July 5, 2004

Check a nation's football to find its economic pulse

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Portugal versus Greece was hardly the bookies’ anticipated pairing for the final of Euro 2004. You would have got generous odds on it.

Sports pundits still refer to Europe’s football “aristocrats” when it is clear that the game’s landscape and hegemony has changed. Whoever wins this evening’s final in Lisbon, it is evident from this tournament and the last World Cup that the pecking order of football is changing to reflect something fascinating.

The surprise packages of the last two major tournaments – Greece, Portugal, the Czech Republic, Turkey (third in the World Cup 2002) and South Korea (semi-finalists in 2002) – share one economic similarity: they are all regarded as developing countries in financial markets.

If you go to the back page of the Economist any given week, you will see that these countries are lumped together under the rather disparaging description of “emerging markets”.

They are seen not quite as First World economies, but rather as unstable and maybe a bit risky. However, they are growing faster and have more dynamism than the old economies of France, Italy, Germany and England.

Could there be a correlation between a nation’s footballing prowess, its team’s performance on the pitch and its economy? Could globalisation be meddling in international football as well as international economics?

Many people argue in half-jest that the emergence of the Celtic Tiger was pre-dated by our emergence as an international footballing nation in the various championships of 1988,1990 and 1994.

While it is clear that a good run in a major championship boosts national morale and spending on booze, barbecues and overly tight acrylic jerseys, could there be something much more fundamental going on?

Let us examine the contention that footballing success is about more than just good players. Why not entertain the argument that the fortune of a national team on the pitch is a function of the institutional robustness of a country?

Let us see whether it could be possible that the Fifa rankings constitute an accurate economic as well as footballing performance table.

At the moment, the main focus of the Euro 2004 post-mortem is that Europe’s football aristocrats have allowed too many foreigners to play their football in the Premiership in England, the Bundesliga in Germany, Serie A in Italy and La Liga in Spain. As a result, domestic talent is suffering.

But a more interesting way to look at this is that the second-rate footballing nations, like the second-rate “emerging” economies, are catching up by virtue of the same globalisation process.

The best way to examine this is to look initially at the extremes.

Take Africa. How can we explain the failure of African nations to make a real mark in any major championship at a time when the continent is exporting more quality footballers than at any other time in its history?

One reason might be that the structures are simply not there at home. The domestic infrastructure is so poor, the leagues so corrupt and the fan bases so penniless, that the national structure is entirely haphazard, amateur and cannot get it together to ensure that the sum of the team is greater than its parts.

This contention might not seem so outlandish when we examine what makes a national team successful.

The most important ingredient is money. Money for underage facilities.

Money to pay sports councils to organise leagues. Money to pay former professionals to coach young players. Money to support local clubs to nurture the local talent. Money to extract advertising revenue out of sponsors and money in a reasonably rich fan base to plough cash back into the game.

A country needs money for footballing academies, for summer Samba Soccer schools and ultimately for stadiums, venues and viable training facilities.

In Africa, the cash is simply not there, so the national footballing organisation is bereft of any depth. So, while the players exist, the national teams make no real impact and do not expect to.

Football, like oil, diamonds, copper and gold, is an extractive industry in Africa where the riches are simply taken for use in developed lands. Globalisation has accelerated this extractive process in oil, gold and copper, as it has in football.

However, while globalisation has failed Africa, it has worked in the middle-income countries such as Greece, Portugal, Turkey, the Czech Republic and Korea.

All these countries have benefited enormously in economic terms in the past two decades. Cash has come into the countries, lifting, if not quite all the boats, at least a large number of them.

Because the middle-income countries had initial infrastructure, rule of law and some clarity for investment, cash inflows have led to permanent increases in wealth.

This has led to the emergence of a football-loving middle class that can be targeted by advertisers such as Vodafone, T-Mobile, Orange, Amstel, Siemens and Nokia.

The advertisers and the increased cash in the coffers of the state allows the authorities to invest the requisite money at every stage of the national football infrastructure. This means that, at every level, the chances of the national team being more than the sum of the parts is enhanced.

This globalisation process is also evident in the national leagues and domestic coaching competence. In contrast to Africa, the Champions League generates the cash from television rights to enable Czech, Greek and Portuguese stars to play their football at home with Sparta Prague, Benfica, Porto or Panathinaikos.

Porto, one of the poorest of the big European clubs, won this year’s Champions League. The Turks also have clubs of decent pedigree.

