1 00:00:10,240 --> 00:00:13,600 Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast. 2 00:00:13,680 --> 00:00:15,400 Speaker 1: I'm Tracy Alloway and I'm Joe. 3 00:00:15,440 --> 00:00:16,759 Speaker 2: Why isn't Joe? 4 00:00:16,800 --> 00:00:20,480 Speaker 1: I think we need to figure out something extremely important 5 00:00:20,560 --> 00:00:22,720 Speaker 1: before we even begin this discussion. 6 00:00:23,880 --> 00:00:25,720 Speaker 2: I know what you're gonna say, and I was wondering 7 00:00:25,760 --> 00:00:29,080 Speaker 2: if we should we should have figured this out before that. No, no, no, 8 00:00:28,880 --> 00:00:29,320 Speaker 2: it started. 9 00:00:29,440 --> 00:00:29,760 Speaker 3: Let's do. 10 00:00:29,960 --> 00:00:33,559 Speaker 1: Let's let's force our work process on everyone listening to this. Now, 11 00:00:33,640 --> 00:00:35,479 Speaker 1: are we going to call this soccer or football? 12 00:00:35,680 --> 00:00:39,320 Speaker 2: This is a call whatever you want. It's fine, Okay, 13 00:00:39,320 --> 00:00:42,760 Speaker 2: I must I say soccer. But I also don't really 14 00:00:42,800 --> 00:00:44,760 Speaker 2: pay attention to this bart and I know you do, 15 00:00:44,920 --> 00:00:46,280 Speaker 2: so maybe you should get to choose. 16 00:00:46,360 --> 00:00:48,559 Speaker 1: I don't as much as I used to, But for 17 00:00:48,640 --> 00:00:51,159 Speaker 1: AUDLTS listeners, I lived in the UK for more than 18 00:00:51,159 --> 00:00:54,639 Speaker 1: ten years, and in the UK, uh, soccer is kind 19 00:00:54,680 --> 00:00:56,840 Speaker 1: of inflicted on you, whether you like it or not. 20 00:00:57,000 --> 00:00:59,960 Speaker 1: So let me just say I if we do start 21 00:01:00,080 --> 00:01:05,640 Speaker 1: saying football in this conversation unless otherwise specified, we mean soccer, 22 00:01:05,720 --> 00:01:07,400 Speaker 1: unless we say American football. 23 00:01:07,520 --> 00:01:08,520 Speaker 2: What if they call it in Japan? 24 00:01:09,560 --> 00:01:10,920 Speaker 1: I don't know, that's a good question. 25 00:01:11,080 --> 00:01:13,959 Speaker 2: What they call it in Austria? 26 00:01:13,520 --> 00:01:14,840 Speaker 1: Football? Right? 27 00:01:15,640 --> 00:01:16,679 Speaker 2: What do they call it in Hong. 28 00:01:16,600 --> 00:01:20,800 Speaker 1: Kong uh soccer? I think no, it must be football 29 00:01:20,800 --> 00:01:23,760 Speaker 1: because that's British. I have no idea. Okay, okay, look, 30 00:01:24,200 --> 00:01:27,200 Speaker 1: soccer and football are going to be interchangeable on this discussion. 31 00:01:27,240 --> 00:01:29,480 Speaker 1: But I think we've given away what we are going 32 00:01:29,480 --> 00:01:30,400 Speaker 1: to be talking about. 33 00:01:30,720 --> 00:01:33,720 Speaker 2: Yes, yeah, And we brought it up very briefly in 34 00:01:34,200 --> 00:01:37,680 Speaker 2: episode with Brad Setzer because at the time I asked him, 35 00:01:37,720 --> 00:01:39,800 Speaker 2: I was like, what's the deal of Saudi Arabia offering 36 00:01:39,840 --> 00:01:42,800 Speaker 2: like half a billion dollars to Lionel Messi. Then like 37 00:01:42,880 --> 00:01:45,040 Speaker 2: two days later that deal never actually happened and he 38 00:01:45,080 --> 00:01:45,760 Speaker 2: went to Miami. 39 00:01:46,200 --> 00:01:47,200 Speaker 3: There is but it all. 40 00:01:47,319 --> 00:01:49,000 Speaker 2: But he of course he was being Brad. He had 41 00:01:49,000 --> 00:01:52,080 Speaker 2: this great like macro answer about the Saudi's current account 42 00:01:52,120 --> 00:01:54,400 Speaker 2: surplus and all that stuff, and so there is a 43 00:01:54,440 --> 00:01:58,120 Speaker 2: lot there with like the Ecan the Macro right of soccer. 44 00:01:58,360 --> 00:02:01,240 Speaker 1: Right. It is no secret that's Saudi Arabia has been 45 00:02:01,280 --> 00:02:06,560 Speaker 1: on something of a soccer star spending spree recently. I 46 00:02:06,560 --> 00:02:09,400 Speaker 1: think it all kicked off when they bought Rinaldo earlier 47 00:02:09,400 --> 00:02:12,959 Speaker 1: in the year, and since then they bought some prominent 48 00:02:13,000 --> 00:02:16,400 Speaker 1: people like Benzima. I think I'm probably mispronouncing all of 49 00:02:16,440 --> 00:02:20,160 Speaker 1: these names. We're recording this on June twenty first, and 50 00:02:20,240 --> 00:02:22,600 Speaker 1: I saw that they just picked up Conte, who's like 51 00:02:22,639 --> 00:02:25,880 Speaker 1: a very well known Chelsea midfielder, and they had a 52 00:02:26,080 --> 00:02:29,760 Speaker 1: very strange video to go along with it, which maybe 53 00:02:29,760 --> 00:02:33,799 Speaker 1: we can get into. But anyway, why is Saudi Arabia 54 00:02:33,960 --> 00:02:36,520 Speaker 1: doing this? Is I guess the big question, and what 55 00:02:36,560 --> 00:02:40,440 Speaker 1: does it mean for both European football and American soccer? 56 00:02:41,040 --> 00:02:44,240 Speaker 2: Yeah, I have no idea about any of these things. 57 00:02:44,320 --> 00:02:47,400 Speaker 2: I only found out recently that, like, I mean, I knew, 58 00:02:47,480 --> 00:02:50,840 Speaker 2: like the Major League soccer in the US was kind 59 00:02:50,840 --> 00:02:52,760 Speaker 2: of like big, but I didn't realize it was quite 60 00:02:52,760 --> 00:02:54,000 Speaker 2: as big. It was like booming. 61 00:02:54,200 --> 00:02:55,000 Speaker 3: You didn't know, not. 62 00:02:55,040 --> 00:02:57,760 Speaker 1: Really, you know, my husband was briefly a youth coach 63 00:02:57,880 --> 00:02:59,040 Speaker 1: for the New York Cosmos. 64 00:02:59,280 --> 00:03:00,680 Speaker 2: I had no idea. Yeah that's great. 65 00:03:00,919 --> 00:03:04,200 Speaker 1: Yeah, all right, Well, we have a lot to talk about, 66 00:03:04,240 --> 00:03:06,760 Speaker 1: and I am very pleased to say that we truly 67 00:03:07,440 --> 00:03:10,040 Speaker 1: have the perfect guests. We are going to be speaking 68 00:03:10,080 --> 00:03:14,160 Speaker 1: with the co hosts of the Double Pivot pod, which 69 00:03:14,240 --> 00:03:18,280 Speaker 1: describes itself as the world's most agreeable soccer analytics podcast. 