It’s not everyday that I get to combine two of my favorite topics into one discussion: soccer & finances. Like other major sports, the off season is the time to speculate and dream of your favorite team adding in some new players before another campaign begins. It’s been a slow summer of sorts for Manchester United, but their neighbors have been creating a lot of noise and it’s been fascinating, at least from my end, to watch how both these teams are operating.
To give some background here soccer doesn’t operate in the same manner as NFL, NBA or MLB. There are no drafts, salary caps or collective bargaining agreements (CBA) to deal with. Players are not traded for other players between teams but rather they are bought, which is known as the Transfer Fee. An example of this would be Team A wants to buy Soccer Player from Team B. Team A will pony up money, give it to Team B and Soccer Player is moved to his new team. Because there isn’t a CBA governing these amounts, it basically comes down to whoever has the deepest pockets, gets the spoils.
So I’m a big fan of Manchester United and it’s been a family thing. My Dad’s been a supporter since his late teens and grew up watching the likes of George Best and Sir Bobby Charlton. United’s big rivals are Manchester City. As you could have guessed, City and United are in the same town much like the Yankees/Mets, and Lakers/Clippers. But the rivalry is much more than just the two teams in the same town. Imagine if Texas and OU, with the same fan base were located in the same city.
What has made the rivalry a tad bit more interesting in recent years has been the their ownership. United are owned by the Glazer family, who have handcuffed United by roughly $800 million of debt. City on the other hand have been bought up by Sheikh Mansour bin Zayed Al Nahyan in September 2008. Yes, you read that right. A Middle Eastern oil mogul owns Manchester City. A team with $800 million of debt versus a Sheikh. From a pure fiscal stand point, it has been largely entertaining to watch these two teams spend the past two summers.
Here’s a quick breakdown on their summer spending habits:
- United – $33 million
- City – $188 million
- United – $27 million
- City – $120 million (another $30 million is expected to be spent before the August 31st deadline)
Obviously both Manchester teams are spending significant amounts of cash here but $300 million+ for City in two summers?!?! Spending at these alarming rates can be justified by winning the league title, advancing far in domestic tournaments (more games played = more $$$) and for finishing in the top four of the table (also known as the standings). I’m sure the first two make the most sense but the top four finish is actually kind of an interesting thing that European soccer does.
For finishing in the top four in the English Premier League, the next season you get to play in the Champions League. Think of this as European soccer’s version of March Madness where the top clubs of Europe play in a tournament to get final bragging rights over who’s best. The only difference here is that you enter this prestigious tournament for the next season, and is played concurrently with your regular league schedule. The Champions League is a cash cow of epic proportions and for obviously reasons: more games = more $$$, and more prestigious games against marquee opponents = more $$$.
At the end of the 2009/2010 campaign, United finished 2nd and City just missed out of the top four and finished 5th. Granted City moved from 10th the previous season to 5th, which is a good improvement but was it worth the $188 million that was spent the summer before? I’m going to have to say no. Eventually City will finish in the top four and win the league title, for the Shiekh, any amount spent may be worth it, but from a financial stand point it’s hard not to question City’s spending madness.
In the past few years I have spent my time writing about Best Buys (2008, 2009, 2010) and what has been for me, purchases that I have found to be of good value. Not a single signing of City in the past two years have come cheaply and everyone agrees that they have grossly overpaid in transfer fees and player salaries (which in fairness to City, they had to offer a lot for anybody to want to go play there). They certainly don’t make my cut on Best Buys.
United on the other hand? I’m a bit torn to be exact. United’s best bargain find this summer was Javier “Chicharito” Hernandez. While the fee is undisclosed, many speculate that it was in the $11 million region for this young striker. And after his 2 goal performance in this year’s World Cup, many are excited for the future and potential that his young player has. So why I’m torn? Young player. Good bargain. Promising future. Should be thumbs up for me and United right? Well, if you couldn’t guess from his name, you can guess from this clip what national team he plays for. More in this in a later post.