6+5: the economics

FIFA president Sepp Blatter, and British MPs, want to limit the number of foreign players to five: the so-called 6+5 rule. A new paper discusses the economics of this. Such a rule, it says, would have three effects:
1. It would increase the wages of domestic players. This is trivial; demand for them would rise.
2. It would raise the profits of all clubs. This is because an unlimited market in foreign players causes an “arms race”; if Manyoo spend heavily on foreign players, their rivals must also do so. The result is that profits are eaten up by big transfer fees. Limiting foreign players stops this arms race.
3. It would improve competition. This follows from the premise that the limit on foreign players is more binding upon the bigger teams than the smaller. Stoke or West Brom can‘t buy top-quality foreign players anyway, so restricting the ability to do so hurts them less than it does the bigger teams.
All of which raises the question: who would lose? One set of losers would be good-but-not-great players from countries with poor domestic leagues. These would lose the opportunity to earn big money overseas. Another set of losers would be the better teams with many foreigners, as some of these leave to be replaced by less-good English equivalents. The losses would be especially great for the teams with limited budgets, as they would be less able to buy English replacements of a tolerable quality.
It goes without saying that freedom would also be a loser  - hence European Commission’s hostility to the proposed rule.
. But so too might justice. Do we really want a rule that improves the job prospects of Joey Barton, but worsens those of Kolo Toure?

Comments

[RobW]

This is a stupid idea. It's based on the premise of improving the English Football team. But I've come to the conclusion that the FA is so corrupt that the English football team will always be sh*t apart from the odd moment when they get their act together 1966, 1990 and 1996.

So I'd rather they didn't ruin the Premiership.

[CharliemcMenamin]

"One set of losers would be good-but-not-great players from countries with poor domestic leagues. These would lose the opportunity to earn big money overseas."

Aka the let's-really-stick-it-to-Robbie-Savage-'cos-no-one-likes-him-anyway' clause.

[Kit]

1. Wages up
2. Profits up
3. Improved competition

Hmmm.

[Morten]

I think you are mistaken, possibly on all three counts.

I think the quality of the top teams will go down. Both absolute (obviously), and relative to their European competitors. Where are the top four gonna find 40 to 50 great English players? Ask Capello how tough it is to find even 20.

This will reduce turnover. A lot. Forget about three CL semifinalist. One would be an achievement.

Also, foreign willingness to pay to watch PL games will go down because of quality and as foreigners will be more rare.

So
1. Increased demand for domestic players will increase wages, but reduced turnover of top clubs will pull down wages. Not obvious what will dominate
2. No chance! Reduced international success and interest will REDUCE profits.
3. Probably the opposite will happen. Now Stoke and West Brom won't be able to buy 'top' English talent either. So, instead of competing for first rate English and second rate foreign talent, they will have to settle for second and third rate English talent.

[Luis Enrique]

If 2. is true, why do clubs oppose it?

[Andrew]

Luis, I think it's because football clubs are a lot closer to Chris' ideal organisation than most businesses; they're not obsessed with profits, and on average exist for the benefit of a wider range of stakeholders (e.g. fans). Whether that manifests itself as Ebbsfleet or an Oligarch's toy, it's still not the short-termist standard business.

Actually, I wonder what Chris' views on managerialsim are when applied to football. Are they examples of organisations where the manager (football as opposed to business) actually has incentives aligned with those of the club as a whole, long-term? Or is faith in a football manager just as bad as faith in a business manager?

[Luis Enrique]

Andrew,

I agree football clubs do not look much like profit motivated organizations

[redpesto]

One thing overlooked re. the 6+5 rule: the fact that, as far as the *English* Premier League is concerned, Scottish, Welsh and Northern Irish players all count as 'foreign' (as, obviously, does the Republic of Ireland). Manyoo repeatedly had this problem in the 1990s: Once you've picked, say, Schmeichel, Stam, Keane, Cantona and Yorke, you can't then have Giggs without losing one of the others. I can't see Blatter granting an exemption for the UK (lat alone England) when they're already the only nation allowed four entries for the price of one.

[morgs]

Surely FIFA can't enact a rule that would contravene the Treaty of Rome?

[dearieme]

"if Manyoo spend heavily on foreign players, their rivals must also do so": but wouldn't this also be true if we replaced "foreign" by "native"?

[Tom Addison]

Firstly the price of English players will rise, as seen in the old 3+2 system. This means we get a situation where relatively mediocre English players will carry more value than, say, a good French one.

And let's face it, because of the comparative inferiority of a large majority of English players compared to their foreign counterparts (think Kieran Richardson and Anderson), the quality of Premiership football will fall. If you replace Evra, Ronaldo and Tevez in the United line-up with Bridge, Lennon and Crouch, United's football will not be as pleasing on the eye.

With TV revenue now the most important source of income for most, if not all clubs, revenue (and most likely profits) will fall. Of course, this would take a while as the TV packages tend to last a few years.

Because of the fact so many English clubs already face financial difficulty, they may be forced to sell their best English players as their price and value would no doubt rise under such zoning restrictions as seen prior to the Bosman ruling, meaning the larger clubs horde English talent (as they’ll feel they require more than 6 English players, Champions League etc) and we'll still see young English players getting less opportunities.

