article-single

Soccer Socialism

Soccer, that is, to our American readers; but football to the rest of the world. Why this naming convention should be maintained to distinguish it from gridiron football is a bit of a mystery to me. After all, how often are the bipedal extremities employed in such a game? When American Football came to the television screens of Britain in 1984, it was watched with some degree of enthusiasm, but kicking the ball was mainly reserved for after touchdowns. I can report, however, that we did improve on the product in reducing the number of commercial breaks between plays! I guess it is just a cultural thing.

Meanwhile, the planet’s greatest sporting tournament, the sixteenth FIFA World Cup, gets underway on the 31st of May amidst charges of corruption set against its president, Sepp Blatter. With as much as $360 million unaccounted for during his watch and the alleged whiff of bribery in the air, the lower-ranking FIFA executives have drawn the swords as the FIFA presidential election looms only three days before the World Cup begins. It looks like Blatter may be saved the trouble of writing the opening speech.

The USA will be competing in this four-yearly tournament and are placed in a group consisting of South Korea (joint-host with Japan), Poland and Portugal. Soccer is still a poor straggler in America behind gridiron football, basketball, baseball and ice hockey. The smart money is on the USA finishing bottom of the group, but I would be loath to invoke any superior tones as my own team, Scotland, has failed to qualify at all.

Ah, yes. Scotland. As we speak, libertarian moves are afoot to progress the game in Europe and perhaps beyond. The background is this. Scotland has two dominant club teams, Rangers and Celtic. Celtic were formed in 1887 to ostensibly feed the catholic poor of Glasgow’s East End as well as keeping the youth engaged in wholesome sporting activities. Rangers were formed in 1873 and historically claimed the Protestant majority of Glasgow for their support. Together, they are called the Old Firm and they rule the roost in Scotland. Between them, they have scooped nearly 90% of all available trophies in Scotland in over 100 years. A duopoly if ever I saw one.

Now imagine a business, which creates and markets a successful product to the local customer base. Naturally, success breeds profits and a desire to expand to conquer new markets will arise. In the case of football, that normally means the larger European tournaments played between the top teams of each nation. However, the most successful footballing nations from England, Spain, Germany and Italy have monopolistic ideas and their exclusive lobbying group called G14 has been successful in increasing the numbers of their teams as a proportion of overall entrants into these lucrative competitions.

This shift of capital towards the larger nations creates a problem for clubs like Rangers and Celtic who have absorbed as much as they can from the “local” economy but find their access to the global economy of European markets hindered by entry requirements biased towards the country of origin.

Meanwhile, the less wealthy clubs in Scotland whose turnovers are less than that of the Old Firm combined have demanded a greater market share in the distribution of TV revenues in disproportion to the actual customer base they have access to (i.e., their fans).

In this we see the socialist concept of redistribution at the local level and the libertarian concept of freedom of association at the international level. At the national level, Rangers and Celtic own 80% of the customer base. The last distribution of TV revenues was 60% to the Old Firm and 40% to the other 10 clubs in the top league.

Why the disproportionate sums? The other clubs argue that being part of a “society” (that is, the 12 team Scottish League), Rangers and Celtic should hand over some of their rightful revenues for the “common good” of that society. This is not a voluntary donation, it is the coercive equivalent of a tax and if the other 10 do not get more they will resign and form a breakaway league.

Now, I have no problem with the European football authority UEFA laying down such rules as to who can enter their competitions and on what bases and I have no problem with the 10 smaller Scottish clubs forming their own exclusive cartel with private entry requirements. They are free to form their private groups and invite whomsoever they wish.

What I do have a problem with is the options left to Rangers and Celtic in the pursuit of larger markets. An attempt to gain entry into the top English league (and hence this G14 cartel) has failed because they see no current financial advantage in admitting the two clubs. Moreover, UEFA is a monopoly running from Iceland to Turkey and they will eject any team who attempts to move out of their national league.

The hypocrisy is evident. UEFA states the rules for membership of its exclusive club but will not allow anyone to move into other leagues/markets without facing banishment. Freedom of association also implies free movement of labour between the parties in agreement. As a further example, the clubs in the league below the top English league are in favour of Celtic and Rangers joining them but the regulatory bodies of England and Scotland will not allow it. The fear is that deregulated movement of clubs across borders will see the best teams of humdrum middle-ranked nations leave to form multi-national leagues.

But the ethic of free market competition demands it. If the richest footballing nations carve up the majority of the broadcasting revenues, then the clubs below them have the right to form associations, which react to and challenge that structure. This is the only natural way to avoid eventual stagnation of the product on offer.

Libertarianism is coming to football. UEFA’s restrictive rules on movement of labour will be challenged in the courts of the European Union and will fail. We can then expect successful clubs in mediocre nations to band together to form stronger pan-European leagues which successfully compete against the existing top national leagues. Teams from Scotland, Holland, Portugal and Belgium could form their own association and compete with UEFA for TV revenues. This can only be good for improving customer choice.

Meanwhile, our ten little clubs in Scotland minus the Old Firm would have a chance to win the Scottish league and inject a little competition into their product. After all, no one beyond Rangers or Celtic has won it since 1985…

May 21, 2002