In Asia, South Korea reached the semi-finals of the World Cup without one recognisable player, but with a team of real quality stemming from the national league and a Dutch coach of some guile who understood how to beat Europe’s fading powers.

So it is clear that globalisation is changing football’s pecking order, but who is losing out?

The evidence is unambiguous. Old Europe (to borrow a phrase from Donald Rumsfeld) is on the skids. The big five – France, Italy, Germany, England and Spain – have a problem.

Just as globalisation is allowing middle-income countries to catch up economically, the same financial imperatives are driving the changes in football’s hegemony.

Cash is king in national football. Over the coming years the biggest bets in club football will not be made on Manchester United, Milan, Juventus, Real Madrid, Bayern Munich and others of the old aristocracy; the smart money will be flowing to Prague, Athens, Istanbul and the other former second-tier clubs.

This process is only beginning. What will happen when the Chinese, Koreans and Japanese clubs emerge? Don’t take my word for it: look at the countries where the likes of Vodafone are putting most of their football-related branding and marketing efforts.

Obviously the other factor driving the success of national teams in the future will be population growth. How likely is it that the countries of Old Europe, with their dwindling birth rates, will produce winners in the future?

If you do not think there is a correlation between sport and economics, think of the other big international sporting event this weekend – tennis.

Today, emerging Russian stars dominate women’s tennis. The French Open final a few weeks ago featured two Russian women, Elena Dementieva and Anastasia Myskina.

Yesterday’s Wimbledon final saw 17-year-old Russian Maria Sharapova challenge the traditional order. Remember Russia shunned tennis in communist times as being far too individualistic and un-Soviet. Since the fall of communism, tennis, with its focus on individual talent, has burst forth.

Nothing more reflects the new Russia than its new stars in its new sport. Again, sport reflects underlying economic changes.

So what does this mean for future footballing nations?

Well, in the same way as manufacturing jobs are migrating from the rich countries to the developing countries of eastern and southern Europe, so too is footballing prowess.

This is not to say that the big five aristocrats of European football are in terminal decline. They are, however, like their economies, in relative decline.

The new kids on the block are the middle-income European countries.

The process of globalisation will accelerate this as long as the new powers have sufficient domestic infrastructure to benefit from the new football-related inflows of cash.

Globalisation will not stop at changing the relative pecking order in Europe.

Eventually, many other middle-income countries will have their place in the sun at the expense of the entire continent.

Think about the eclipse of England in the sports that it invented over the last 40 years.

The collapse of Britain’s economic empire was foretold by its defeats on the pitch in football in the 1950s, rugby in the 1960s and cricket in the 1970s.

So the next time you want to know how an economy is doing, in addition to checking its GDP, growth, taxes and exchange rates, look up its Fifa rankings as well – you’ll hardly go wrong.


  1. Ronan Lyons

    Hi David,

    An interesting piece, and one with a very different angle
    to Eamon Dunphy’s on RTE recently. There, he argued that
    poverty and totalitarianism were necessary conditions (I’m
    not too sure if he meant one would do, or both were
    necessary) for footballing geniuses to flourish.

    Perhaps there is, however, a “Gameboy effect”. The greater
    the disposable income of parents, the greater the
    allowances given to children. The greater their allowances
    and their parents’ incomes, the more likely the children
    are to have Playstations, digital TV and a multitude of
    other time-consuming but not calorie-burning pastimes, thus
    reducing the overall number of hours spent by the average
    child playing sport and thus their fitness and skill levels.

    Maybe where your two viewpoints convege is at the idea that
    there is at work some type of Kuznets curve-relationship
    between national income and the nation’s football team. At
    very low levels of income, although much time is spent
    playing football around the shanty towns, there is little
    infrastructure in place to reap the rewards of this human
    capital. As income increases, that infrastructure improves,
    pushing out the possibilities frontier, so to speak, of the
    national side. A point might be reached, however, where the
    effect of increased income on social behaviour outweighs
    these infrastructural benefits, leaving countries like the
    Netherlands to fill their academies with ex-colonial
    imports and France to trawl through Senegal, Suriname and
    Reunion for its players.

    Either that, or you need a really good coach these days!

    All the best,

    Ronan.

  2. David Mc Williams

    hi ronan, thanks for the comment. You’ve articulated what I
    was trying to say much more cojently than myself!

    thanks, David

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