Cautionary disapproval is only redundant if you assume (as you seem to) that the bubble will never burst. But eventually it will .... and when some clubs are stuck with players that they can't sell except at a huge loss, we'll see how "dull" the topic is then.
Is the bubble about to burst? (all doomsday scenario posts here please)
- Thread starter GlastonSpur
- Start date
Cautionary disapproval is only redundant if you assume (as you seem to) that the bubble will never burst. But eventually it will .... and when some clubs are stuck with players that they can't sell except at a huge loss, we'll see how "dull" the topic is then.
The bubble will never burst. If anything they'll find newer ways to monetise the most popular league in the world's most popular sport.
Wenger has been waitinv for the bubble to burst since 2000. I honestly think part of his problems was building his vision for Arsenal around that.
It's not like if the bubble burst that we'd all be sitting around with players we can't sell. The market would readjust and maybe reset but clubs would still be richer than others and things just stay the same.
The market is crazy. Paying £75m for Lukaku was crazy. But Lukaku is statistically one of the top two or three strikers in the league. Paying almost that much for just a good CB would actually outstrip the market.
Bubbles always burst eventually - there are signs that things could be changing already with the decreasing viewing figures for Sky, etc. which is leading them to change strategy with the new channels etc. Over saturation + lowering viewers = eventually a decline.
Problem with these statements is you will never be wrong. Even after 100 years if the bubble doesn't burst, you can say "It will eventually".
That isnt a problem though is it - you said yourself that my comment is essentially correct so on the flip side anybody saying a bubble will never burst must also be completely wrong. I did also give some evidence that things may already be changing.
Spurs have to come up with £100mil for a new training ground and £750mil for a stadium.
Seems to me Spurs are exposed to both a football bubble and a property bubble.
You didn't give evidence, evidence would be clubs making less money from sponsorship deals or sky signing next TV deal for less money. None of them happened.
Your comment isn't correct.
A pet hate of mine is when somebody brings Spurs into a thread that was totally unrelated to Spurs just because I am a Spurs fan.
@balaks
At the same time the bubble can only burst if it's a bubble in the first place. Theres nothing artificial about this, everything is in line with income and inflation.
Look at the transfer fees, its Utd, PSG and City doing all the spending. Liverpool are linked with 2 big transfers but maybe they only moved on to Kieta because they were warned off of VVD? Even then they could spend 60m because they know Coutinho is off to Barca for 80m?Everton are spending Lukaku money so where is this madness?
This bubble has been seemingly bursting for 20 years.
At the same time the bubble can only burst if it's a bubble in the first place. Theres nothing artificial about this, everything is in line with income and inflation.
Look at the transfer fees, its Utd, PSG and City doing all the spending. Liverpool are linked with 2 big transfers but maybe they only moved on to Kieta because they were warned off of VVD? Even then they could spend 60m because they know Coutinho is off to Barca for 80m?Everton are spending Lukaku money so where is this madness?
This bubble has been seemingly bursting for 20 years.
I do see your point and to an extent it's very hard to disagree with - I just feel that we could be reaching at least a plateau of cash - I just don't see how further years of vastly inflating transfer fees/wages, etc. can be sustainable at the current level of inflation. I could easily be wrong of course.
Thread created to stop others from being derailed. Bubbles, inflation, etc. All these topics here please.
It's correct but being meaningless though - You can't actually derive anything from such a statement. It could have been made 15 years ago and told us absolutely nothing about what was to come - except that the statement then was as true as it is today - someday.
Of course it's redundant as it's coming from a perspective that's not actually bothered about the wellbeing of the game or individual clubs - it's simply an opportunity to engage in point scoring. The macro-economics of football and the potential hazards that lie ahead are not at the forefront of most fans' minds - if they were they wouldn't disapprove while simultaneously be screaming for the signing of Player X for £70m... That's why it is entirely dull as the overwhelming majority of these fans are not invested in the safeguarding and future proofing of the game. It's simply another avenue to point score.
