The Global Polio Eradication Initiative (GPEI) spearheaded by the World Health Organization aims to eradicate polio worldwide. Pakistan has active and widespread transmission of polio and GPEI has set aside a $100 million budget for 2013 – 2015, although it presently has a shortfall of about 20% of this sum.
Given the problems in the world, it can be argued that it is not only the chants on football terraces that are obscene. Today, 24 year-old Gareth Bale became the world’s most expensive footballer with Spain’s Real Madrid paying Tottenham Hotspur of the UK, a massive $132 million for his services, more than enough to cover the cost of the polio eradication programme in Pakistan. Gerardo Martino, the understated new coach of Real Madrid’s arch-rivals, Barcelona, described the transfer fee as “lacking respect for the world we live in”.
Bale’s weekly wage of $475,000 represents approximately ten times the average annual salary of an employee in his home country. In total, over half a billion pounds was spent on player transfers by UK premiership clubs alone during the summer transfer window, with more than two billion euros being spent across Europe. The question is whether this can be justified at a time of economic austerity. Should one player be paid so much when youth unemployment in Spain is running at 56% of all 16 to 24 year-olds?
Football (soccer) has long been considered the ‘people’s sport’, but over recent years the costs of attending matches has risen dramatically and football crowds consist more of the middle classes and corporate clients than traditional supporters. Football has become big business with Europe’s super-clubs, especially Real Madrid, Barcelona and Manchester United, buying ‘icons’ , such as Beckham and Ronaldo, more than simply players. Football clubs have become first and foremost brands and their players, products to be sold to the highest bidders. In fact, their commercial success depends more on the sales of merchandise and television rights worldwide, than on revenue from ticket sales alone. For example, it is common for European clubs to buy players from Asia to ensure a wider audience in the Asian region and thereby generating significant merchandise sales. In the UK, the recent entry into the market of BT Sports has meant annual revenues for the rights to televise premiership football rising to over £5.5 billion. Clubs have been floated on stock exchanges worldwide attracting billionaires prepared to invest their ‘pocket money’ in the risky business of the football club ownership.
However, markets are about consumer choice and the price of products and services are the result of the forces of supply and demand. If owners, advertisers, television companies and the paying public are prepared to pay for the privilege of watching high quality football, is this morally wrong? If fans continue to buy the kits and football paraphernalia associated with their favourite players, then the market is working effectively. Although, it is argued by many commentators that no individual can be worth the money being paid for Bale, the fact is that there are very few people with the talent required to play at the highest level of football, whereas many people can become teachers, nurses or accountants so salaries will inevitably be much lower. However, those teams that live beyond their means will be subject to the same fate as any other business where revenues are insufficient to pay costs. Indeed, the last couple of years have seen a dramatic increase in football clubs on the brink of closure.
IB Style questions
1. Define the following terms:
2. Explain the factors determining the salaries of professional footballers.
3. Analyse the role of branding in global sports markets.
4. Discuss the ethical issues associated with football marketing and operations.