70 00:03:18,600 --> 00:03:22,160 Speaker 1: I love that tagline. We have Michael Cayley. In addition 71 00:03:22,240 --> 00:03:25,000 Speaker 1: to being the co host of Double Pivot Pod, he 72 00:03:25,120 --> 00:03:28,840 Speaker 1: is also the fourth coming author of a book with 73 00:03:28,960 --> 00:03:34,000 Speaker 1: the very interesting title of the First Apocalypse of James 74 00:03:34,040 --> 00:03:37,200 Speaker 1: Martyrdom and Sexual Difference, So not necessarily what you would 75 00:03:37,240 --> 00:03:41,480 Speaker 1: expect from a soccer commentator. And we also have Mike Goodman. 76 00:03:41,560 --> 00:03:45,680 Speaker 1: He is the senior editor for soccer at cbssports dot com, 77 00:03:45,720 --> 00:03:49,240 Speaker 1: so really the perfect people to thread the needle between 78 00:03:49,280 --> 00:03:52,600 Speaker 1: the soccer world and also Saudi Arabia's current account surplus. 79 00:03:53,160 --> 00:03:55,480 Speaker 1: Welcome to the show. Michael and Mike. 80 00:03:55,680 --> 00:03:57,760 Speaker 3: Thrilled to be here. We're both big fans, so it's 81 00:03:57,840 --> 00:04:00,480 Speaker 3: great that we have the chance to do this. So excited. 82 00:04:00,520 --> 00:04:03,760 Speaker 4: I feel like we were probably the only soccer podcast 83 00:04:03,880 --> 00:04:07,240 Speaker 4: to base an episode around Brad Setster's research on the 84 00:04:07,280 --> 00:04:08,800 Speaker 4: Saudi herb account balance. 85 00:04:08,840 --> 00:04:10,560 Speaker 2: So amazing, amazing, love it. 86 00:04:11,000 --> 00:04:14,640 Speaker 1: Okay, so first, one more bit of housekeeping. I'm just 87 00:04:14,720 --> 00:04:17,960 Speaker 1: gonna you know, Mike and Mike is a little confusing, 88 00:04:18,440 --> 00:04:21,680 Speaker 1: so I'm going to refer to Michael Kayley as Kaylee 89 00:04:21,760 --> 00:04:24,840 Speaker 1: and Mike Goodman as Mike or Michael, if that makes sense. 90 00:04:24,880 --> 00:04:26,919 Speaker 1: I think that's what you do on your podcast anyway, 91 00:04:27,320 --> 00:04:30,560 Speaker 1: So hopefully that works for everyone. But I guess the 92 00:04:30,640 --> 00:04:34,280 Speaker 1: big question for me is, you know, watching all this activity, 93 00:04:34,360 --> 00:04:37,880 Speaker 1: it kind of started in January when we saw Christiano 94 00:04:38,000 --> 00:04:42,880 Speaker 1: Ronaldo moved from Manchester United over to a Saudi Arabian 95 00:04:42,920 --> 00:04:46,520 Speaker 1: team called Al Nasser, and that was for some insane 96 00:04:46,680 --> 00:04:49,400 Speaker 1: amount of money, like two hundred million euros for a 97 00:04:49,440 --> 00:04:52,880 Speaker 1: two and a half year deal. And I think when 98 00:04:53,000 --> 00:04:56,400 Speaker 1: that first happened, there was a lot of discussion that 99 00:04:56,560 --> 00:05:02,080 Speaker 1: maybe this was just an opportunistic move by Saudi Arabia. 100 00:05:02,160 --> 00:05:06,360 Speaker 1: You know, he was out of contract and maybe they 101 00:05:06,560 --> 00:05:09,160 Speaker 1: just saw an opportunity there and seized on it. But 102 00:05:09,279 --> 00:05:12,880 Speaker 1: since then, we've just seen them making more and more 103 00:05:12,880 --> 00:05:15,960 Speaker 1: approaches to football stars and snapping some of them up. 104 00:05:16,720 --> 00:05:21,960 Speaker 1: So what's happening here, Like, is this the first salvo 105 00:05:22,200 --> 00:05:26,080 Speaker 1: of a long plan development in Saudi football or did 106 00:05:26,240 --> 00:05:31,120 Speaker 1: the transfer open the Saudi government's eyes to what was possible? 107 00:05:32,360 --> 00:05:34,400 Speaker 3: So I, honestly, I think I'd start by taking a 108 00:05:34,440 --> 00:05:36,440 Speaker 3: step back and doing something that maybe we do a 109 00:05:36,480 --> 00:05:39,560 Speaker 3: lot on our podcast, which is sort of questioning the 110 00:05:39,560 --> 00:05:42,719 Speaker 3: premise here a little bit. I would honestly say, I 111 00:05:42,720 --> 00:05:46,160 Speaker 3: would honestly say that Saudi Arabia's involvement directly in soccer 112 00:05:46,200 --> 00:05:51,160 Speaker 3: predated Ronaldo. They bought Newcastle United. The PIFF bought Newcastle 113 00:05:51,279 --> 00:05:54,920 Speaker 3: United last summer basically, and it has been a long 114 00:05:55,640 --> 00:06:00,520 Speaker 3: going actually more than like eighteen months ago. This had 115 00:06:00,560 --> 00:06:04,520 Speaker 3: been sort of a longgoing negotiation where Saudi Arabia PIFF 116 00:06:04,520 --> 00:06:08,559 Speaker 3: had wanted to purchase it and the UK had stood 117 00:06:08,600 --> 00:06:10,040 Speaker 3: in the way, and the Premier League had stood in 118 00:06:10,080 --> 00:06:12,920 Speaker 3: the way saying we despite the fact that another club, 119 00:06:12,960 --> 00:06:16,159 Speaker 3: Manchester City, is owned by United Arab Emirates, we won't 120 00:06:16,160 --> 00:06:21,600 Speaker 3: allow a sovereign nation to buy this club. There were 121 00:06:21,640 --> 00:06:27,120 Speaker 3: ongoing negotiations. Eventually Saudi Arabia is satisfied the UK and 122 00:06:27,160 --> 00:06:31,400 Speaker 3: said we are not a sovereign nation, we are PIFF, 123 00:06:31,440 --> 00:06:35,080 Speaker 3: we are independent, and UK accepted this. Premier League accepted 124 00:06:35,080 --> 00:06:36,920 Speaker 3: this and they bought Newcastle. I would say this was 125 00:06:36,960 --> 00:06:40,440 Speaker 3: going on at the same time that PIFF founded liv 126 00:06:40,640 --> 00:06:45,000 Speaker 3: Golf to be now merged with the PGA Tour. And 127 00:06:45,080 --> 00:06:47,320 Speaker 3: what you've seen, I think a better way to understand 128 00:06:47,320 --> 00:06:49,560 Speaker 3: it is really looking at the soccer spending first on 129 00:06:49,640 --> 00:06:53,240 Speaker 3: Newcastle than on these players. In addition to some other 130 00:06:53,240 --> 00:06:55,479 Speaker 3: ways that they are putting money into the game as 131 00:06:55,520 --> 00:06:58,080 Speaker 3: in concert with what they were doing in golf, as 132 00:06:58,120 --> 00:07:02,160 Speaker 3: a concerted effort to spend their capital on sports for 133 00:07:02,279 --> 00:07:03,920 Speaker 3: various reasons. Yeah. 134 00:07:03,960 --> 00:07:06,200 Speaker 4: I think the other thing to add here is in 135 00:07:06,320 --> 00:07:09,640 Speaker 4: terms of what is the Saudi Arabian timeline? And obviously 136 00:07:09,680 --> 00:07:13,760 Speaker 4: these things can change, but their vision twenty thirty, this 137 00:07:13,920 --> 00:07:18,840 Speaker 4: big you know, economic modernization plan twenty thirty is also 138 00:07:19,040 --> 00:07:21,920 Speaker 4: the next World Cup that is up forbidding, and Saudi 139 00:07:21,960 --> 00:07:25,280 Speaker 4: Arabia is one of the probably the leading bidder at 140 00:07:25,320 --> 00:07:27,520 Speaker 4: this point. You know, you know how the bids for 141 00:07:27,680 --> 00:07:32,400 Speaker 4: for FIFA things work and so very transparent and. 142 00:07:33,280 --> 00:07:37,120 Speaker 1: On the up and up. Everything's good, everything's kosher exactly. 