As for the sustainability of such fees, I understand the distaste towards the huge fees but I think it's not as hazardess as you are making out. Players aren't being bought using speculative income streams. The TV money is real and has been committed to the clubs. Furthermore, I'm not sure that future worth and value of players are a chief priority when clubs are buying these players for the fees we are seeing right now. Buying clubs who are operating at the top end of the market know that they are investing in commodities that will likely lose value. It may not be sustainable spending but I don't think it'll necessarily do significant harm.
There are two major threats as far as I can see:
- The sugardaddy clubs start dominating by buying everyone in sight. We're already starting to see City and PSG burning off the competition by paying obscene fees, and it seems the more 'organic' clubs are being priced out. If this continues we could start seeing City, PSG and the other artificial clubs carving up the CL between them. If that happens people will just lose interest; we all know it's plastic and inauthentic, which is why City can't even fill their ground.
- The illegal streams get to a stage that people stop paying for Sky and going to the pub to watch games. The whole broadcasting edifice is predicated on the idea that people will keep paying, but the streams are getting seriously good now, so this could become a major problem for the broadcasters.
We bought law for a few hundred thousand?
We bought keane for 4.5m?
We bought rio for 30m?
We bought pogba for 90m?
Inflation? Or bubble? Reasonable rise or unreasonable rise?
Is neymar purchase the norm if it's happening? Or just an extreme outlier situation? No teams entered this dick measuring contest enough to claim 220m is becoming the norm.
If you says 90m is the new bubble yes probably, but at this rate the neymar deal isn't happening yet.
Now we also have to look at clubs income, and compare them.
What's dangerous isn't player purchase, any sort of danger in finance club can just strap in and not buying any player. The real bubble imho is actually the ever-growing revenue.
Teams have gotten used to massive tv deals and sponsorship but are these 2 dependable? As in you basically rely heavily on the above to keep your club daily running cost. That can really fecked you up since you really can't cut running cost in the span of 1 season without having a serious repercussions.
We bought keane for 4.5m?
We bought rio for 30m?
We bought pogba for 90m?
Inflation? Or bubble? Reasonable rise or unreasonable rise?
Is neymar purchase the norm if it's happening? Or just an extreme outlier situation? No teams entered this dick measuring contest enough to claim 220m is becoming the norm.
If you says 90m is the new bubble yes probably, but at this rate the neymar deal isn't happening yet.
Now we also have to look at clubs income, and compare them.
What's dangerous isn't player purchase, any sort of danger in finance club can just strap in and not buying any player. The real bubble imho is actually the ever-growing revenue.
Teams have gotten used to massive tv deals and sponsorship but are these 2 dependable? As in you basically rely heavily on the above to keep your club daily running cost. That can really fecked you up since you really can't cut running cost in the span of 1 season without having a serious repercussions.
Cheers @GlastonSpur, I find this a fascinating subject.
The first thing I would say is, this statement:
Is patently a dangerous one. As someone else said, bubbles always burst.
Having said that they can inflate for a lot longer than people expect. I remember having this debate with a friend going on ten years ago (maybe 8) and while I was not predicting an imminent collapse at that point, it felt close to being unsustainable even at that point. I thought something would have happened by now. If anything the market seems to have developed more momentum, but that can also be a sign things are coming to a head.
I just dont know what the catalyst would or could be that would prick the bubble. General public revulsion at the salaries of footballers? Boredom with an increasingly corporate and sanitised football culture? An arms race for talent that leads even the richest clubs to overextend themselves and collapse under the weight of their own debt? I have no idea. Its hard to detect signs of any of those things happening to any significant degree yet.
Im in two minds on this. On the one hand I can see things continuing to escalate, so that in ten years time, as someone suggested this morning in another thread, £150m transfers could be relatively routine. On the other hand I have to believe one of the potential situations I suggested above, or something else entirely, will prevent that from happening. Maybe top clubs will realise things are spiraling out of control and work together to find some kind of a solution, but given the fierce competition for trophies and the egos behind some of the wealth coming into the game, its hard to see that kind of restraint.
The first thing I would say is, this statement:
Is patently a dangerous one. As someone else said, bubbles always burst.
