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Oil Money and European Football

Image Credits - Jakub Cichecki

Introduction

Oil is potent. Both crude and refined oil are considered to be the most widely traded commodities globally today, with the highest energy content among all common fuel sources. In nations such as Kazakhstan, Angola, and Russia, oil has propelled opportunists and economies towards prosperity. 


One notable example is the Russian oligarch Roman Abramovich. Abramovich acquired the oil behemoth Sibneft, which yields billions in yearly income, for a mere $100 million. After a couple of years, Abramovich divested his shares for billions of dollars and subsequently ascended to the status of one of Russia's wealthiest individuals. With his recently accumulated wealth, Abramovich purchased the English football club Chelsea in the year 2003, thus heralding the beginning of the era of oil money in the sport. From 2003 to 2021, through extravagant spending, Abramovich propelled the club to two Champions League and five Premier League trophies. 


This action also inspired subsequent foreign investors. In 2008, Sheikh Mansour acquired Manchester City. In 2021, Mohammed bin Salman acquired Newcastle United. This trend did not limit itself to England. In 2011, Tamim bin Hamad Al Thani purchased the French club Paris Saint-Germain (PSG) through Qatar Sports Investments. Looking at the increasing advent of oil money, we see how it has influenced the landscape of European football.


The Origins of Club Football

In 1863, the Football Association (FA) was formed in England. This marked the beginning of organised football in England. As per the labour laws, specifically the Factory Acts implemented during the mid-19th century, the working class was granted more free time, which led to a rise in the popularity of football as a leisure activity. Consequently, various clubs emerged in various industrial centres of the Midlands and the North. The examples include Newton Heath LYR Football Club (Manchester United), Thames Ironworks Football Club (West Ham), and St. Domingo's Football Club (Everton). In the early stages of the game, it was primarily monopolised by individuals belonging to the working and middle classes. Young, working-class men toiled arduous shifts in the mines, were entirely subject to their employer, and possessed limited autonomy. Football was a means through which individuals could establish their reputation and become part of a revitalising community. Although the game was popularised in private schools, many of the upper class scoffed at it, asserting that it provided an avenue for the expression of the "criminal tendencies" of working-class men.


French club football's origins were alike. Firms in northern cities of France, such as Lens, believed that sports enhanced the cohesion and physical well-being of their employees. The game was more diverse with teams playing foreigners including Raymond Kopa, Larbi Benbarek, and Just Fontaine, who were the most notable ones. The game assisted immigrants and working-class French citizens in social mobility.

Many of the owners of the top clubs, such as John Houlding of Liverpool and Louis Edwards of Manchester United, were affluent individuals, yet only a limited number could be described as true multi-millionaires. From 1959 to 1968, during one of Manchester United's prosperous eras, the club stood as England's leading team, yet they faced financial difficulties. Denis Law, the striker for Manchester United during a significant portion of that era, remarked that the players primarily utilised rags as training attire, thus emphasising the club's thrifty approach. Even Law’s £115,000 acquisition had to be financed by a local bookmaker, as Edwards found it challenging to cover his wages.

Outside of England, clubs like Real Madrid were forced to sell their star midfielder Luis del Sol in 1962, shortly after their 5th European Cup victory in 1960, owing to the financial hardship that the club was going through. This was the nature of the game during the aforementioned period. The upper echelons exhibited affluence, yet they were nonetheless limited by financial considerations, necessitating compromises in squad assembly.          

  

The New Era of Oil Money

Chelsea, conversely, did not have to make any compromise under Abramovich's ownership. The club spent an unprecedented £140 million within the initial six weeks of his takeover. They did not need to judiciously allocate funds and make trade-offs; they could purchase any player they desired at any price. Arsenal, another club based in London, is the city rival of Chelsea. In 2003, Arsenal had Thierry Henry who was considered to be among the best footballers globally, also ranking 2nd in the Ballon d’Or voting that year. In the 2003 summer, Chelsea proposed a sum exceeding £40 million for his acquisition. Previously, only reputed clubs like Barcelona and Real Madrid could afford to buy a player of Henry's calibre, as substantial reserves of money were accumulated through years and even decades of sustained success. Furthermore, clubs typically refrain from selling to their competitors. Nevertheless, Chelsea, a relatively small football club, proceeded to submit a lavish bid for Henry, which was promptly rejected by Arsenal. This established a precedent for forthcoming owners, demonstrating that a club's reputation and enduring triumph were no longer the primary elements in accumulating wealth and enticing talent. Looking back on the humble beginnings of the game, many regard Abramovich's tenure as a betrayal of its roots.