143 00:07:37,560 --> 00:07:40,720 Speaker 4: There's no advantages to being a sovereign nation that can 144 00:07:40,800 --> 00:07:44,120 Speaker 4: just expense money in various random ways, and so they 145 00:07:44,200 --> 00:07:47,440 Speaker 4: are like as they're looking to build for soccer. I 146 00:07:47,440 --> 00:07:50,840 Speaker 4: think the timeline is probably best understood as a twenty 147 00:07:50,880 --> 00:07:53,800 Speaker 4: thirty timeline, both in terms of the vision project and 148 00:07:53,960 --> 00:07:55,680 Speaker 4: in terms of the World Cup. 149 00:07:56,320 --> 00:07:59,160 Speaker 2: God, I already have so many questions. You know, one 150 00:07:59,160 --> 00:08:01,720 Speaker 2: thing that brand brought up what we mentioned, and I 151 00:08:01,760 --> 00:08:04,720 Speaker 2: think this case, this was an issue with the last 152 00:08:04,800 --> 00:08:08,040 Speaker 2: where was the last World Cup. Cutter was that, Yeah, 153 00:08:08,040 --> 00:08:09,480 Speaker 2: the most the most recent one. 154 00:08:09,720 --> 00:08:11,880 Speaker 1: What's the much controversy offense? 155 00:08:12,000 --> 00:08:16,320 Speaker 2: Too much controversy absolutely, like how difficult is it and 156 00:08:16,440 --> 00:08:20,600 Speaker 2: costly to build sort of climate controlled stadiums in that climate? 157 00:08:20,680 --> 00:08:22,640 Speaker 2: Like how did that even go, like with the heat 158 00:08:22,680 --> 00:08:23,200 Speaker 2: and everything. 159 00:08:24,200 --> 00:08:27,120 Speaker 4: So I don't know the specifics of the cost. If 160 00:08:27,160 --> 00:08:30,840 Speaker 4: certainly it's a it's a massive money losing effort. They 161 00:08:30,880 --> 00:08:35,840 Speaker 4: they were more or less successful at getting stadiums where 162 00:08:35,840 --> 00:08:39,840 Speaker 4: players could play soccer that was recognizable as soccer in 163 00:08:39,880 --> 00:08:42,760 Speaker 4: the heat. They did have to move that. The initial 164 00:08:42,840 --> 00:08:45,720 Speaker 4: bid from Cutter did say they were going to play 165 00:08:45,720 --> 00:08:47,800 Speaker 4: on the normal World Cup schedule, it is going to 166 00:08:47,800 --> 00:08:51,920 Speaker 4: be played in June, and that just that they were 167 00:08:51,960 --> 00:08:55,280 Speaker 4: not able to produce the climate controlled stadiums that would 168 00:08:55,280 --> 00:08:58,040 Speaker 4: make it possible play in June. In Cutter, that was 169 00:08:58,120 --> 00:09:01,079 Speaker 4: why the World Cup moved to November, and this because 170 00:09:01,120 --> 00:09:03,920 Speaker 4: that was the only time that they could pull it off. 171 00:09:04,080 --> 00:09:08,560 Speaker 3: And it's worth pointing out that that decision was incredibly contentious. 172 00:09:08,600 --> 00:09:11,760 Speaker 3: There are contracts that had to be renegotiated, there were 173 00:09:11,800 --> 00:09:16,880 Speaker 3: amends that had to be made. Media companies bid lots 174 00:09:16,920 --> 00:09:21,520 Speaker 3: of dollars to broadcast the World Cup, and an American 175 00:09:21,559 --> 00:09:25,720 Speaker 3: broadcaster broadcasting something in the summer Versus an American broadcaster 176 00:09:25,840 --> 00:09:28,600 Speaker 3: broadcasting something when the biggest game for American audiences is 177 00:09:28,640 --> 00:09:34,000 Speaker 3: the day after Thanksgiving, is a massive difference in terms 178 00:09:34,080 --> 00:09:36,079 Speaker 3: of what you were paying for and why. 179 00:09:37,200 --> 00:09:40,880 Speaker 1: So let me ask the big picture question that you 180 00:09:41,640 --> 00:09:44,280 Speaker 1: were kind of hinting at in your first answer. But 181 00:09:44,880 --> 00:09:47,319 Speaker 1: it is well known at this point that there is 182 00:09:47,400 --> 00:09:50,880 Speaker 1: a lot of Middle Eastern money floating around the world 183 00:09:50,880 --> 00:09:54,400 Speaker 1: of football in various ways, either through the World Cup 184 00:09:54,720 --> 00:09:59,840 Speaker 1: in Katar or through ownership of teams, primarily in Europe. 185 00:10:00,080 --> 00:10:02,320 Speaker 1: I know, when I was in Abu Dhabi, if you 186 00:10:02,400 --> 00:10:05,760 Speaker 1: wanted to have a nice conversation with Kal Dun al Mubarak, 187 00:10:06,200 --> 00:10:08,880 Speaker 1: you would bring up Manchester City and he would talk 188 00:10:08,920 --> 00:10:10,800 Speaker 1: a lot about it, you know, provided that they were 189 00:10:10,840 --> 00:10:14,600 Speaker 1: actually having a good season. But what is it about 190 00:10:15,160 --> 00:10:20,400 Speaker 1: soccer slash sports that makes these attractive assets for a 191 00:10:20,440 --> 00:10:24,199 Speaker 1: country like Saudi Arabia or even the United Arab Emirates. 192 00:10:24,960 --> 00:10:28,040 Speaker 3: Yeah, so I would say the starting point here is 193 00:10:28,080 --> 00:10:33,920 Speaker 3: that foreign money flowing into soccer is not new. The 194 00:10:34,080 --> 00:10:38,240 Speaker 3: soccer economy is set up to not really be a 195 00:10:38,280 --> 00:10:42,079 Speaker 3: healthy economy. So there is a long history of soccer 196 00:10:42,120 --> 00:10:46,280 Speaker 3: clubs testing around for money to either sell to a 197 00:10:46,280 --> 00:10:49,040 Speaker 3: new owner, to sell their most saleable assets, which are 198 00:10:49,240 --> 00:10:53,440 Speaker 3: player contracts, to you know, people outside of Europe who 199 00:10:53,559 --> 00:10:56,199 Speaker 3: maybe have lots of money to spend on it. What 200 00:10:56,360 --> 00:10:59,640 Speaker 3: is new and different right now is that it's only 201 00:10:59,720 --> 00:11:02,800 Speaker 3: since two thousand and eight, when Abu Dhabi in particular 