This weekend got my wheels turning. First, my girlfriend and I hitchhiked to the next county over to visit my childhood town of Blaj and we had a lengthy discussion about the state of Romanian football with the guy who picked us up in his flatbed truck. Then, I got the idea for this post after reading a sports paper somebody left on the train on the way back to Cluj. Among analyses of upcoming matches, players, and betting odds, there was a piece about FC Vaslui, one of the better teams in the league. Narrowly missing the title of Romanian champions last season, Vaslui has been drawn to play Inter Milan in the play-off to the Europa League group stages later this month. They will be soundly beaten. But there was something else that caught my eye. The article indicated that the team's owner, a former player and referee now turned agriculture investor, Adrian Porumboiu, has an estimated fortune of a 1Bn Euro. While I'm not a fan of telling how they should spend their money, I have to question the model of club ownership in Romania from a business perspective.
In top-flight leagues like England, Spain, Germany, or Italy, clubs have a strong incentive to win from a financial standpoint. English champions Manchester City made a cool GBP 60M (about 75M Euro) from TV rights last season. Granted, each team in the Premier League makes some good coin from participation alone (20th place Wolves got GBP 39M), but this is because the league is relevant on the world stage and there is an interested audience outside of England. Obviously there are other significant sources of revenue like merchandising sales, product licensing, ticket sales, sponsorships, and player transfers. Out of these streams of revenue, only the latter brings in significant cash to clubs in Romania; unfortunately it's also the least sustainable.
Cash from player transfers is hard to depend on as a source of predictable revenue, particularly when it's also used to cover a club's operating costs instead of allocating it all to further strengthening the squad with new/better players. I understand Arab sheiks buying into Premier League clubs; there are multiple streams of revenue, perfect opportunities for PR (see, Qatar Foundation coming to a football jersey near you), and generally looks pretty good on the ol' vanity resume.
There is only one way that player transfers can bring in significant return on investment: By selling players whose values have far outgrown the investment. Generally, buying a player for cheap and selling him for millions is reserved for clubs with very well developed scouting networks is not very sustainable, unless you're FC Porto, and buying a player for millions and selling him for more millions is reserved for clubs who are already in the 'Big 20'. So the only real(istic) way of basing a club's income on a player's transfer is to develop the player at the club from a young age and sell him to a rich club with a well-developed scouting network.
One of the few places this happens quite regularly is in Brazil, where the top clubs have world-class academies that churn out world-class players who move to Europe's top leagues for very large transfer fees. In Europe some of these academies include Ajax in the Netherlands and Sporting Lisbon in Portugal. Neither have the market base in their respective league nor the popularity of some mid-table Premiership teams, yet they consistently manage to stay in the black through player sales. Many other European clubs, basing their success solely on the deep pockets of a benevolent owner, are operating at a loss. They don't develop home-grown talent, buy their way to trophies, and are operating in leagues where supporters can't afford to help finance operations and where foreign interest (and therefore revenue in the form of broadcasting rights) is virtually zero. This is why UEFA has come up with the Financial Fair Play regulations (FFP), basically a set of rules meant to make clubs more fiscally responsible by not spending more than they earn. I'm not sold on all of it, but one thing that's certain is it will force club to be smarter about spending and force them to look in their own backyard for players. In most countries in Europe, particularly the less populous ones, it's a disadvantage, but in Romania, we have plenty of the most undervalued resource of all, people.
The Deloitte Football Money League report rightly concludes that a 'virtuous circle' is the only viable model of sustainability in modern football. This model dictates that the quality of football on show induces more support at home and abroad, invites revenue through merchandising, sponsorship and broadcasting, and that the revenue is spent on further improving the league and the clubs. It's simple and it makes sense. And it begs a very important question: Why own/finance a football club if you're unable or not willing to contribute to this model? Why does Porumboiu -and every other Romanian club owner - keep pouring money into their clubs if they're only losing it? I don't think they realize that they have the possibility of single-handedly resurrecting football in this country. So, if you have a billion Euros, here's how to change the face of this country through football.
