Lentwood
Full Member
Many have noted that our recent recruitment drive seems very much focused on UK-based players and I have a theory on one key factor that seems to be being consistently overlooked......exchange rate!
I have a background in Economics (A level & Degree) and therefore I have a decent understanding of the huge impact the exchange rate has on the trade of goods and services across borders. It's a relatively simple concept but I will just go through a quick example;
Example 1: £1 = $2 £1 = 1000Rs
Price of 1 Tonne of US cotton = $100 (£50)
Price of 1 Tonne of Indian Cotton = 50,000Rs (£50)
Example 2: £1 = $1.5 £1 = 1000Rs
Price of 1 Tonne of US cotton = £75
Price of 1 Tonne of Indian cotton = £50
Example 3: £1 = $2 £1 = 500Rs
Price of 1 Tonne of US cotton = £50
Price of 1 Tonne of Indian cotton = £100
Sorry if the Maths isn't perfect...feel free to point out any errors....but you get the jist. In Example 1, there is no advantage in buying cotton from either the US or India. In example 2, British importers would surely prefer to purchase Indian cotton and in example 3, you would expect them to purchase from the US.
A key point to remember here is that neither the value nor the price of the cotton is changing. It is purely the 'buying power' of the £ against the $ and the R which is changing.
Now consider this from a footballing perspective.....United have purchased very few players (at large sums) from the Eurozone since the Brexit referendum. If you have been on holiday to Europe regularly over the last couple of decades, you will have noticed that whereas in the 00s, £1 was worth almost 2 Euro's, nowadays they are trading at about £1 = 1.1 Euro's. This means that your money does not go as far as it would have done ten years ago, all other things being equal.
I understand that some people might think this is a tenuous reason to look at domestic players but I really don't - not when you consider what we know about the Glazers, Ed (and his background as an accountant) as well as the fact that in every other form of 'international trade', exchange rate really DOES matter.
Just think about one recent example. Greizmann had a release clause of 130m Euro's, which Barcelona have met. In the early 00s, a British club could have purchased 130m Euro's for about £65m, nowadays the same amount would cost around £120m.....I think this HAS to have had an impact....particularly when we are bidding against clubs based in the Eurozone
CAVEAT - by no means am I saying that this is the ONLY reason, in fact I suspect it's a comparatively minor, however I do think it has an impact. Thoughts?
I have a background in Economics (A level & Degree) and therefore I have a decent understanding of the huge impact the exchange rate has on the trade of goods and services across borders. It's a relatively simple concept but I will just go through a quick example;
Example 1: £1 = $2 £1 = 1000Rs
Price of 1 Tonne of US cotton = $100 (£50)
Price of 1 Tonne of Indian Cotton = 50,000Rs (£50)
Example 2: £1 = $1.5 £1 = 1000Rs
Price of 1 Tonne of US cotton = £75
Price of 1 Tonne of Indian cotton = £50
Example 3: £1 = $2 £1 = 500Rs
Price of 1 Tonne of US cotton = £50
Price of 1 Tonne of Indian cotton = £100
Sorry if the Maths isn't perfect...feel free to point out any errors....but you get the jist. In Example 1, there is no advantage in buying cotton from either the US or India. In example 2, British importers would surely prefer to purchase Indian cotton and in example 3, you would expect them to purchase from the US.
A key point to remember here is that neither the value nor the price of the cotton is changing. It is purely the 'buying power' of the £ against the $ and the R which is changing.
Now consider this from a footballing perspective.....United have purchased very few players (at large sums) from the Eurozone since the Brexit referendum. If you have been on holiday to Europe regularly over the last couple of decades, you will have noticed that whereas in the 00s, £1 was worth almost 2 Euro's, nowadays they are trading at about £1 = 1.1 Euro's. This means that your money does not go as far as it would have done ten years ago, all other things being equal.
I understand that some people might think this is a tenuous reason to look at domestic players but I really don't - not when you consider what we know about the Glazers, Ed (and his background as an accountant) as well as the fact that in every other form of 'international trade', exchange rate really DOES matter.
Just think about one recent example. Greizmann had a release clause of 130m Euro's, which Barcelona have met. In the early 00s, a British club could have purchased 130m Euro's for about £65m, nowadays the same amount would cost around £120m.....I think this HAS to have had an impact....particularly when we are bidding against clubs based in the Eurozone
CAVEAT - by no means am I saying that this is the ONLY reason, in fact I suspect it's a comparatively minor, however I do think it has an impact. Thoughts?