[email protected]: Vince Cable – Arthur, Delia and another rotten bubble

Over at the Daily Mail, Lib Dem deputy leader Vince Cable examines the disconnect between the have-nots and the ‘haves and have-yachts’ in the sporting world, and asks if ‘The Storm’ will close the gap:

First it was debt, then property. Now I sense another bubble waiting to burst. While some of Britain’s key wealth-generating activities – construction, manufacturing, finance – are in terrible shape, one industry sails serenely on apparently oblivious to the recession: football’s Premier League. Britain’s leading banks may have bitten the dust but our top clubs dominate Europe and, arguably, the world. …

I can’t see this party continuing much longer. TV channels have run out of cash and can’t honour their contracts. Advertisers are waving yellow cards. Fans at the turnstiles fear for their jobs. And this year’s supporters’ chant will be ‘Where have all the billionaires gone?’ …

We are producing a growing disconnection: between the top, rich clubs and the rest; between top professional sport and local communities; and between sport as a TV spectacle and as an activity. … The problems are not just British. Other European countries (notably Italy and Spain) also allow money to buy sporting success. A Europe-wide salary cap might stem the rush to widening inequalities and eventual ruin. …

As with banking, perhaps a necessary corrective is for the Premier League bubble of ridiculous salaries and inflated egos, financed by the world’s super-rich, to burst. We may be close to that point.

You can read the article in full HERE.

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  • Simon Wilson 11th May '09 - 6:27pm

    I am afraid that Vince hasn’t chosen the best example here. As a long-suffering Norwich City member, we were relegated because we were rubbish on the pitch and poorly led off it. Lots of clubs with much lower crowds and income did better.

  • David Cooper, Newbury Libdem 11th May '09 - 10:05pm

    Grossly excessive returns are often indicative of a bubble. As is customary, the downside will be at least partly borne by the taxpayer. I’m not a soccer fan myself, but I think bankrupt clubs are undesirable, since they will have debts that the taxpayer will have to pick up.

    But Vince is wrong to propose a cap on players wages. A better approach would be to tax grossly excessive wages and bonuses at a high marginal rate, even above 50%, not out of a sense of outrage or envy, but as insurance against the day when the bubble driving them bursts. The £100K weekly payments to top football players represent an accumulating time-bomb of debt. We should not hesitate to tax such wages at very high marginal rates, to protect ordinary taxpayers against the liability they represent. Top footballers may move abroad in response: perhaps taxpayers are braver in other countries.

  • Footballers do not “deserve” the money they get.

  • “Grossly excessive returns are often indicative of a bubble.”

    Few premiership clubs are making those though.

  • “Footballers do not “deserve” the money they get.”

    A highly subjective assessment – but unless we set up Jobcom to assess how much all workers “deserve” to be paid people will be paid what the market says they should.

  • Matthew Huntbach 12th May '09 - 9:37am

    I never understood football, hated it in fact, but I can see the point in cheering on one team of local lads from a place where one has some attachment against another team of local lads from somewhere else.

    I can’t see why anyone would want to cheer on a team of hired men gathered from across the world each of whom might next year be playing for the opposite side.

    I may be wrong, are the skills in football so much that watching two teams who are random assemblies of men playing the game is so much fun that one would want to do it? It does seem to me a good part of the fun must come from having some sort of emotional attachment to one side. Developments in professional football seem to me to be working towards ending that emotional attachment. I think from that it must eventually end in disenchantment as people start thinking “why should I care that random collection X wins against random collection Y?”.

  • Why should the taxpayer pick up the debts of football clubs?

    Let them fail and let the market educate itself as to the true risk involved.

    If this results in fewer clubs, then so be it.

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