Between the Lines

"Of all unimportant subjects, football is the most important" – Pope John Paul II

A long-term explanation of United’s financial supremacy

Posted by hakanrylander on October 3, 2008

The widening gulf between rich and poor clubs is a distinct, and regrettable, feature of the modern game. Well, not only of the modern game. The trend has in fact been in evidence for very long. But a closer look at this development sheds a surprising light on how important changes have, coincidentally, occured at ideal times for United and helped the club achieve financial supremacy over its English rivals. At least until Abramovich and the Abu Dhabi guys came along.

Empirical research (Dobson, Goddard; The Economics of Football) shows that the gap between rich and poor in English football was considerably wider at the end of the century than in the mid 1920’s. This is not at all surprising. More interesting is the finding that almost all of the increase in inequality can be attributed to two rather short periods within those 75 years. The first started in the late 50’s and ended in the early 70’s. The second began in the early 90’s and is probably still underway.

Both these periods were characterized by fundamental changes in football’s economic strucuture. In the 60’s the maximum wage was abolished and the retain-and-transfer system was reformed. This made it possible for the big clubs to attract players by offering higher wages. The 90’s saw the formation of the Premier League, the Bosman ruling and a dramatic rise in revenue from television and commercial activities.

Most interesting from a United point of view is that the two periods of increasing inequality coincides almost exactly with the spells when United played the best football in the history of the club. 1957 was the year of the Busby Babes, the young team that was more or less wiped out in Munich the following year. Matt Busby then built a new team that went on to win the European Cup in 1968, with stars like Bobby Charlton and George Best . This golden spell ended around 1970, and it was not until the early 90’s that Alex Ferguson led the club into the arguably even more successful era that is still ongoing.

My conclusion is that success on the playing field put United in a perfect position to take financial advantage of the changes in the economic structure of English football. During these transitional periods the quality of the team boosted United’s ability to attract players, crowds and new sources of revenue, and cemented the club’s position as the richest in England. As a big club in a big city United would have benefited from the changes in any case. But the benefit was certainly enhanced by the footballing success. In hindsight, United have been triumphant on the field at exactly the right times.

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One Response to “A long-term explanation of United’s financial supremacy”

  1. […] previous posts I’ve touched upon two of the segments that I find most interesting; the increasing inequality between rich and poor clubs and how the length of a spell of wins/losses affects the probabilities […]

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