Italian lire. At the time, in 1998, that was about £17 million. Eriksson reminisced, ‘That was the biggest sum in the world. No player had been involved for that.’ He said the talks then went more or less as follows:
Cragnotti: That’s a lot of money.
Eriksson: I know.
At this point Atlético mentioned that it might accept some Lazio players in partial payment for Vieri.
Cragnotti: Can we do that?
Eriksson: No, we can’t give away these players.
Cragnotti: What shall we do then?
Eriksson: Buy him.
Cragnotti: Okay.
Eriksson recalled in Zurich: ‘He didn’t even try to pay 49. He just paid 50.’
Nine months after Vieri joined Lazio, Inter Milan wanted to buy him. Once again, Eriksson reported the conversation:
Cragnotti: What shall I ask for him?
Eriksson: Ask for double. Ask 100.
Cragnotti: I can’t do that.
Eriksson recalled: ‘So he asked 90. And he got 90. That’s good business.’ (Or the ultimate example of the greater-fool principle.)
Someone in the audience in Zurich asked Eriksson whether such behaviour was healthy. After all, Lazio ran out of money in 2002 when Cragnotti’s food company, Cirio, went belly-up. Cragnotti later spent time in prison, which even by the standards of Italian football was going a bit far.
Eriksson replied, ‘It’s not healthy. And if you see Lazio, it was not healthy. But we won the league. And we won the Cup Winners’ Cup. We won everything.’
The point is that football clubs, prompted by media and fans, have a tendency to make financially irrational decisions in an instant. They would like to think long term, but because they are in the news every day they have ended up fixating on the short term. As the British writer Arthur Hopcraft wrote in his book The Football Man in 1968, ‘It is the first characteristic of football that it is always urgent.’ Ferran Soriano, chief executive of Manchester City, advises, ‘Do not take decisions on a Monday’ (i.e. based on the weekend’s result). However, taking decisions on a Monday is the nature of professional football.
An executive with an American entertainment corporation tells a story about his long-arranged business meeting with Real Madrid. His company was hoping to build a relationship with the club. But on the day of the meeting, Madrid ritually sacked its manager. The usual chaos ensued. Two of the club officials scheduled to attend the meeting with the American executive did not show up.
Chris Anderson entered football specifically with the aim of making the game more thoughtful. Once a semi-professional goalkeeper in Germany, he became a professor of political science at Cornell University in the US, but his life changed in 2009 when his wife gave him a copy of Moneyball. Anderson read it open-mouthed. He began blogging about football data. Soon he was being asked to consult clubs. He wrote his book The Numbers Game, and in 2015 gave up his tenured job at Cornell in order to become managing director of Coventry City in League One. He lasted only eleven months at Coventry, but he came away with some insights into why clubs don’t think very hard. Anderson told the world-class Dutch sportswriter Michiel de Hoog that he hadn’t come across a single truly innovative club anywhere in football. A club could potentially use all the new knowledge from physiology, psychology, sports data, organizational science and so on, and come up with a completely different way of doing things, but, said Anderson, ‘No one has really taken it and run with it.’
Why not? Anderson identified various reasons:
1 ‘Time is the great luxury in football,’ he told De Hoog. Coventry often played two matches a week. The constant pressure dissuades clubs from trying anything new.
2 In Europe at least, football clubs can be relegated, which means financial disaster. Clubs in American sports leagues are free from that pressure, which is why you find innovators at some NBA teams such as the Houston Rockets and the Philadelphia 76ers.
3 If you do everything the same as all the other clubs, then you can’t be blamed or humiliated if things go wrong.
4 Most football clubs are packed with people who have always done things the old way. So everyone keeps doing the same things they have done for ever, even if those things have never worked particularly well.
5 A ‘masculine culture’ in the ‘working-class’ football industry encourages stubbornness and certainty, argues Anderson. He says that in recent years the game’s insiders, the gnarled old ex-players-turned-coaches, have recently become scared of losing their power to egg-headed data whizzes. That has made some of them even more stubborn.
Anderson concluded that the clubs with the most freedom to innovate were new clubs with no existing culture, such as RB Leipzig, which was founded in 2009, and eight years later finished second in the Bundesliga. But in the rest of the industry, he said, two basic rules applied: ‘When you’re doing well, why change? And when you’re doing badly, why change?’
NOT BUSINESSES AT ALL
When businesspeople looked at football, they were often astonished at how unbusinesslike the clubs were. Every now and then one of them would take over a club and promises to run it ‘like a business’. Alan Sugar, who made his money in computers, became chairman of Spurs in 1991. His brilliant wheeze was to make the club live within its means. Never would he fork out 50 billion lire for a Vieri. He was dismayed to discover that managers regularly stole from their clubs in the form of bungs (bribes, mostly paid by agents who wanted the manager to make a particular transfer). After Newcastle bought Alan Shearer for £15 million in 1996, Sugar remarked, ‘I’ve slapped myself around the face a couple of times, but I still can’t believe it.’
He more or less kept his word. In the ten years that he ran Spurs, the team lived within its means. But most of the fans hated it. The only thing Spurs won in that decade was a solitary League Cup. It spent most of its time in mid-table of the Premier League, falling far behind its neighbour Arsenal. Nor did it even make much money: about £2 million a year in profits in Sugar’s first six years, which was much less than Arsenal and not very good for a company its size. Sugar’s Spurs disappointed both on and off the field, and its experience also illustrated a paradox: when businesspeople try to run a football club as a business, not only does the football suffer, but so does the business.
Other businessmen have pursued a different strategy than Sugar’s. They assumed that if they could get their clubs to win trophies, profits would inevitably follow. But they too turned out to be wrong. Even the best teams seldom generated profits. We plotted the league positions and profits of all the clubs that played in the Premier League from 1997 to the 2015–2016 season, as shown opposite.
The graph shows how spectacularly unprofitable the football business has been. Each point on the chart represents the combination of profit and position for a club in a particular year. One obvious point to note is that most of the dots fall below zero on the profit axis: these clubs were making losses. But the graph also shows that there was barely any connection between league position and making money. Although there is some suggestion that a few clubs at the top of the table made big profits, the graph also shows that some clubs in these positions made big losses. Manchester United’s consistent profitability is clearly the exception. In the thirty years before being taken over by the Glazer family in 2005,