Having said that they can inflate for a lot longer than people expect. I remember having this debate with a friend going on ten years ago (maybe 8) and while I was not predicting an imminent collapse at that point, it felt close to being unsustainable even at that point. I thought something would have happened by now. If anything the market seems to have developed more momentum, but that can also be a sign things are coming to a head.
I just dont know what the catalyst would or could be that would prick the bubble. General public revulsion at the salaries of footballers? Boredom with an increasingly corporate and sanitised football culture? An arms race for talent that leads even the richest clubs to overextend themselves and collapse under the weight of their own debt? I have no idea. Its hard to detect signs of any of those things happening to any significant degree yet.
Im in two minds on this. On the one hand I can see things continuing to escalate, so that in ten years time, as someone suggested this morning in another thread, £150m transfers could be relatively routine. On the other hand I have to believe one of the potential situations I suggested above, or something else entirely, will prevent that from happening. Maybe top clubs will realise things are spiraling out of control and work together to find some kind of a solution, but given the fierce competition for trophies and the egos behind some of the wealth coming into the game, its hard to see that kind of restraint.
The bubble will not burst for the big clubs because there is no bubble. The "fundamentals" of their books are rising relatively proportionally to the "inflated" prices. See the fact that Lukaku was still 22% (don't quote me on this) of United's revenue.
However, for clubs that do not have an increasing income stream, what Glaston says is on the money. Because the prices quoted between those clubs are based on market speculation (grounded in what a big club would pay) of what a player like VVD is worth.
However, for clubs that do not have an increasing income stream, what Glaston says is on the money. Because the prices quoted between those clubs are based on market speculation (grounded in what a big club would pay) of what a player like VVD is worth.
why? because Levy says it is about to? smokescreen and mirrors for Spurs not strengthening their squad (not that they had to do so dramtically)
It's mainly the crazy TV-deal that cause the explosion in transfer fees imo. There is currently floating so much money around that clubs are able to pay these huge sums of money.
So unless the pay TV market for football suddenly implodes I think this trend of growing tranfer fees and wages will continue.
We cannot conflate a market bubble (equity, housing, etc...) with the confined Sky football bubble. They are fundamentally different.
While a bubble may burst at a certain club devastatingly (oil clubs, should the owners leave), the 'burst' from football would occur gradually. Sky might make a loss from 'dwindling' viewing figures in years t+3, t+4, and when it comes time for Premier League contract renegotiations, the PL might be offered a lesser contract, which would of course then impact the clubs.
Clubs, being hit by reduced revenues, might adjust wage structure. Average weekly salary might reduce by £60k per week to £45k per week. Big money transfers would reduce in frequency, and the transfer market would adjust accordingly.
Sponsorship deals may not be hit as badly. The value of the sponsorships may not change, and if they do, they will have several years to adjust. Like Sky, many are locked in for several years.
This is a contained environment and as such I don't quite see the same risk as you might see in an asset bubble. Structurally, an adjustment may happen, but I imagine it would be gradual.
And I honestly think that football will continue to increase in popularity globally, not the reverse.
While a bubble may burst at a certain club devastatingly (oil clubs, should the owners leave), the 'burst' from football would occur gradually. Sky might make a loss from 'dwindling' viewing figures in years t+3, t+4, and when it comes time for Premier League contract renegotiations, the PL might be offered a lesser contract, which would of course then impact the clubs.
Clubs, being hit by reduced revenues, might adjust wage structure. Average weekly salary might reduce by £60k per week to £45k per week. Big money transfers would reduce in frequency, and the transfer market would adjust accordingly.
Sponsorship deals may not be hit as badly. The value of the sponsorships may not change, and if they do, they will have several years to adjust. Like Sky, many are locked in for several years.
This is a contained environment and as such I don't quite see the same risk as you might see in an asset bubble. Structurally, an adjustment may happen, but I imagine it would be gradual.
And I honestly think that football will continue to increase in popularity globally, not the reverse.
The same was said of the mortgage bonds in the US. A popular quote was "Who doesn't pay their mortgage?".
