if every team has the same amount of money then every team can afford good players.

The parity theory believes, if one or two teams dominate every year, it's bad for the league. The good of the league over the good of the individual owner, that is just about the definition of not only Socialism but...Communism.

If professional sports are indeed an industry (and they most certainly are) then name another industry that operates in America, where competitors are made to pool their revenues and each company is guaranteed an equal share?

For years Toyota, Nissan, and Honda have been building and selling cars in the U.S that people want to buy, while Detroit's "big three" have been struggling in the marketplace.

Does anyone honestly think the U.S Department of Commerce should force the Japanese auto makers to "share revenues" with competitors just so the big three can compete in the market?

No! BUT the NFL does, and by any name, it's socialistic.

Aside from T.V revenue negotiated by the leagues themselves, European soccer has no such revenue sharing.

For example, in the NFL, if you buy a Ben Roethlisberger jersey for $100, the NFL might make $32 in licensing fees with $1 going to the Steelers but that same amount also goes to the Bengals as well.

On the other hand if you buy a Wayne Rooney jersey for $75, Manchester United pockets all of the $32 in licensing fees.

If a team plays in the prestigious UEFA European Champions League, then that's an extra $2-to-10 million dollar (U.S) payout, based on how far the team advances, that is pocketed solely by the team as a reward, for their excellence that season.

There is nothing more capitalistic than that.

 

3. Player Drafts

"Money demands that you sell, not your weakness to men's stupidity, but your talent to their reason."

-Ayn Rand

Player drafts are nothing more than a means of equalizing outcomes by allowing underperforming teams to acquire resources at below market value.

In layman's terms, if your favorite NFL team sucks, they can pick a good college player, who might make a great pro, and for at least three years have his salary locked in because no other team can hire him away on the free market.

Take for example the aforementioned Adrian Peterson, the best running back in the NFL.

Just because the Minnesota Vikings were terrible in 2006, they gained the right to a high draft pick. They chose Peterson and signed him to a deal making around $8 million a year.

Not only that but because Peterson is not yet a free agent, he cannot get more than that $8 million price tag (unless the Vikings choose to give him a raise), even if his value on the free market might be closer to $15 million.

Peterson in worth the football free agency, however because of the draft and free agency rules, the Vikings will get his rights for three years at below market value.

For the most part in all American professional sports (even MLS) this is how teams acquire young players.  Rewarding failure and punishing success.

In Europe on the other hand young players are acquired two ways. They are either developed by "youth systems" or are bought from other teams.

For example, England's brightest young star, Theo Walcott, entered the training program at Championship club Southampton at age 14, broke into the senior team at 16, and at 17 was sold to London glamour club, Arsenal.

This produced a win-win situation. Southampton got a much needed payment of around $12 million dollars and Arsenal got the next great star.

In both cases, hard work was rewarded. Southampton identified a top young player.  Southampton developed him effectively then sold his rights at a profit to a team with money from past successes.

 

4. Relegation and the Champions League

"Money was never a big motivation for me, except as a way to keep score. The real excitement is playing the game."

-Donald Trump

Any conservative scholar or media mouthpiece will tell you that life in life there are winners and there are losers.

In our capitalist system, some people end up being doctors living in a mansion and driving a BMW, and others are on welfare living in a trailer park.

The lover of capitalism will tell you, that system of economics rewards success and punishes failure. If you have a talent, you can market this society. You get paid if you win and don't lose.

This is the reality of life in America, except in professional sports.

In professional sports, if you lose there is no penalty. The next season you are right 0-0, forgiven of past mistakes and given a bailout by the league.

The Bengals have been bad since Tim Krumrie snapped his leg in Super Bowl XXIII and the Lions haven't won a conference championship in half a century, yet any punishment.

In the NFL, NHL, NBA, and Major League Baseball you can be bad for seemingly ever and regardless, even if you're the L.A Clippers, Chicago Blackhawks, or Kansas City Royals. In fact, you will actually get rewarded with a high draft pick and revenue sharing for failure.

However, in that socialistic bastion of Europe, in the "socialist sport" or soccer, if you finish at the bottom of the top division, you actually are punished.

The concept of relegation is foreign to Americans, but in England if you finish in spots 18-through-20 in the 20 team Premier League you will find yourself in English soccer's equivalent of AAA baseball, and three teams from the second division will be in the Premiership the following year.

Imagine if you will the Cincinnati Reds, the oldest team in Major League Baseball. You finished last in the N.L Central and found them replaced by the Louisville Bats or Scranton-Wilks Barre Yankees.

European soccer rewards success and punishes failure through relegation, while American sports reward failure and aside from a trophy and bragging rights, winners see no other rewards.

Aside from a fraction-like bonus players receive, the Steelers gained no additional money for winning the Super Bowl, and nor did the Celtics, the Phillies, or the Red Wings for winning their respective championships.

Europe has own version of the Super Bowl is called the UEFA Champions League.  A yearlong competition where the top teams in Europe compete as a reward for a successful season in their previous year’s domestic league.

The Champions League is a big deal and to put it into perspective, this year around 100 million people watched Super Bowl XLIII.  This is half of the number of fans who watched the Champions League Final between Manchester United and Chelsea. This is a conservative number.

For winning the English Premier League last season, Manchester United took home over $33 million U.S. and another $10 million for winning the UEFA Champions League.

This is money straight to Manchester United not to be shared with anybody; even the three other English teams who didn't win the Champions League took home a minimum of $3.6 million U.S.

 

The general perception of soccer as socialistic seems to now be based solely in bias and pseudo-xenophobia because in terms of pure socialism as represented in sports Americans need to look no further than their own beloved sports.

 

 

 

 

 

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