202 00:11:02,840 --> 00:11:05,480 Speaker 3: bought Manchester City that we come to understand these teams 203 00:11:05,480 --> 00:11:09,360 Speaker 3: as being owned by sovereign nations as opposed to rich 204 00:11:09,440 --> 00:11:12,679 Speaker 3: individuals from these sovereign nations. Manchester City was not the 205 00:11:12,679 --> 00:11:15,400 Speaker 3: first club to be bought by somebody with the title 206 00:11:15,400 --> 00:11:19,680 Speaker 3: of Sheik. It wasn't, but before that you would understand 207 00:11:19,679 --> 00:11:22,160 Speaker 3: them to be a rich individual who was doing this 208 00:11:22,200 --> 00:11:24,959 Speaker 3: instead of buying super yacht. Basically, if sports teams have 209 00:11:25,000 --> 00:11:29,840 Speaker 3: for a long time been luxury goods, and then that changed, 210 00:11:29,960 --> 00:11:32,640 Speaker 3: and that changed first with Abu Dhabi, then with Kadar 211 00:11:32,760 --> 00:11:35,600 Speaker 3: and Paris Saint Germain and twenty eleven, then with Saudi 212 00:11:35,640 --> 00:11:39,040 Speaker 3: Arabia and Newcastle, and now what we're seeing is the 213 00:11:39,080 --> 00:11:43,440 Speaker 3: sort of secondary extension of that, which is the players 214 00:11:43,559 --> 00:11:47,120 Speaker 3: going the opposite direction. With Saudi Arabia now attracting a 215 00:11:47,240 --> 00:11:49,920 Speaker 3: number of big names and seeming to have no end 216 00:11:50,000 --> 00:11:52,120 Speaker 3: insight to what they want to do. Why they want 217 00:11:52,160 --> 00:11:53,880 Speaker 3: to do that is I think an interesting question is 218 00:11:53,880 --> 00:11:57,160 Speaker 3: a question of politics. It's a question of you know, 219 00:11:57,280 --> 00:11:59,520 Speaker 3: influencing the Western world in a lot of ways. But 220 00:11:59,559 --> 00:12:03,120 Speaker 3: I think the the place to start is this is 221 00:12:03,160 --> 00:12:06,720 Speaker 3: a vulnerability that the sport has had for a long time, 222 00:12:06,880 --> 00:12:11,680 Speaker 3: this need for capital because until very recently these clubs 223 00:12:11,679 --> 00:12:15,400 Speaker 3: have not been at all profitable, and being even a 224 00:12:15,400 --> 00:12:18,400 Speaker 3: little bit profitable is an extremely new development. And you've 225 00:12:18,400 --> 00:12:21,480 Speaker 3: seen then American owners come in because of this. You've 226 00:12:21,520 --> 00:12:25,280 Speaker 3: seen lots of different changes in ownership as it's become 227 00:12:25,360 --> 00:12:29,520 Speaker 3: big business. But the fundamental of Bedrock premise here is 228 00:12:29,559 --> 00:12:33,320 Speaker 3: that soccer as an entity, especially European soccer, but all 229 00:12:33,360 --> 00:12:36,720 Speaker 3: soccer as an entity, needs to find find influxes of 230 00:12:36,720 --> 00:12:37,960 Speaker 3: capital pretty regularly. 231 00:12:38,640 --> 00:12:41,560 Speaker 4: And I think it's worth here making a contrast to 232 00:12:41,640 --> 00:12:44,840 Speaker 4: the way that most American league sports work. This is 233 00:12:45,080 --> 00:12:49,480 Speaker 4: very very different from MLB baseball, from NBA basketball, from 234 00:12:49,559 --> 00:12:54,560 Speaker 4: NFL football, all of those are effectively run as ownership cartels. 235 00:12:54,960 --> 00:12:58,720 Speaker 4: There is you cannot just get a team and have 236 00:12:58,760 --> 00:13:01,840 Speaker 4: it joined the NBA be approved by the NBA owners. 237 00:13:02,040 --> 00:13:03,439 Speaker 3: There's all sorts of rules. 238 00:13:03,720 --> 00:13:08,160 Speaker 4: The NFL rules not only explicitly do not allow for 239 00:13:08,240 --> 00:13:10,280 Speaker 4: a sovereign, well fundo team, they don't even allow for 240 00:13:10,320 --> 00:13:14,000 Speaker 4: a private, private equity to own a team. And so 241 00:13:14,720 --> 00:13:19,080 Speaker 4: all of these are done in order to ensure profits 242 00:13:19,160 --> 00:13:21,200 Speaker 4: for all of the ownership groups. And then there is 243 00:13:21,200 --> 00:13:23,880 Speaker 4: a collective bargaining agreement with the players that sets the 244 00:13:24,000 --> 00:13:26,760 Speaker 4: terms of this and continue to guarantee those profits. And 245 00:13:26,840 --> 00:13:30,680 Speaker 4: there are two really crucial ways that European soccer is 246 00:13:30,840 --> 00:13:35,000 Speaker 4: different from that. One is promotion and relegation, So top 247 00:13:35,040 --> 00:13:38,640 Speaker 4: teams in the second league get to join the top league. 248 00:13:38,679 --> 00:13:41,160 Speaker 4: So there's a ton of teams and there is just 249 00:13:41,320 --> 00:13:45,679 Speaker 4: more competition. This has historically made it very very difficult 250 00:13:45,960 --> 00:13:49,760 Speaker 4: for any individual league to put in place any kind 251 00:13:49,760 --> 00:13:52,960 Speaker 4: of cost controls in the way that you expect in 252 00:13:53,000 --> 00:13:56,480 Speaker 4: American sports, because if your league puts in plays cross controls, 253 00:13:56,720 --> 00:13:59,520 Speaker 4: someone else is going to sign your players. And then 254 00:13:59,600 --> 00:14:03,439 Speaker 4: on top of that, of course, European soccer is multinational, 255 00:14:03,920 --> 00:14:06,880 Speaker 4: so instead of having one league, which is you know 256 00:14:07,559 --> 00:14:10,280 Speaker 4: bas In America as a Canadian team, or two you know, 257 00:14:10,360 --> 00:14:12,600 Speaker 4: there is an English league there is a Dutch league, 258 00:14:12,600 --> 00:14:14,720 Speaker 4: there is a Spanish league, there is an Italian league, 259 00:14:15,120 --> 00:14:19,240 Speaker 4: and so all of these individual leagues are competing with 260 00:14:19,360 --> 00:14:22,200 Speaker 4: each other at the same time as the clubs are competing, 261 00:14:22,520 --> 00:14:26,680 Speaker 4: and it creates a situation where it is just a 262 00:14:26,840 --> 00:14:32,840 Speaker 4: far far more cutthroat, capitalist kind of world. And it 263 00:14:32,920 --> 00:14:36,040 Speaker 4: means that, and what it is effectively meant is it's 264 00:14:36,160 --> 00:14:38,800 Speaker 4: very very hard for any team to retain any kind 265 00:14:38,800 --> 00:14:42,400 Speaker 4: of profitability and there is a need for external money. 