According to Booth, R., 2004, "The economics of achieving competitive balance in the Australian football league, 1897-2004" "The effect of geographical (territorial) zoning in achieving equal playing strengths depends initially on the ability of the league to create geographic zones comprising equal amounts of player talent and the clubs to be equally adept at selecting talent.” In addition to this, the initial effect of geographical zoning could be undermined by poor finances forcing clubs to sell their best players." So zoning will, on a European level, make things even harder for teams from leagues based in small countries.

If people feel they HAVE to change something in football all I can think of is a salary cap for every club across all leagues. For example, Man United didn't really need Berbatov, his marginal product would have been much higher at Spurs, but had their been a salary cap in place we/United would have been a lot more reluctant to add £80K (or whatever Berbatov is on) onto our weekly wage bill for a player who is essentially a squad player.

[JImbo]

One of the most obvious losers would be African football. Many of Their best players would lose an opportunity to get into the big leagues and perhaps more importantly in terms of International football, the entire Continent of Africa would lose massive about of experience. That would leave Football with a huge credibility gap. ‘World’ football would revert to Europe and South America in terms of standards.

As a Scot (seriously don’t go there) I remember the 1974 World Cup with Zaire in our group. To be blunt they were a joke. Scotland’s performance in that group is an entirely different argument, but the African Champions were seriously rubbish. Your average pub team in the UK would have outclassed them. None of the players looked like they understood the basic principles of the game and were literally there to make the numbers up. Fast forward to the position today. African teams can walk onto a World Cup stage with pride and expectation. An African Nation (not even South Africa) are unlikely to win the World Cup in the next two or three tournaments, but they are capable of progressing out of the group stages. In terms of ‘World’ football, rather than the Europe/South America hegemony this move would be a disaster. If we want Africa and Asia to be part of the World game, we cannot deny there better players access to the better, professional leagues.

[reason]

Personally,
I think if they want to do this, a better way would be to simply insist that a club must have a certain number of local juniors (U24) in their (limited - 26?) squad. This would ensure investment in junior teams AND that those juniors have a genuine chance of making it to the big team. Then Barcelona, wouldn't be an exception, but the norm.

[Morten]

There are several problems with that paper (sry my first comment was just based on this post, now I have skimmed the paper).
1) They assume 'infinite' player pool. If I hire Rooney, you can also hire Rooney. How many Rooney's are there in England? They only justify this by saying it is a European-wide market (and no justification on the national market). But still, there is only one Messi. I guess one could say that this paper don't apply to the really big clubs, only the second tier.
2) Decrease in average quality have no effect on average turnover. Only costs goes down. Wow!

I think the right way to think about this is that it will be really bad the for the premier league, disaster for less rich countries (eastern Europe, Africa), bad for players in small countries and good for the leagues of Germany/France/Italy/Spain.

[James Hamilton]

The trouble with this for the top English clubs is that their youth systems already invest heavily in young players from continental Europe, Africa, and increasingly Asia. This investment will be heavily damaged by 6+5, and so, in all likelihood, will be the careers of the young people concerned. Youth facilities at the big four have become at least the equal to those abroad, for the first time in living memory.

On the other hand, Manchester United at least, and perhaps Arsenal, do have sufficient young English talent in those youth systems to comply without an absolute step-down in standards. It's Arsene Wenger's stated opinion that the current 10-16 year-old English crop are technically as good as the Spanish or Italians. Up until now, both United and Arsenal have tended to sell on many of their young English players e.g. Ebanks-Blake at Wolves was a United trainee; there are others.

Chelsea have the most to worry about. But since Mourinho's sacking interrupted their youth development programme, they have plenty to worry about if things stay the same.

[ortega]

We had the same discussion here in Spain, when the national team used to lose most of the matches.
Now we are on the winning streak and not only the spanish teams have a lot of foreign players, but quite of the spanish players are working abroad. Maybe Fábregas, Reina and the like are learning something there that they will not in the not-so-good spanish teams they would be playing.

[charlieman]

Andrew: "Luis, I think it's because football clubs are a lot closer to Chris' ideal organisation than most businesses; they're not obsessed with profits, and on average exist for the benefit of a wider range of stakeholders (e.g. fans). Whether that manifests itself as Ebbsfleet or an Oligarch's toy, it's still not the short-termist standard business."

That proposition may be true for the club board and for club officials (eg scouts) with a long term commitment. It certainly does not apply to managers, who need to stay up (at the bottom of the table), look promising (middle of the table) or get a trophy. Managers need short term results: ask those who formerly worked at Chelsea.

[Glenn]

its all completely academic as someone said it contravenes the Treaty of Rome.

More foreign competition and unlimited labour market in players - surely this would reduce transfer fees and salaries in the long-run?

[Preved]

Yo, nigga! http://111111111tv0m0vttqay-7vt-vt0-mqva.com blonde 222222 [url=http://33333333333333333sfgwet.com]333333[/url]I've no time to read all of it but I'll be back soon !

[viagra online]

excellent theme soccer is the best and is the sport that more and better exponents given through the entire history of sport. A zidane, pele, maradona, messi, ronaldo, Ronaldinho and some more great football is the best.