Unlike Germany’s thriving Bundesliga, the Premier League is run for the super-rich, not fans
Birmingham City FC fans are in revolt. Their once proud club has not been well managed – to put it mildly – by “businessman” Carson Yeung, currently awaiting trial in his native Hong Kong, for an alleged £59m-worth of money laundering, and the process is not over yet. It is the degeneracy of British economy and society in a football microcosm – nothing to stop Cayman Island ownership, strange “sponsorships” and lush, anonymous director fees.
In Britain, there are no legal or governance structures that put football or the fans at the centre of a club owner’s concerns. Rather, in keeping with the wider culture, football is “open for business”. Market forces are deified as the only value worth celebrating and a business – even a football club – is no more than its owner’s private plaything. The result is a moral and economic disaster – in football as in the wider economy.
Economists call this “rent-seeking” and those who don’t know what the term means need only spend a few seconds surveying the history of the club since Mr Yeung, his son and third director Peter Pannu took it over in 2009. The club is owned by a holding company based in the Cayman Islands, but burdened by vast debts used by Yeung to buy it, now facing financial problems following the problems with Yeung’s business affairs.
Their sole interest is selling off assets, chiefly good footballers in the transfer market, and now the club, to get their money back into the Cayman Islands – while paying large director fees for unnamed services. What they want is economic rent: a surplus created for doing nothing of value.
Britain is a rent-seeker’s paradise, as many more football clubs other than Birmingham City can testify. We have created a looters’ charter, with football as a playpen, within which the super-rich can do what they want. A recent flash point is the price visiting fans are charged for their tickets. (Manchester City fans protested at the £62 they were asked to pay for today’s game at Arsenal.) If the price of admission, along with travel, is prohibitive, then the game is played to only one set of supporters in the stadium with one set of chants. The experience of a game shrivels.
For the rent-seeker, this is emotional sentimentality. Everybody now knows that market forces are both best and irresistible, a perfect justification for putting up ticket prices to whatever the market will bear. Christian Siefert, CEO of the German Bundesliga, told the Observer recently that football is one of the last areas where people are brought together: “We want to have our whole society as part of our football, in our stadiums”, explaining why the owners of football clubs forgo the highest possible ticket prices. It is not a sentiment that Mr Yeung, or the many other foreign owners of British clubs, would share. Why worry about British society? We exist to be looted and privately mocked for our connivance in our own destruction.
Flexible and free markets, we have had drummed into us for 30 years, are the reason why Britain is now the world-beating economy that it has become and Germany and the European Union are in the doldrums. The Premier League, slavishly following these principles, is self-evidently, or so runs the line, the best football league in Europe. Pity the poor Germans and the daffy Herr Siefert, who worry about who owns their companies and football clubs, care about fan culture and invest in their young talent.
They don’t welcome “wealth creators” such as Carson Yeung with no questions asked, and because German clubs reserve parts of their grounds for standing room only cheap tickets, they don’t maximise the economic value of their sporting assets. Down that road lies ruin – or so a bevy of economic commentators and Eurosceptic Conservative MPs will rush to tell us.
But the German approach to football, as with their wider economy and society, is beginning to win admirers, not least among football supporters. There are three German sides in the last 16 of the Champions League this year and fuddy-duddy Dortmund played Manchester City, exemplar of British-style market forces, off the park. What’s more, they care about their fans. It is a great club rather than a sheikh’s passing whim. The Premier League is now considering something very German: capping the prices that clubs can charge visiting supporters. Football as a sport might just, in one tiny step, challenge the law of the market.
British football needs to go much further. German football clubs require that a majority of votes are exercised by fans. There can’t be Carson Yeungs because they would be outvoted. German clubs invest in homegrown talent. Sixty per cent of Bundesliga players are homegrown compared with 39% of Premier League players.
The lessons go wider still. Eighteen years ago, I argued in The State We’re In that it was obvious that Germany would outperform Britain economically, just as it is obvious that it will do the same – unless we reform ourselves wholesale – over the next 18. What is so depressing about today’s economy is not just that we stand on the verge of a triple dip recession, but that, like our football clubs, so much of our economic base is organised around rent-seeking.
Nor do we seem to have learned much. There should be a vibrant debate about how to reproduce in Britain what evidently works in Germany. We need companies organised around long-term business purpose and to create a whole network of public and private institutions, law and practice that buttresses them. Yet the heart of the Eurosceptic, anti-EU case is that, instead, we need to leave to reinforce the market “flexibilities” and “freedoms” that have created such fantastic British success. Let the looting get more intense.
We are far gone. There is no majority in the Premier League for serious reform. Foreign owners are not going to vote to qualify their autonomy, allow more supporter voice or limit their capacity to compete by offering sky-high player wages. On the other hand, there is a growing argument for change – witness the possible concession on ticket prices.
It’s the same with wider economic reform. The average size of a British manufacturing firm is 14 people: the majority of large firms and factories are foreign-owned. We have constructed an economy in which the rent-seekers and Carson Yeungs are the majority. It is very clear what needs to be done. The signs are confusing, but, as in football, maybe the grip of the looters is weakening as the evidence mounts of their vandalism. Here’s hoping.