266 00:14:42,880 --> 00:14:47,680 Speaker 4: And then as people have found this opportunity, then it 267 00:14:47,720 --> 00:14:52,200 Speaker 4: is an opportunity for them to use soccer to advance 268 00:14:52,320 --> 00:14:55,200 Speaker 4: national interests in a way that again just really kind 269 00:14:55,200 --> 00:15:10,280 Speaker 4: of isn't happening in American sports. 270 00:15:13,880 --> 00:15:17,560 Speaker 1: Let me ask a totally innocent and completely unloaded question, 271 00:15:18,400 --> 00:15:23,360 Speaker 1: but in Europe, don't we have financial fair play rules 272 00:15:23,400 --> 00:15:27,680 Speaker 1: that are supposed to limit some of this influx of capital. 273 00:15:29,080 --> 00:15:32,520 Speaker 3: It is a great question, and we do. Sort of 274 00:15:33,280 --> 00:15:37,440 Speaker 3: financial fightplay comes about, honestly, specifically because of Abu Dhabi 275 00:15:37,520 --> 00:15:40,760 Speaker 3: and Katar buying Manchester City and Paris centermen and spending 276 00:15:40,840 --> 00:15:43,960 Speaker 3: tons of money in the attempt to improve their teams. 277 00:15:44,080 --> 00:15:47,760 Speaker 3: And what financial fireplay rules are, They're structured fairly differently 278 00:15:47,800 --> 00:15:50,360 Speaker 3: from an American sports salary cap. Right, an American sports 279 00:15:50,400 --> 00:15:54,000 Speaker 3: salary cap just says, here's the negotiated amount of money 280 00:15:54,000 --> 00:15:56,240 Speaker 3: that each team can spend. They can't spend more than it. 281 00:15:56,480 --> 00:15:58,680 Speaker 3: Here's the floor. They have to spend more than the floor. 282 00:15:58,720 --> 00:16:00,680 Speaker 3: This is the range of acceptable money to spend on 283 00:16:00,720 --> 00:16:05,400 Speaker 3: contracts more or less. FFP financial fair play says you 284 00:16:05,480 --> 00:16:09,120 Speaker 3: cannot spend more than the revenue you are bringing in. 285 00:16:10,000 --> 00:16:11,720 Speaker 3: We average it out over a number of years. There 286 00:16:11,720 --> 00:16:15,120 Speaker 3: are exceptions here and there, but the bottom line is 287 00:16:15,200 --> 00:16:19,200 Speaker 3: the intent of financial fair play is to structure your 288 00:16:19,240 --> 00:16:22,280 Speaker 3: finances such that you are not going into increasing amounts 289 00:16:22,280 --> 00:16:26,280 Speaker 3: of debt now, because those are different, you will hear 290 00:16:26,440 --> 00:16:29,720 Speaker 3: not unfair critiques of financial fair play from the likes 291 00:16:29,720 --> 00:16:32,560 Speaker 3: of Manchester City, who will say, this is not actually 292 00:16:32,600 --> 00:16:36,280 Speaker 3: about responsible spending. This is about protecting the old rich 293 00:16:36,400 --> 00:16:39,120 Speaker 3: clubs from the rise of the new rich clubs. Because 294 00:16:39,120 --> 00:16:41,920 Speaker 3: we have tons of money that we can responsibly spend. 295 00:16:42,040 --> 00:16:44,880 Speaker 3: We're owned by a nation state, but you are instituting 296 00:16:44,960 --> 00:16:48,280 Speaker 3: rules to prevent us from spending that money in order 297 00:16:48,360 --> 00:16:52,200 Speaker 3: to sort of reify your place at the top. And 298 00:16:52,240 --> 00:16:56,000 Speaker 3: then you have the additional complication of the fact that 299 00:16:56,120 --> 00:16:59,320 Speaker 3: FFP may not be legal under Europe in law, that 300 00:16:59,440 --> 00:17:02,200 Speaker 3: it may be anti competitive. It may not be, but 301 00:17:02,640 --> 00:17:06,080 Speaker 3: if it was legally challenged, nobody is super confident it 302 00:17:06,080 --> 00:17:11,640 Speaker 3: would survive. So there is a lot of effort to 303 00:17:11,800 --> 00:17:15,480 Speaker 3: use financial fair play to enforce some things without ever 304 00:17:15,640 --> 00:17:18,560 Speaker 3: using it emphatically enough to get it challenged where it 305 00:17:18,640 --> 00:17:19,480 Speaker 3: might get struck down. 306 00:17:19,920 --> 00:17:24,440 Speaker 2: What is the difference between financial fair play because, as 307 00:17:24,560 --> 00:17:28,679 Speaker 2: you described, the situation in which an environment of relegation 308 00:17:28,840 --> 00:17:33,160 Speaker 2: and promotion a sort of lack of barriers of entry 309 00:17:33,440 --> 00:17:38,440 Speaker 2: into competitive soccer competition between different nation soccer leagues, So 310 00:17:38,520 --> 00:17:40,840 Speaker 2: the Premier League versus the Spanish League versus the Dutch 311 00:17:40,920 --> 00:17:46,800 Speaker 2: League versus the Bundesligue the German one. So what is 312 00:17:46,840 --> 00:17:52,000 Speaker 2: the mechanism via which financial fair play is supposed to 313 00:17:52,040 --> 00:17:54,880 Speaker 2: constrain how much any given team spends on sailors? 314 00:17:55,560 --> 00:17:59,600 Speaker 4: So financial fair play is as currently there are individual 315 00:17:59,640 --> 00:18:03,280 Speaker 4: leagues that have their own rules. Barcelona is presently being 316 00:18:03,320 --> 00:18:08,399 Speaker 4: heavily constrained in their spending by La Liga's own internal rules. 317 00:18:08,640 --> 00:18:10,639 Speaker 4: But the main financial fair play that was put in 318 00:18:10,680 --> 00:18:13,879 Speaker 4: place with put in place europe wide through UEFA, which 319 00:18:14,119 --> 00:18:17,760 Speaker 4: so UEFA is both the entity that runs the EUROS, 320 00:18:17,880 --> 00:18:24,040 Speaker 4: the European international soccer competition, as well as the interclub 321 00:18:24,080 --> 00:18:27,480 Speaker 4: competitions like the Champions League. And so the financial fair 322 00:18:27,520 --> 00:18:30,400 Speaker 4: play that we're mostly talking about is one that only 323 00:18:30,440 --> 00:18:34,480 Speaker 4: applies to teams that are competing in a European competition 324 00:18:34,800 --> 00:18:36,920 Speaker 4: such as the Champions League or the Europa League. 325 00:18:37,200 --> 00:18:39,840 Speaker 3: And then the penalty mechanism is one of both fines. 