1. Buy a club in each of the Romania's main regions. I'd recommend FC Timisoara (they'll promote to the top division once you pay off their debts), U Cluj (they'll take any buyers right now), and any of the Bucharest teams (depending who's more receptive to the offer). You could also do this with smaller clubs, but I think it's important you're in the larger city to benefit from better infrastructure.
2. Start building state of the art football academies for each respective club. Model them after Barcelona, Ajax, Sporting, and even Viitorul Constanta (the one bright light in Romanian football).
3. Hire some top scouts and coaches. Send the scouts all over the country to watch every promising youngster. Have the coaches (all foreign) instill a culture of fitness and discipline within the current squad ranks. Focus on steady improvement instead of immediate results (remember, you're basically making no money whether you're first or last place in this league).
4. Until the facilities are built, spend transfer money only on young prospects from Romania or EU countries, forget that twenty-seven year old second division player from Portugal.
5. Make sure you fire anyone at the club who's not doing a good job. This will probably be most of the people who worked there when you took over. Oh well.
6. Ignore the media.
It will take time, but in about ten years, your three teams will be dominating the league and participating in European competitions on a regular basis on the back of local talent. Other owners are following your example. The Romanian national team is young and dangerous. League games are being broadcast in some countries outside of Romania while at home people are filling the stadiums. Romania is finally starting to be known for something other than (blood) sucking.
What I just described was the easy way. If you're smart with money it'll fix any problem and apparently the only man in this country that's smart enough is Gheorghe Hagi. I just don't understand why the other owners aren't getting the point.
But how does this all make the country better?
I once said that Romanians are suffering from a chronic lack of pride. That's not about to change overnight, but a catalysts of this eventual change will be the resurgence of a national team that can consistently compete in international competitions. When the national team plays Romanians remember that we're all brothers, we forget any regional rivalries and cheer for the boys in one voice. It's slightly primitive in some ways, but also uplifting. Romanians are nicer to each other on the days that Romania wins. They consider their nationality a blessing, not a burden. A lot of Romanian teams winning will result in more of these positive vibes. It will push people to be better. Romanians will have finally have positive business examples and will look to build healthy businesses with long-term returns on their investment instead of operating a business to milk it dry purely for the sake of short term gains. Things might start to get done properly for once and Romanians will have learned an important lessons that nobody teaches here: Excellence breeds excellence.
In top-flight leagues like England, Spain, Germany, or Italy, clubs have a strong incentive to win from a financial standpoint. English champions Manchester City made a cool GBP 60M (about 75M Euro) from TV rights last season. Granted, each team in the Premier League makes some good coin from participation alone (20th place Wolves got GBP 39M), but this is because the league is relevant on the world stage and there is an interested audience outside of England. Obviously there are other significant sources of revenue like merchandising sales, product licensing, ticket sales, sponsorships, and player transfers. Out of these streams of revenue, only the latter brings in significant cash to clubs in Romania; unfortunately it's also the least sustainable.
Cash from player transfers is hard to depend on as a source of predictable revenue, particularly when it's also used to cover a club's operating costs instead of allocating it all to further strengthening the squad with new/better players. I understand Arab sheiks buying into Premier League clubs; there are multiple streams of revenue, perfect opportunities for PR (see, Qatar Foundation coming to a football jersey near you), and generally looks pretty good on the ol' vanity resume.
There is only one way that player transfers can bring in significant return on investment: By selling players whose values have far outgrown the investment. Generally, buying a player for cheap and selling him for millions is reserved for clubs with very well developed scouting networks is not very sustainable, unless you're FC Porto, and buying a player for millions and selling him for more millions is reserved for clubs who are already in the 'Big 20'. So the only real(istic) way of basing a club's income on a player's transfer is to develop the player at the club from a young age and sell him to a rich club with a well-developed scouting network.