Sheikh Mansour's persistent tenure as the owner of Manchester City can be perceived in a comparable manner. The club had achieved a moderate level of success before World War II, with two FA Cup victories and a league title in 1937. However, clubs such as Aston Villa, Manchester United, Arsenal and Liverpool clinched greater success in the game. Despite having a moderately successful period under the guidance of Malcolm Allison, Manchester City was primarily characterised as a "yo-yo club", consistently transitioning between Divisions and achieving minimal success. Nevertheless, in 2008, upon the arrival of Mansour, a member of the ruling family of Abu Dhabi, the club was infused with billions. The club signed superstars such as Sergio Agüero and notably defeated rivals Manchester United for the Premier League title in 2012. The club won the title for the first time in 76 years. From that point forward, Manchester City evolved into a prominent global entity, as they signed Europe’s top-notch footballers, such as Kevin De Bruyne and Erling Haaland. With these stars, Manchester City achieved parity with Manchester United by securing the Treble in 2023 winning the Premier League, the FA Cup and the UEFA Champions League in a single season. No longer were they considered United's inferior counterparts, in fact, they had become Manchester's premier team.


PSG was established in the year 1970 to provide the capital of France with a successful football club. Among all the clubs in Paris, as of the year 1970, only Red Star Paris had competed in the top division of French football. In its initial stages, the club was dependent upon financial support from patrons in various locations such as Paris, Morocco, and Belgium. The club possessed a robust and varied fan base, consisting of African and European immigrants. Similar to Manchester City, the club had experienced several successful years before receiving an influx of funds, however, they were overshadowed by competitors such as Olympique Lyonnais and Olympique de Marseille. However, Since 2011, the club has secured nine Ligue 1 titles, with only a limited number of French clubs capable of rivalling its achievements. The financial support provided to PSG significantly exceeds that of all other French clubs.


The Responses to Change

The influx of billions into football has not been embraced by all. RB Leipzig, funded by Red Bull and established through legal loopholes in the German sports law, has earned the moniker of being "Germany’s most hated club". Other sporting cultures, like the Scots and the Basques, have also opposed foreign investment. Athletic Bilbao, Heart of Midlothian, and various other clubs lament the growing commercialization of football. This has occurred due to the influx of billions, frequently originating from the oil industry, which has had a detrimental impact on the distinct identity of European football clubs. Football clubs in Europe are regarded as a symbol for a group or a local geographic entity in which they are located. Clubs also tend to focus on their regional identity and local philosophy. Many people are of the opinion that the influx of oil money has played a role in the "McDonaldisation" — or rationalisation — of the sport. Instead of cultivating connections with the community and recruiting from a local talent pool, clubs supported by financial investments from the oil industry often allocate significant resources to acquiring foreign players. As a result, numerous young players do not receive an opportunity to play. In the case of Manchester City, academy players like Cole Palmer and Romeo Lavia found it challenging to secure first team playing opportunities within the club. Hence, they were eventually sold out by the club. Both of them currently play for Chelsea and have together commanded a transfer fee totalling £100m.           


Image Credits - The Scotsman

The Impact on Competitors

The spending by clubs such as PSG and Manchester City has escalated the demands on other football clubs. Mansour has the capability to finance expensive signings; however, not all football clubs possess this capacity. Manchester City routinely spends more than £150 million during summer transfer windows. In recent times, notable signings like that of Jack Grealish, Riyad Mahrez, and Rodri have been secured for substantial amounts. With the ongoing growth and development of Manchester City, football clubs that are not supported by the oil industry, such as Manchester United and Liverpool, find themselves compelled to invest significantly in top players in order to remain competitive with Manchester City. Notwithstanding this, Manchester City has secured victory in 6 out of the last 7 Premier League titles. Even Liverpool, with their best squad over the past three decades, has faced difficulties in matching the pace set by Manchester City. PSG, as previously stated, has secured victory in 9 out of the past 13 Ligue 1 championships. Both the Premier League and Ligue 1 have emerged as significantly unbalanced competitions, with Manchester City and PSG exerting dominance. PSG has little to no jeopardy to their eminence at this juncture, as no Ligue 1 team can rival them.


Liverpool and Arsenal, owing to restrictive ownership and poor management, did not achieve significant success during Abramovich’s tenure at Chelsea, securing 0 and 1 Premier League title respectively. They were unable to compete with Chelsea's expenditures, as neither Liverpool nor Arsenal was in a position to risk their future with speculative spending. Only Manchester United were able to withstand and compete, due to the brilliance of arguably the greatest manager of all time, Sir Alex Ferguson. After Sir Alex Ferguson retired in 2013, Manchester United has not won any Premier League titles. Additionally, they frequently suffer humiliating defeats against Manchester City owned by Mansour.


 PSG's expenditure is equally obscene. PSG acquired both Neymar and Kylian Mbappe for a total of €400 million in 2017, which caused astonishment throughout the global football community. This spending spree was unprecedented. The President of La Liga, Javier Tebas, has accused PSG of financial doping and manipulating financial records to circumvent violations of Financial Fair Play (FFP) regulations. As a result, he has called for an inquiry into the club.