326 00:18:39,880 --> 00:18:42,200 Speaker 3: But also if you are in violation, we can prevent 327 00:18:42,240 --> 00:18:44,719 Speaker 3: you from playing in this competition even if you were 328 00:18:44,760 --> 00:18:49,200 Speaker 3: qualified for it, which is itself both an expensive penalty 329 00:18:49,200 --> 00:18:51,520 Speaker 3: but also sort of you know, the prestige of it, 330 00:18:51,600 --> 00:18:53,280 Speaker 3: Like the idea is you're trying to qualify for the 331 00:18:53,359 --> 00:18:55,560 Speaker 3: Champions League and then win the Champions League. So I 332 00:18:55,600 --> 00:18:58,719 Speaker 3: mean it's a significant penalty should it be implemented. 333 00:18:59,000 --> 00:19:02,639 Speaker 4: And these were put in place, it was pretty clear 334 00:19:03,080 --> 00:19:07,800 Speaker 4: that Cutter and and Abu Dhabi were violating these rules. 335 00:19:07,800 --> 00:19:13,120 Speaker 4: They both got very very large sponsorship contracts from the 336 00:19:13,160 --> 00:19:16,840 Speaker 4: airlines of their respective countries right at the time that 337 00:19:16,960 --> 00:19:21,280 Speaker 4: financial fair play was put in place. But YUEFA did 338 00:19:21,359 --> 00:19:24,520 Speaker 4: bring charge, tried to bring charges against them, and then 339 00:19:24,600 --> 00:19:29,439 Speaker 4: like settled for extremely minor levels of punishment. So this 340 00:19:29,520 --> 00:19:31,359 Speaker 4: has been, you know, continued to be a thing that 341 00:19:31,400 --> 00:19:34,240 Speaker 4: they push up against, even as they are no longer 342 00:19:34,359 --> 00:19:37,840 Speaker 4: allowed to run the kind of humongous book profits that 343 00:19:37,880 --> 00:19:41,840 Speaker 4: they did before financial book losses, before financial fair play. 344 00:19:42,720 --> 00:19:44,800 Speaker 1: So, you know, we talked a little bit about the 345 00:19:44,840 --> 00:19:48,720 Speaker 1: World Cup in Katar most recently, and I guess when 346 00:19:48,760 --> 00:19:53,120 Speaker 1: I see so, I understand your point about football consuming 347 00:19:53,280 --> 00:19:56,480 Speaker 1: a lot of capital, and Saudi Arabia at this point 348 00:19:56,520 --> 00:20:00,679 Speaker 1: has spent hundreds of millions, maybe even some billions at 349 00:20:00,680 --> 00:20:05,720 Speaker 1: this point on its soccer ambitions. Are there any suggestions 350 00:20:05,880 --> 00:20:11,919 Speaker 1: that it wants to I guess, succeed consistently in the 351 00:20:11,960 --> 00:20:15,200 Speaker 1: world of football or is this basically a one time 352 00:20:15,320 --> 00:20:17,800 Speaker 1: cash splurge to try to get the World Cup? 353 00:20:18,480 --> 00:20:21,440 Speaker 3: So I don't think there's a lot of suggestion that 354 00:20:21,560 --> 00:20:26,040 Speaker 3: they want their national team, the Saudi Arabian national team 355 00:20:26,440 --> 00:20:30,320 Speaker 3: to be competitively successful. You're not seeing from them, at 356 00:20:30,400 --> 00:20:32,719 Speaker 3: least not yet, the kinds of things that you have 357 00:20:32,800 --> 00:20:34,920 Speaker 3: to do as a nation. And these things all take 358 00:20:34,960 --> 00:20:37,600 Speaker 3: extremely long time horizons. I mean, talk to any US 359 00:20:37,600 --> 00:20:40,320 Speaker 3: men's national team fan who loses their mind every three years. 360 00:20:40,400 --> 00:20:43,480 Speaker 3: But these things are like decades long processes, we're not 361 00:20:43,480 --> 00:20:47,520 Speaker 3: seeing any indications of that. What we are seeing possibly 362 00:20:48,240 --> 00:20:54,480 Speaker 3: is the beginning of an economic plan that would basically 363 00:20:55,480 --> 00:20:58,800 Speaker 3: could in years to come, make Saudi Arabia more of 364 00:20:58,840 --> 00:21:01,840 Speaker 3: the central hub of size in the world club soccer. 365 00:21:02,040 --> 00:21:03,480 Speaker 3: So you know that if you want to see the 366 00:21:03,520 --> 00:21:09,200 Speaker 3: best teams, the best players, the best competitions, you would 367 00:21:09,280 --> 00:21:12,200 Speaker 3: be associating them. They would be owned in some manner 368 00:21:12,320 --> 00:21:14,639 Speaker 3: or other by Saudi Arabia. I think that's where you 369 00:21:14,680 --> 00:21:17,680 Speaker 3: could see this going, including the World Cup. But I 370 00:21:17,720 --> 00:21:20,760 Speaker 3: think that's the direction you could see this going, much 371 00:21:20,800 --> 00:21:23,159 Speaker 3: more so than say the Saudi Arabian national team becoming 372 00:21:23,160 --> 00:21:27,480 Speaker 3: a powerhouse. How the details of that would eventually work 373 00:21:27,520 --> 00:21:31,080 Speaker 3: are I think, really cloudy, and maybe it doesn't happen. 374 00:21:31,280 --> 00:21:34,959 Speaker 3: We've seen instances before where, if not nation states, at 375 00:21:35,040 --> 00:21:38,639 Speaker 3: least actors closely associated with nation states have spent a 376 00:21:38,640 --> 00:21:41,560 Speaker 3: lot of money to bring soccer talent into the country 377 00:21:41,840 --> 00:21:43,920 Speaker 3: and then seen it fizzle out after a few years. 378 00:21:43,920 --> 00:21:45,480 Speaker 3: So I don't think anybody wants to get to ahead 379 00:21:45,480 --> 00:21:47,920 Speaker 3: of themselves. But if you're thinking about what is Saudi 380 00:21:48,000 --> 00:21:51,320 Speaker 3: Arabia possibly doing, I think the answer is spending a 381 00:21:51,320 --> 00:21:54,520 Speaker 3: lot of money, so that Saudi Arabia conceivably could be 382 00:21:55,400 --> 00:21:57,640 Speaker 3: the sort of king maker of club soccer. 383 00:21:58,040 --> 00:22:01,879 Speaker 4: One thing I think is an interesting sort of piece 384 00:22:01,920 --> 00:22:04,760 Speaker 4: of context here and contrast, because I think that what 385 00:22:04,920 --> 00:22:08,280 Speaker 4: is going on in saudier Aba is notably different from 386 00:22:08,320 --> 00:22:09,960 Speaker 4: what went on in China. 387 00:22:10,040 --> 00:22:12,399 Speaker 1: Between a bell, Yeah, I was going to ask you 388 00:22:12,880 --> 00:22:15,200 Speaker 1: about Saudi versus China, but go ahead. 