Saving football, this time for real. Part 1

Athletic Bilbao, punishing a good club

Athletic Bilbao, a club that depends almost entirely on breeding its own squad through the academy and regional grassroots academies is one of only three clubs in Spain that had never relegated from the first division, doesn’t spend beyond its means, and possibly the club with the strongest connections to its community. A club that counts in its rise and fall on its sporting project, developing players, having sound management at the top. A model that demonstrates more football fair play by practice than anything the ties and sunglasses will decorate via their random Football Fair play regulations.

Now if we talk about distributing the football wealth on clubs based on earning it through their performances as proper football clubs, the way football clubs are supposed to be run, how much that brilliant football model Athletic follows is recognized in football wealth distribution?

Zero.

Athletic Bilbao can spend five years to build a proper cycle with a competitive team to get oppressed out of any European spot (where you can get more money) by a club or two making some random fully baked signings with the hope to recover the transfers investments via the European competitions additional revenues. And, Hey, Athletic, back to square one.

Why will clubs not prioritize turning squad building to suicidal surgical transfer auctions instead of organic consistent growth then?  

Why is everyone surprised that all clubs (big, small, all) are acting like hyenas fighting for a piece of that cash to waste via over-inflated spending (all spending is inflated in nowadays world football)?

Why will clubs have patience with managers and young players they believe they may deliver on the long term if the future is totally dictated by short-termism?

How is it a surprise that all football clubs are riding that economic destructive rollercoaster created by that vicious circle where the amount of money you get can change by every year dramatically depending on your team getting one point more or less in a season, which depends on whether you had better luck (more often than not, spent more) in the previous summer transfer auction?

Football regulations decide where the money goes and how it is distributed and that sets the tone for the whole dynamics of the game. The current model at its core is destructive. It creates a game dominated by owners’ greed, agents’ antiques, and players’ uncontrollable demands. 

When the concept is flawed and destructive, the discussions about who should get what and how much on its bases are debating which symphony the orchestra should play on the Titanic after striking the iceberg.

The idea that giving more money to “smaller” clubs just by default makes them more capable of competing for titles is a long-lasting laughable joke. In theory, it makes no sense. In practice, it proved to be counterproductive. It decreased the clubs’ dependence on developing players with the illusion that with more money they can compete in the market. That led to fewer developed players, supply declined while demand increased and so as the money. What a brilliant setup!

Here is what happened in reality (bare the exceptions that happened in football from the beginning of time): The bigger the club is the more money it will still have and the more attractive it is. In that sense, there are different classes of clubs and different classes of players. With the increase of money (the way it is now) clubs within the same class will just spend more on their equivalent class of players than they did before. And it goes all the way down. The disruptive factor for that statico is the owners. Some clubs got wealthy owners who invested in their clubs (regardless of how and why) and upgraded their clubs’ status. Other owners just took the money given to their clubs and relegated that status.

The current model of money distribution does nothing but harm to football no matter how the money is distributed on its basis.

There is a need to scratch the whole football economic model off and go back to the drawing board to find proper answers to:

1) Creating a model that provides more revenue channels (from the football accumulated wealth) than what league you play in and what your club achieved in one year.

2) Create a model where clubs actually earn the most of the money they get. But a model that provides fair chances for different clubs on different levels to create their business models that allow them to grow steadily towards whatever goals they aspire to.

3) Create a model that by its nature controls the market inflation and reshape the impact of the transfer market from being The factor in success to become a factor in it among many other factors including developing players.

4) Create a model that by its nature scare away owners with one objective in mind and that is to take most of the money out of the football cycle to their own pockets. 

5) Create a model that protects clubs from the economic fragility caused by the many unpredicted future crises involving ownership behavior, global economic crisis, etc…

A new model to fulfill the set goals

Reward the industry, not just the merchants.

     

1) Competitions rewarding system

     Now that the highest noise comes from the distribution of the UCL money, it is good to take that competition as a case study of a model that could trickle all the way down to the lowest division league in the least recognized football nation. Currently, the rewarding system is based on short-term results, driving the clubs crazy for transfers with immediate impact, inflating the market, wages, agent fees, and ultimately disrupting the football economy altogether.

That is the first to change by adding more diversity to the rewarding module combining short-term success with long-term work of developing players, the heart of the game.

Distribution channels

a)    Channel 1, Results-based rewarding: this is basically the model that exists right now. Clubs’ rewards are dependent on their performances throughout the season. 