One of the few places this happens quite regularly is in Brazil, where the top clubs have world-class academies that churn out world-class players who move to Europe's top leagues for very large transfer fees. In Europe some of these academies include Ajax in the Netherlands and Sporting Lisbon in Portugal. Neither have the market base in their respective league nor the popularity of some mid-table Premiership teams, yet they consistently manage to stay in the black through player sales. Many other European clubs, basing their success solely on the deep pockets of a benevolent owner, are operating at a loss. They don't develop home-grown talent, buy their way to trophies, and are operating in leagues where supporters can't afford to help finance operations and where foreign interest (and therefore revenue in the form of broadcasting rights) is virtually zero. This is why UEFA has come up with the Financial Fair Play regulations (FFP), basically a set of rules meant to make clubs more fiscally responsible by not spending more than they earn. I'm not sold on all of it, but one thing that's certain is it will force club to be smarter about spending and force them to look in their own backyard for players. In most countries in Europe, particularly the less populous ones, it's a disadvantage, but in Romania, we have plenty of the most undervalued resource of all, people.
The Deloitte Football Money League report rightly concludes that a 'virtuous circle' is the only viable model of sustainability in modern football. This model dictates that the quality of football on show induces more support at home and abroad, invites revenue through merchandising, sponsorship and broadcasting, and that the revenue is spent on further improving the league and the clubs. It's simple and it makes sense. And it begs a very important question: Why own/finance a football club if you're unable or not willing to contribute to this model? Why does Porumboiu -and every other Romanian club owner - keep pouring money into their clubs if they're only losing it? I don't think they realize that they have the possibility of single-handedly resurrecting football in this country. So, if you have a billion Euros, here's how to change the face of this country through football.
1. Buy a club in each of the Romania's main regions. I'd recommend FC Timisoara (they'll promote to the top division once you pay off their debts), U Cluj (they'll take any buyers right now), and any of the Bucharest teams (depending who's more receptive to the offer). You could also do this with smaller clubs, but I think it's important you're in the larger city to benefit from better infrastructure.
2. Start building state of the art football academies for each respective club. Model them after Barcelona, Ajax, Sporting, and even Viitorul Constanta (the one bright light in Romanian football).
3. Hire some top scouts and coaches. Send the scouts all over the country to watch every promising youngster. Have the coaches (all foreign) instill a culture of fitness and discipline within the current squad ranks. Focus on steady improvement instead of immediate results (remember, you're basically making no money whether you're first or last place in this league).
4. Until the facilities are built, spend transfer money only on young prospects from Romania or EU countries, forget that twenty-seven year old second division player from Portugal.
5. Make sure you fire anyone at the club who's not doing a good job. This will probably be most of the people who worked there when you took over. Oh well.
6. Ignore the media.
It will take time, but in about ten years, your three teams will be dominating the league and participating in European competitions on a regular basis on the back of local talent. Other owners are following your example. The Romanian national team is young and dangerous. League games are being broadcast in some countries outside of Romania while at home people are filling the stadiums. Romania is finally starting to be known for something other than (blood) sucking.
What I just described was the easy way. If you're smart with money it'll fix any problem and apparently the only man in this country that's smart enough is Gheorghe Hagi. I just don't understand why the other owners aren't getting the point.
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| The smartest man in football |
I once said that Romanians are suffering from a chronic lack of pride. That's not about to change overnight, but a catalysts of this eventual change will be the resurgence of a national team that can consistently compete in international competitions. When the national team plays Romanians remember that we're all brothers, we forget any regional rivalries and cheer for the boys in one voice. It's slightly primitive in some ways, but also uplifting. Romanians are nicer to each other on the days that Romania wins. They consider their nationality a blessing, not a burden. A lot of Romanian teams winning will result in more of these positive vibes. It will push people to be better. Romanians will have finally have positive business examples and will look to build healthy businesses with long-term returns on their investment instead of operating a business to milk it dry purely for the sake of short term gains. Things might start to get done properly for once and Romanians will have learned an important lessons that nobody teaches here: Excellence breeds excellence.
Talked to a guy who lived in germany that stayed at my sisters for a while .... He was saying how cities build their recreation facilities and provide soccer leagues ...once one of the home town players is signed to a big league contract part of his "transfer fees" are put back into the program to further develope the current youth in the city and maintain the club for generations to come ... Pretty sick idea ....
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