389 00:22:15,720 --> 00:22:20,159 Speaker 4: Yeah, So the Chinese Super League in twenty fourteen, she 390 00:22:20,359 --> 00:22:23,920 Speaker 4: makes some remarks about how he wants China to be 391 00:22:24,000 --> 00:22:27,800 Speaker 4: more of a global soccer power, and he specifically says 392 00:22:27,840 --> 00:22:30,720 Speaker 4: that he wants China to have a national team that 393 00:22:30,800 --> 00:22:34,720 Speaker 4: is competitive in men's and women's soccer and to host 394 00:22:34,760 --> 00:22:38,040 Speaker 4: and eventually compete for World Cups. And that was part 395 00:22:38,080 --> 00:22:39,760 Speaker 4: of it, but he also said that he wanted to 396 00:22:39,840 --> 00:22:43,760 Speaker 4: build a league that would be successful, and I think 397 00:22:43,800 --> 00:22:48,440 Speaker 4: also suggested wanted to see Chinese you know, major Chinese 398 00:22:48,440 --> 00:22:52,119 Speaker 4: interests buy into European leagues as well, and so between 399 00:22:52,119 --> 00:22:55,680 Speaker 4: twenty fourteen and twenty seventeen especially, you see a ton 400 00:22:55,960 --> 00:22:59,920 Speaker 4: of this investment in the Chinese Super League and also 401 00:23:00,160 --> 00:23:03,840 Speaker 4: you know owners going abroad and buying parts of teams 402 00:23:03,920 --> 00:23:06,320 Speaker 4: as well. But The biggest thing is I think the 403 00:23:06,359 --> 00:23:14,280 Speaker 4: twenty four, twenty fifteen, twenty sixteen summers, Chinese clubs spent 404 00:23:14,480 --> 00:23:18,800 Speaker 4: over eight hundred million in transfer fees to purchase contracts 405 00:23:18,880 --> 00:23:24,280 Speaker 4: of players, mostly almost entirely from Europe. And those teams 406 00:23:24,320 --> 00:23:28,800 Speaker 4: also ran up massive increases in their wage bills. You know, 407 00:23:29,200 --> 00:23:32,640 Speaker 4: multiple teams in the league running wage bills tens many tens, 408 00:23:32,680 --> 00:23:37,200 Speaker 4: up to one hundred million dollars effectively. And this happened 409 00:23:37,320 --> 00:23:41,360 Speaker 4: very very quickly, and obviously you can imagine what Chinese 410 00:23:41,359 --> 00:23:43,960 Speaker 4: money is going into this. The team that wins the 411 00:23:44,040 --> 00:23:47,359 Speaker 4: Chinese Super League five out of six seasons is Guangzhou 412 00:23:47,480 --> 00:23:48,119 Speaker 4: ever Grand. 413 00:23:48,840 --> 00:23:51,879 Speaker 2: Yes, what I remember I have an ever Grand jersey. 414 00:23:52,200 --> 00:23:54,720 Speaker 1: Do you really? There's a great Actually, I think we 415 00:23:54,800 --> 00:23:57,480 Speaker 1: did this when I was in Hong Kong with Bloomberg. 416 00:23:57,520 --> 00:24:00,920 Speaker 1: There's a great schematic of all the rand the businesses 417 00:24:00,960 --> 00:24:03,520 Speaker 1: that China Everground was into, and yes, one of it 418 00:24:03,600 --> 00:24:05,480 Speaker 1: was a professional football club. 419 00:24:06,040 --> 00:24:08,280 Speaker 2: I'm just saying I'm enjoyed this conversation a lot. I 420 00:24:08,320 --> 00:24:11,880 Speaker 2: want to say, Michael and Michael, you guys, I might 421 00:24:11,920 --> 00:24:14,399 Speaker 2: become a soccer person after this. I'm really there's so 422 00:24:14,520 --> 00:24:17,440 Speaker 2: much now I'm like fascinated by all of this. But 423 00:24:17,520 --> 00:24:19,639 Speaker 2: here's a question that I have so you sort of 424 00:24:19,720 --> 00:24:22,840 Speaker 2: hinted at it, which is that for a long time, 425 00:24:23,560 --> 00:24:26,479 Speaker 2: soccer clubs weren't profitable, which I guess implies that more 426 00:24:26,520 --> 00:24:29,399 Speaker 2: and more they are. What is the business model of 427 00:24:29,440 --> 00:24:32,840 Speaker 2: a successful soccer club? Is it selling jerseys? Is it 428 00:24:33,200 --> 00:24:36,520 Speaker 2: the streaming rights with various networks around the world, Like 429 00:24:36,840 --> 00:24:39,320 Speaker 2: what did a successful soccer business look like? 430 00:24:39,800 --> 00:24:41,800 Speaker 3: Okay, so I suppose before we get too deep into 431 00:24:41,840 --> 00:24:44,200 Speaker 3: the conversation, I do work for CVS. We do own 432 00:24:44,200 --> 00:24:46,400 Speaker 3: the rights for the UEFA Champions League and a number 433 00:24:46,480 --> 00:24:48,760 Speaker 3: of other rights, so I should probably just say that, 434 00:24:48,880 --> 00:24:51,159 Speaker 3: not that it has anything to do with my job specifically, 435 00:24:51,440 --> 00:24:57,800 Speaker 3: but what has changed. What had changed, I suppose in 436 00:24:58,200 --> 00:25:02,119 Speaker 3: a large way, is that because these teams were in 437 00:25:02,160 --> 00:25:05,159 Speaker 3: an open environment of promotion and relegation. Because it was 438 00:25:05,320 --> 00:25:07,720 Speaker 3: very hard for you to say, in five years from 439 00:25:07,760 --> 00:25:11,760 Speaker 3: now our situation, our revenues will be constant from where 440 00:25:11,760 --> 00:25:14,800 Speaker 3: they were now, because competition on the field could really 441 00:25:15,440 --> 00:25:17,960 Speaker 3: randomly kind of blow a hole in your in your 442 00:25:18,000 --> 00:25:20,240 Speaker 3: operation if you got relegated. It was very hard to 443 00:25:20,280 --> 00:25:22,520 Speaker 3: invest capital in a team that was not a club. 444 00:25:22,680 --> 00:25:24,520 Speaker 3: It was hard to build a new stadium, it was 445 00:25:24,600 --> 00:25:27,800 Speaker 3: hard to do hospitality, it was hard to have a 446 00:25:27,800 --> 00:25:32,240 Speaker 3: professional marketing team because you had to be flexible enough 447 00:25:32,280 --> 00:25:35,760 Speaker 3: to not blow up if you got relegated. Now that 448 00:25:35,960 --> 00:25:39,760 Speaker 3: meant that all of these in Europe specifically clubs were 449 00:25:41,080 --> 00:25:45,320 Speaker 3: kind of ripe to be to have their values increased 450 00:25:45,600 --> 00:25:49,639 Speaker 3: by some sort of basic business management by somebody with 451 00:25:49,720 --> 00:25:52,879 Speaker 3: a lot of money coming in running the club well, 452 00:25:53,200 --> 00:25:56,080 Speaker 3: building up the marketing department, you know, building up the 453 00:25:56,119 --> 00:25:59,959 Speaker 3: training facilities to make them sort of you know, more attractive, 454 00:26:00,000 --> 00:26:02,960 Speaker 3: of doing all the things that a normal business will 455 00:26:02,960 --> 00:26:07,199 Speaker 3: do to increase revenue. And even if they weren't increasing profitability, right, 456 00:26:07,240 --> 00:26:09,600 Speaker 3: we understand how this works. You increase the value of 457 00:26:10,080 --> 00:26:13,560 Speaker 3: stadiums are a massive one, the ability to come in 458 00:26:13,600 --> 00:26:16,520 Speaker 3: and either renovate an existing stadium or build a new stadium. 