     Sum (A) from all the money allocated to distribute between clubs will be shared based on their performance in the UCL. There is no need to go into a lot of explanation there as it is a known format that could be tweaked and agreed on per clubs’ discussions.

b)    Channel 2, football development-based rewarding: Sum (B) from the money allocated to distribute between clubs will be distributed based on each club’s success in developing football players. And this is how it works:

• ·       Split Sum (B) rewarding percentage on the different stages of the UCL (I will take the existing UCL structure here): Qualifying rounds, Play-off round, Group stages reward, Round 16, Quarter finals, Semi Finals, Final
• ·       Decide the minimum number of minutes club’s developed players (CDP) should collectively play in each round to be qualified to receive money from each stage the club reaches. CDP means the players developed through the club’s academies. In the group stage, we only calculate the CDP minutes played by each club in its first 5 games in the group stages (many clubs guarantee their qualification before the last game, so they may collect CDP minutes in an irrelevant game which misses the purpose and make the concept flawed).

Application sample:

After playing all the group stage games in the UCL, clubs get their rewards from Channel 1 based on their performances as it happens right now. As for rewarding the clubs from Channel 2, we create the CDP table listing the teams from the club with the highest CDP to the lowest *:

*In the rewards column the percentages are obviously random to explain the point.

Let’s assume a club like Ajax did not qualify from the group stages to the knockout, but it ended up being Team 1 in that table. Instead of being punished for their effort in developing players and giving all the money to Big transfers clubs that qualified, this channel rewards Ajax for their work that is the essence of football survival: developing players. As in the sample table, Teams 14, 15, and 16 failed to reach the CDPM (minimum of minutes played by academy players), so they get no rewards, and the sum of the money allocated to their slots in the table end up being redistributed on the other 13 teams in the table. Another example, if one of the two teams reaching the final fails to reach the CDPM, the other club gets the rewards of both slots. IF both teams fail to meet the CDPM the rewards allocated for that stage get redistributed on the teams of the previous round (semifinals) meeting the CDPM. If Team 4 and Team 5 ends up having the same CDP, the money sum of the two slots gets distributed equally between the two teams.

Thanks to restructuring the rewarding system this way, developing players become a way to achieve sustainable income for clubs. A club like Ajax will be able to hold to its players better, predict the revenues for few years in advance and plan accordingly, and balance up the rewards given to big clubs with big transfer pockets with the sustainable academy-based models that work harder under unpredictable risks as no one knows what youth will actually become a good player.

This will flatten the revenues rollercoaster from year to year which makes it possible to plan middle to long term. If you have 12 academy players this season, you can expect to have 10 of them for the next season and possibly add one or two and keep a relatively stable CDP position to secure consistent rewards, balancing that with being competitive to get the best slice possible from the channel 1 rewarding system.

A 10 years plan where the money distributed through channel 2 gradually increase while the money distributing through channel 1 decreasing can contribute in fixing a lot of football’s major problems:

• -          If at some point the money distributed through Channel 2 exceeds the money distributed through channel one, building a team dependent on club academy players become an economic must. That will force owners - following the money - to invest in their clubs’ academies.
• -          With Channel 2 pumping money in the veins of academies-based clubs, such clubs will be less dependent on selling players, making it even more difficult for rich clubs to just buy the best players around so the big club remains big, and the rest just feed it.
• -          With more clubs putting more effort on their academies the pool of developed players gets bigger and bigger with more players for different levels. That increase in supply can slow down market inflation and add more quality to teams in different divisions of different leagues.

 2) Players’ gratitude payments

During the revolution that followed the Super League circus, players voiced their rage and stood shoulder to shoulder to defend the spirit of the game and the right of smaller clubs to have a fair path to grow. Great. Now we should expect every player to put the money where your mouth is.

Play and pay.

Same as rewarding clubs based on short term success (the previous point) is not sustainable as it pumps random amounts of money that can change vastly from one season to another, rewarding a club that developed a player a percentage of any transfer the player makes in future is not sustainable either. 

The same as we try to reward players developing clubs consistently through the competitions rewarding system such clubs should have a consistent income from players they developed. Let's take an example, C.Ronaldo. Had there been a regulation that a player should pay 10% of his total annual income (that exceeds 1 M a year) to his developing club, that would’ve still made C.Ronaldo a rich man but also brought Sporting a consistent payment for 20 years now. 

