Saturday, June 12, 2010

Where does their soccer money come from?

To bore my readers completely, another post about soccer. In a recent paper about the sport, economist Jim O'Neill wrote that "Poland's economy has decoupled from the performance of the national football team in the past decade."

Boy, did it ever. It decoupled in the sense that both national and club team soccer perform abysmally. What's interesting is that in at least four post-communist countries that are poorer than Poland (Bulgaria, Romania, Russia and Ukraine), soccer is doing great. In all those countries, fans care about the sport about the same. Of those five countries, Poland is the richest on per capita basis (PPP GDP's per capita are as follows: Poland $17,900; Russia $15,100; Bulgaria $12,600; Romania $11,500; Ukraine $6,400). And yet, there is huge disparity in how much money is being invested in the sport in Poland versus four other countries. The richest team in Polish soccer top-tier league has an annual budget of about $15 million. The richest teams of Romania, Russia, or Ukraine operate on budgets that are eight to ten times larger. The same magnitude of disparities can be seen when comparing entire leagues. In case of Russia this can be sort of explained: First, they're not that much poorer, and second, in aggregate terms they're actually richer (their GDP is more than three times larger). But Bulgaria, Romania and Ukraine are poorer both in aggregate and per capita terms. Their fans do not care about the sport any more than Polish fans do. And yet they spend more than ten times as much on soccer as Poland does (and it's mostly private spending, too; there's very little government money in it). I don't understand why this happens.

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