All it will take is for one top club to crash, and then the deck of cards will fall soon. Most probably, the market will then correct itself and running a tight ship will be back in fashion. My opinion is that clubs who have sound fundamentals and a steady stream of legitimate income and a steady youth set up will emerge unscathed.
All it will take is for one top club to crash, and then the deck of cards will fall soon. Most probably, the market will then correct itself and running a tight ship will be back in fashion. My opinion is that clubs who have sound fundamentals and a steady stream of legitimate income and a steady youth set up will emerge unscathed.
Surely some sort of cap has to be implemented; this is crazy money.
Yes but why is it even classed as a bubble?
Our league has destroyed the competition in terms of exposure over the last decade. if English clubs struggling in Europe v Spanish dominance hasn't changed this then nothing will.
The real danger is major corporations taking over the medium size clubs and turns England into the NBA of football but I can't see us ever losing popularity worldwide.
Thats not a bubble. Just because we dont like the millions being thrown around doesn't make it a terrible thing.
Our league has destroyed the competition in terms of exposure over the last decade. if English clubs struggling in Europe v Spanish dominance hasn't changed this then nothing will.
The real danger is major corporations taking over the medium size clubs and turns England into the NBA of football but I can't see us ever losing popularity worldwide.
Thats not a bubble. Just because we dont like the millions being thrown around doesn't make it a terrible thing.
Pogba you could at least try and justify. This summer however has seen the market go absolutely mental, and it would be silly to claim we haven't contributed. It used to be (in the past 3-4 years) that a player had to at least be of a certain quality or potential quality for such fees to be paid, for example Bale, Pogba, Di Maria, Higuain, i.e the top echelons of talent. This summer it seems everybody and their mum is worth 30m+, Sigurdsson and Barkley were 50m each weren't they?
Why's it considered a bubble?
I love it how the big clubs are going to be saddled with useless players who they'll be forced to sell (and at a loss!) whilst good ol' Spurs will continue with their revolutionary strategy which has since seen them amass a grand total of zero trophies.
That does seem like the most likely trigger for a "bursting" but I think you might be underestimating the systemic implications. If there is less TV money, all of a sudden a large number of clubs can no longer afford to pay their players. If they could negotiate a blanket pay cut for players that might solve the problem but would they be able to do that, given the players have contracts? There would be a fire sale of players as clubs looked to cut their wage bills but there would be no buyers because other clubs would be in the same position, so transfer values would collapse.
That would indicate that the bubble is reaching maximum size, not that it is about to burst. In that scenario, the current levels of spending on both transfers and wages is perfectly sustainable, we just wouldn't see any further increases. You're looking at slowdown not collapse.
The bubble can only really burst if the money is going outside the game. The reality is that the money is being recycled throughout the clubs. It can deflate but it can't burst.
This is another Summer 2009. These crazy fees will become the norm. We aren't even close to the bubble bursting. I reckon we will see a £1billion transfer one day or something truly ridiculous.
The way I see it is that revenue is locked in from TV deals and sponsorships. Only way I see a collapse is if a wider economic collapse occurs, but that didn't have much effect in 08/09 when the market collapsed.
Football is the most popular sport in the world and markets appear to be growing rather than shrinking. The Asian market hasn't been fully realised yet, neither have the South American/North American markets.
If living standards continue to rise in third world countries, football isn't in for a decline any time soon.
Football is the most popular sport in the world and markets appear to be growing rather than shrinking. The Asian market hasn't been fully realised yet, neither have the South American/North American markets.
If living standards continue to rise in third world countries, football isn't in for a decline any time soon.
The bubble will burst not because the transfers are crazy compared to earnings right now but because the TV rights deals are crazy. People have been saying that it must burst for ages and they've been wrong but that doesn't mean it never will.
Due to illegal streams and other factors Sky are struggling a little. One of those other factors is, I feel, the money is actually turning people off the sport. It cannot be argued that Sky/BT face huge challenges.
To quote here (I think links are ok when relevant?) - http://www.thedrum.com/news/2017/06...es-hit-seven-year-low-signalling-changing-the
"Average viewing for Sky’s live TV channels fell 14% over the course of the 2016/17 Premier League season despite the broadcaster paying around 83% more for the most recent deal."