What matters here is not how big that number is (and in this case, it is decent, to say the least) but the fact that Sporting could’ve been able to predict how much this talent will generate for the club in the 10 years following his departure to Manchester United.

The shared idea between rewarding clubs in competition for developing players and Player’s gratitude payment is securing consistent, relatively easy to predict income for clubs to help them to plan beyond the one-year-at-a-time period that governs modern football. This will only increase the value of having youth academies. The more the big clubs pay their imported players, the more the clubs lower on that food chain get consistently, the more they can invest in their academies and get more money to trigger that sustainable growth to reach the top.

 3) Controlling the transfer market:

Heading straight to the point here, there is a need to put a leash on the transfer market dynamics that is turning football to a suicidal greedy bidding war instead of what it should actually be: Clubs getting players for specific positions they need, clubs selling players they do not need, players moving clubs to improve their careers and financial benefits – within the boundaries of commonsense. 

There is a need for a structure that creates proper checks and balances to protect the game from its current circus.

•     The minimum duration for a player contract is five years for a player aged 24 or younger, and three years for a player older than 24.
  
  
•    The maximum transfer fee for a player is (His salary*number of years left in his contract* a fixed variable to be determined through further analysis). That’s where the FFP regulations regarding salary control become more powerful and make more sense as it compliments this structure. But a tweak there will also be good and that is to put a cap on how much the difference could be between the highest earner in the squad and the lowest earner. That will balance things up and make the clubs less pressured to splash all the cash on star players. A player who earns 30M today will not retire and seek a career as a carpenter if such new regulations make it impossible for any club to offer him more than 15 M. So, why not going for it?
  
  
•     The maximum commissions clubs (buying clubs) pay for transfer agents is a fixed percentage applied on the agreed transfer fee.
  
  
•     There is a maximum fixed percentage an agent can charge a player annually from the player’s football salary and rewards.

Let’s apply that to a player who is 23 years old with a salary of 10 million on a 5 years contract. If we assume the fixed transfer variable is 2.5, the player’s maximum transfer fee one year after signing his contract is 100 M, one year later it becomes 75 M, then 50M, then 25M in his final year. At any point, his club can improve his salary by offering a new contract which will reshape his transfer value.

This will keep the transfer market working without inflating it madly. Put that with the previously set rewarding systems and any ambitious club can start building a proper academy, improve its financing, and reach a point where it can also compete in the transfer market.

4) Controlling the money leaking

Regulators on national and continental bases (like parliaments) may need to step in at this point putting new laws differentiating sports clubs from the normal business companies to make it possible to protect the game without breaching business laws leading to legal cases.

Accordingly, there should be a maximum percentage of clubs’ net income that owners can take out of the club annually so we make sure the most of the money generated through football remains in the sport. That alone can make investors who only care for cashing money out of the clubs’ blood retreat and find themselves other investments away from the game. Open a hairdresser or something, who cares, just stay away.

 5) An obligatory reserve

In short, it is a tempting idea to discuss whether each club should have an obligatory reserve account and move a small percentage of its annual income there till the account sum matches the operation cost of running the club for three years. The club can’t use that reserve beyond very specific conditions. This is a financial guarantee against any future financial crises. A three years soft landing is enough to restructure the club to counter the urgent situation and adapt to it.

We want any club to have a chance to win titles, become a dominant club, and aspire to greatness. All the attempts to make leagues more competitive in the past 20 years ended up being just noise. EPL was the jewel of the crown with TV distributions, and we are still with the same clubs, plus one funded by a Russian Oligarch and one funded by a Petro-state. Yea, Leicester. I knew you were going to go there. We had similar phenomena before all the holy changes. Heck, the UCL was won once by Red Star Belgrade. Aberdeen? Deportivo in Spain? Verona in Italy? Besides, if Leicester's achievement was exceptional, well, that’s exactly the point. Exceptions.

Pumping more money randomly in clubs on short-term results-based success serves no purpose other than inflating the market and making football agents richer.  Let the clubs actually earn it instead of the exhausting rambles about All-clubs-Matter. A club that wins, gets rewarded. A club that contributes in developing talents gets rewarded. A club that does neither this nor that shouldn’t.

The keyword: Evolution. Organic growth and progression. And a football economic model that makes that actually possible.

You can always check latest rants on @FootballMood

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