Further, players and clubs frequently utilise the fees and salaries of other players as a reference point for their own compensation. PSG have frequently hit headlines for making expensive deals in the market. They signed the Brazilian star Neymar in 2017 for a whopping €220 million, the most expensive football transfer of all time. In the same transfer window, PSG signed Mbappe for €185 million, the second most expensive signing in football history. This spree sent shockwaves through the rest of European football. This overspending has resulted in inconsistent footballers commanding substantial fees and salaries. Marcus Rashford, who is recognized for his lack of consistency and negative attitude, receives a weekly salary of £350,000. Antony, considered an inconsistent football player, was sold for a considerable sum of £85 million, a valuation perceived as surpassing his actual worth in consideration of his skill and character. Antony was, in fact, privately appraised at £25 million by United scouts before his contractual agreement. Whilst Neymar and Mbappe were likely not utilised as a benchmark for Antony's final valuation, subsequent signings that used those two as benchmarks impacted Antony's transfer; therefore, the ripple effect is still in motion.


Beyond England, Florentino Pérez, president of Real Madrid, is dissatisfied with the extravagant spending of oil-supported teams. If Real Madrid, a prominent football club globally renowned for its wealth, boasting 14 European Cup victories and 35 La Liga championships, is experiencing challenges in keeping up with clubs owned by oil magnates, then this is indicative of a concerning trend for the overall well-being of the sport.


How Can The Other Clubs Compete?

What actions can prospective football clubs take? The sole means of overcoming domination is to either invest heavily in the team, or organically construct a competitive squad and directly compete with renowned clubs. The first, thanks to Financial Fair Play (FFP), no longer exists. FFP originally began as a mechanism to prevent clubs from exceeding their financial capabilities. FFP is beneficial for the health of the game, however, it has adverse effects on competition. Spending was one of the few methods to directly confront teams such as PSG and Manchester City. After the initiation of FFP in 2011, clubs were compelled to operate within their financial capabilities, and the infusion of funds by owners was restricted to a specified percentage of the total revenues. Fortunately, Manchester City received their funds before the introduction of FFP, and PSG receives ample funding from Qatari sponsors, a practice that is perceived by many as a loophole in the FFP regulations. As far as the endeavour of building a team from its inception is concerned, its sustainability is not guaranteed. In this regard, Tottenham Hotspur are facing a significant misfortune. From 2014 to 2021, they developed an outstanding team under the leadership of Mauricio Pocchettino, featuring exceptional talents such as Christian Eriksen, Toby Alderweireld, Jan Vertongen, Harry Kane, and Heung-Min Son. Despite this, they won 0 trophies during this time, regularly falling short to sides like City, Manchester United, and Chelsea. Manchester City nearly completed the signing of Harry Kane in 2021, however, they were unsuccessful in persuading Spurs with their £127m bid. Tottenham is widely acknowledged as a prominent football club, esteemed by the elder members for its dedication to attacking football and the development of renowned players such as Glenn Hoddle, Jackie Blanchflower, Harry Kane, and Dave Mackay. For Tottenham to be bullied and dominated by Manchester City, a club with a fraction of the history and authenticity, simply because they were fortunate enough to have been acquired by Abu Dhabi royalty, is a severe indictment on the sport. 


In France, AS Monaco created headlines by clinching the Ligue 1 title in 2017. After Monaco’s victorious campaign, Paris Saint-Germain acquired their standout player, Mbappe, for a sum of €180 million. The individuals such as Benjamin Mendy, Fabinho, Bernardo Silva, and Tiémoué Bakayoko departed from the monacan team shortly thereafter, with Mendy and Silva penning deals with Manchester City for a total of £105m. After the squad was dismantled, Monaco found themselves in a relegation battle two years later and has not competed for the Ligue 1 title since. It appears that, regardless of the course a club chooses, it will ultimately fail. The optimal course of action entails recruiting judiciously, fostering a cohesive team, and striving to secure a few trophies before facing dismantlement due to the financial prowess of clubs like Manchester City or Paris Saint-Germain. 


Conclusion

All things considered, the impact of oil-rich nations on European football has had detrimental effects. Clubs are progressively becoming disconnected from their local origins and are struggling to stay up with the competition at Manchester City and Paris Saint-Germain. Regarding what the future holds, it is highly uncertain. Perhaps the proposed European Super League will offer a limited number of clubs the chance to rival financially supported clubs. However, this would result in a further decrease in the competitiveness of European football. With European football further departing from its core values, it is likely that the game will continue to be dominated by oil financed football clubs.


 

References

  1. https://www.goal.com/en-us/news/what-is-financial-fair-play-and-how-does-it-work-ffp-rules-explained/1ihlynh8s59i319l6nxx1z6kg5 

  2. Baker, W. J. (1979). The Making of a Working-Class Football Culture in Victorian England. 

  3. https://www.abc.net.au/news/2003-12-14/chelsea-owner-made-formal-offer-for-henry-report/105842?future=true&

  4. https://www.goal.com/en/news/financial-dopers-or-just-jealousy-psgs-controversial-ffp-st%20ory/j1xmge8bgjoy1enf796l5mrgm

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DISCLAIMER: The views expressed in articles are the authors’ and not those of Hindu College Gazette or The Symposium Society, Hindu College.

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