It's true that SKY et al will find new ways to monetise their position and things may bounce back this season. But if they don't, if they drop again or even stagnate, what are the chances of the next broadcasting auction continuing to grow at the crazy rate it has? Slim to none. They would stay the same at the very best or possibly even drop.
That could leave some of the smaller clubs in big trouble. Even the biggest clubs could be in difficulties if one of their main sources of income is suddenly reduced. As well as reduced TV rights money, sponsorship deals will fall/stagnate. Why pay the same crazy sums when exposure is reduced with fewer people watching on TV
Players will be on five year contracts. Imagine United have 5 players on £200,000 per week - a perfectly reasonable scenario the way things are going. That alone is a commitment of £260m, or £52m a year. The wages/turnover ratio is fine at most clubs as things stand but with this summer of crazy transfer fees will come crazy wages.
It is how those wages will compare next to reduced TV and sponsor income in the next 5 years or so that will/might/could burst the bubble.
Edit - the quote above "If living standards continue to rise in third world countries, football isn't in for a decline any time soon." is a valid one. Although on a PC forum like this let's go with developing world shall we?!
Due to illegal streams and other factors Sky are struggling a little. One of those other factors is, I feel, the money is actually turning people off the sport. It cannot be argued that Sky/BT face huge challenges.
To quote here (I think links are ok when relevant?) - http://www.thedrum.com/news/2017/06...es-hit-seven-year-low-signalling-changing-the
"Average viewing for Sky’s live TV channels fell 14% over the course of the 2016/17 Premier League season despite the broadcaster paying around 83% more for the most recent deal."
It's true that SKY et al will find new ways to monetise their position and things may bounce back this season. But if they don't, if they drop again or even stagnate, what are the chances of the next broadcasting auction continuing to grow at the crazy rate it has? Slim to none. They would stay the same at the very best or possibly even drop.
That could leave some of the smaller clubs in big trouble. Even the biggest clubs could be in difficulties if one of their main sources of income is suddenly reduced. As well as reduced TV rights money, sponsorship deals will fall/stagnate. Why pay the same crazy sums when exposure is reduced with fewer people watching on TV
Players will be on five year contracts. Imagine United have 5 players on £200,000 per week - a perfectly reasonable scenario the way things are going. That alone is a commitment of £260m, or £52m a year. The wages/turnover ratio is fine at most clubs as things stand but with this summer of crazy transfer fees will come crazy wages.
It is how those wages will compare next to reduced TV and sponsor income in the next 5 years or so that will/might/could burst the bubble.
Edit - the quote above "If living standards continue to rise in third world countries, football isn't in for a decline any time soon." is a valid one. Although on a PC forum like this let's go with developing world shall we?!
I am not underestimating the systemic implications, it is just my belief that this isn't a bubble that will suddenly 'burst'. I believe that if there is a correction it will be gradual for most clubs. Some clubs may find it harder than others. It is a large leap to go from there being less TV money to clubs not being able to afford to pay their players. What is the highest wage-to-revenue ratio in the league? 50%? 60%? There's still an operational buffer, and that is without a debt restructure or other financing means to service wages.
Football is the most popular sport in the world and yet has (until very recently) been fractured and inept in how it monetized it's product. North American sports leagues have been light years ahead for decades now. Premier League broadcast revenues, despite having a global audience, are just now finally catching up to the NFL.
The bubble for club revenues will be if the broadcast revenues drop substantially. That cannot happen in the near term due to locked in contracts, but in the longer term it depends on better monetization in developing markets and monetization of newer media platforms (streaming, etc). The Premier League and UEFA cannot continue to be dinosaurs and late to the party, but should be a market leader in these areas. Revenue from the UK market is probably tapped out and may even slide some, but as long as the PL and UEFA grow revenues in the developing markets there's no reason why clubs should see a major hit to the bottom line any time soon.
Frankly, European football has been laughably small time for decades upon decades. This "bubble" has been a market correction as much as anything, as football finally figured out how to get it's head out of it's ass in terms of generating revenue.
The bubble for club revenues will be if the broadcast revenues drop substantially. That cannot happen in the near term due to locked in contracts, but in the longer term it depends on better monetization in developing markets and monetization of newer media platforms (streaming, etc). The Premier League and UEFA cannot continue to be dinosaurs and late to the party, but should be a market leader in these areas. Revenue from the UK market is probably tapped out and may even slide some, but as long as the PL and UEFA grow revenues in the developing markets there's no reason why clubs should see a major hit to the bottom line any time soon.
Frankly, European football has been laughably small time for decades upon decades. This "bubble" has been a market correction as much as anything, as football finally figured out how to get it's head out of it's ass in terms of generating revenue.
The idea of a bubble bursting sounds like it would be predicated on clubs spending more than they can afford to, or some clear future market trend where transfer fees and wages would both come down. There are maybe a very small handful of clubs doing the former (much fewer than 10-15 years ago, say - most clubs now simply have a lot more TV money or are propped up with oil money that frankly is only a fraction of what the relevant parties could invest), and I am not sure I see a crash in the latter in the foreseeable future. I think growth will slow, for sure, but I don't think the average transfer fee for a given player is likely to move downwards. Football is a huge sport with global appeal and there are a relatively small set of clubs in a small set of countries right now with the majority of global fans - that will continue for some considerable time, meaning there is still growth potential in income, licensing rights, sponsorship, etc. etc. which means that wages and transfer fees are unlikely to crash. The latter could but only if some big legal change happens.
Just for comparison in how laughably small time European football has been in marketing it's product - Diego Maradona was the best player of the 1980s and a volatile and entertaining figure, and yet he spent most of his career playing in a league that was barely broadcast outside of it's own country, and didn't even have every match he played televised. His club was sponsored by various pasta makers. Meanwhile in North America you had Michael Jordan or Magic Johnson playing every game on television with global audiences and massive sportswear / beverage / financial services sponsors with global reach. It's simply incomparable the gap between how effectively North American sports leagues have been marketed and monetized compared to European football until very recently.
Can you imagine Ronaldo playing only 50% of his matches on TV and being sponsored by a Spanish ham maker? Of course not. And now that European football has finally realized there's a fecking giant pot of gold sitting there for them, they are dipping in it to.
Can you imagine Ronaldo playing only 50% of his matches on TV and being sponsored by a Spanish ham maker? Of course not. And now that European football has finally realized there's a fecking giant pot of gold sitting there for them, they are dipping in it to.
IMO the Sky and Premier League model for how games are broadcast is out of date and is the reason for the decline in viewership, not people losing interest in the league. The Premier League is more popular than ever and growing in key markets like the US.
But in the Netflix-era people want to watch the games that they want to watch at the times they want to watch them. This whole thing of you get to watch 5 games over the weekend that we (Sky) pick for you because we know best is what is causing people to use streams.
The situation is ridiculous when the only way you can get to watch your team play is via a supposed illegal manner when there is literally no legal way to watch certain matches. I would happily pay monthly for a service where I get to pick which matches I want to watch and can watch them on any device whether it be mobile, TV, iPad whatever...
No bubble IMO. Football is a business where it's possible to find investors where their top priority isn't to create value in the short run.
A club has also the right to go bankrupt.
The market value of Neymar is just an exceptional case. One market for 99.9% of the player and a market for the confirmed or future Big Stars (around 10 players a a given point in time).
A club has also the right to go bankrupt.
The market value of Neymar is just an exceptional case. One market for 99.9% of the player and a market for the confirmed or future Big Stars (around 10 players a a given point in time).
Definitely. Things are going in the wrong direction though. A while back you at least could see all the televised games (though as you say not all the games you want to watch are televised) with a single subscription, to Sky. But then they decided to increase competition, because competition is always good for consumers. But in this case competition means someone cant follow all their teams' televised games with a single subscription, now they need to pay for two subscriptions because some of their team's games are on Sky and others are on BT. This at a time when disposable household income is being squeezed. Doubling their payments to watch games at home is not viable for some people, so they are being pushed into watching streams. And once you start doing that, why pay for any of it?