459 00:26:16,920 --> 00:26:20,720 Speaker 3: And you had that coincide with the TV boom. The 460 00:26:20,760 --> 00:26:24,040 Speaker 3: Premier League its self forming in the early nineties, increases 461 00:26:24,080 --> 00:26:27,680 Speaker 3: TV revenues massively. Now we have international markets with streaming, 462 00:26:27,720 --> 00:26:32,240 Speaker 3: it's another massive revenue stream. So, especially kind of in 463 00:26:32,320 --> 00:26:35,200 Speaker 3: the zero interest environment of you know, borrow by dye, 464 00:26:35,600 --> 00:26:37,600 Speaker 3: you had a lot of people that could look at 465 00:26:37,600 --> 00:26:41,040 Speaker 3: these clubs as like fun and fairly easy ways to 466 00:26:41,200 --> 00:26:45,040 Speaker 3: invest in a property that would increase in value fairly 467 00:26:45,119 --> 00:26:48,159 Speaker 3: quickly by doing like lots of low hanging fruit stuff. 468 00:26:48,560 --> 00:26:50,640 Speaker 4: Yeah, I think that the sort of the context one 469 00:26:50,640 --> 00:26:54,639 Speaker 4: piece of context here is that before the really like 470 00:26:54,760 --> 00:27:01,360 Speaker 4: early nineties, their soccer is just it is pretty small 471 00:27:01,680 --> 00:27:06,480 Speaker 4: time club soccer as a business. You don't have this 472 00:27:06,680 --> 00:27:09,560 Speaker 4: big growth of it. And because of that, you don't 473 00:27:09,640 --> 00:27:14,240 Speaker 4: have a sort of globalization of soccer. Clubs are much 474 00:27:14,280 --> 00:27:19,520 Speaker 4: more local there they draw talent locally, and once that 475 00:27:19,600 --> 00:27:22,840 Speaker 4: starts growing, it was this incredible growth opportunity is what 476 00:27:22,960 --> 00:27:25,320 Speaker 4: the people who got bought into the Premier League early 477 00:27:25,400 --> 00:27:30,600 Speaker 4: on saw. Rupert murdochs b SKYB launches and gives a 478 00:27:30,680 --> 00:27:33,760 Speaker 4: huge TV contract and over the course of nineteen ninety 479 00:27:33,760 --> 00:27:37,000 Speaker 4: two to twenty eighteen, the value of the clubs in 480 00:27:37,000 --> 00:27:41,680 Speaker 4: the Premier League increased one hundred times over. So the 481 00:27:42,320 --> 00:27:45,640 Speaker 4: possibility for what most the way that people have mostly 482 00:27:45,680 --> 00:27:48,080 Speaker 4: made money if they have succeeded, and again there's a 483 00:27:48,119 --> 00:27:51,919 Speaker 4: real opportunity to lose money if you don't grow, if 484 00:27:51,960 --> 00:27:54,080 Speaker 4: you get relegated, you can really lose money. But the 485 00:27:54,160 --> 00:27:57,879 Speaker 4: opportunity to gain money has been an opportunity mostly about 486 00:27:57,920 --> 00:28:14,200 Speaker 4: asset appreciation rather than about yearly profits. 487 00:28:17,760 --> 00:28:21,240 Speaker 1: I want to go back to the China parallel, if 488 00:28:21,280 --> 00:28:23,600 Speaker 1: I may, and I guess to some extent it was 489 00:28:23,640 --> 00:28:26,280 Speaker 1: the US experience as well. So both the US and 490 00:28:26,359 --> 00:28:31,160 Speaker 1: China tried to build leagues sort of based around star 491 00:28:31,320 --> 00:28:33,720 Speaker 1: players of some sort. So in the US, you know, 492 00:28:33,800 --> 00:28:35,520 Speaker 1: they brought over at Pele who ended up at the 493 00:28:35,520 --> 00:28:37,679 Speaker 1: Cosmos at some point beck In Bauer, I think for 494 00:28:37,720 --> 00:28:41,680 Speaker 1: a long time George best and it didn't quite work. 495 00:28:41,880 --> 00:28:44,840 Speaker 1: And mean, well, I mean we can debate whether or 496 00:28:44,880 --> 00:28:49,280 Speaker 1: not it might work in the future. But meanwhile, in China, 497 00:28:49,440 --> 00:28:51,880 Speaker 1: as you laid out, you had a lot of big 498 00:28:51,960 --> 00:28:56,920 Speaker 1: corporations either starting new football teams or buying up some 499 00:28:57,120 --> 00:29:00,640 Speaker 1: major names for them. And then the CCP appeared to 500 00:29:01,040 --> 00:29:03,920 Speaker 1: crack down on some of that activity or signal that 501 00:29:04,000 --> 00:29:07,280 Speaker 1: it wanted some of that spending to stop. But I 502 00:29:07,280 --> 00:29:09,840 Speaker 1: guess the key difference with what Saudi Arabia seems to 503 00:29:09,840 --> 00:29:12,960 Speaker 1: be doing right now is, again going back to your 504 00:29:13,800 --> 00:29:18,240 Speaker 1: first answer in this conversation, is there is this government involvement. 505 00:29:18,560 --> 00:29:22,200 Speaker 1: So the big sovereign wealth fund, the PIFF now owns 506 00:29:22,280 --> 00:29:25,480 Speaker 1: quite a few football teams there. Even the Ronaldo transfer, 507 00:29:25,560 --> 00:29:28,040 Speaker 1: I think initially was done by the club itself, but 508 00:29:28,200 --> 00:29:32,680 Speaker 1: then became like a government contract. What does that mean 509 00:29:33,120 --> 00:29:37,240 Speaker 1: for I guess Saudi Arabia's ambitions and its chances of 510 00:29:37,280 --> 00:29:41,920 Speaker 1: success that this time around you have an even higher 511 00:29:42,400 --> 00:29:47,640 Speaker 1: government footprint on these moves than China, and certainly than 512 00:29:47,680 --> 00:29:48,280 Speaker 1: in the US. 513 00:29:49,240 --> 00:29:51,520 Speaker 4: Viky that was exactly where I sort of wanted to go. 514 00:29:51,600 --> 00:29:54,240 Speaker 4: With the China example. She makes a statement in twenty 515 00:29:54,320 --> 00:29:58,280 Speaker 4: seventeen or not, she some organ of the Chinese Kinyis 516 00:29:58,280 --> 00:30:02,200 Speaker 4: Party that there have been your rational investments by clubs, 517 00:30:02,480 --> 00:30:07,880 Speaker 4: and immediately the spending goes down, the spending COVID changes everything, 518 00:30:07,880 --> 00:30:11,960 Speaker 4: but the decline had already hit by twenty seventeen, and 519 00:30:12,200 --> 00:30:14,560 Speaker 4: I think that it seems to me, and again this 520 00:30:14,720 --> 00:30:18,280 Speaker 4: is you know, somewhat this is storytelling, but it certainly 521 00:30:18,360 --> 00:30:20,640 Speaker 4: seems to me that what happened with China is that 522 00:30:20,680 --> 00:30:24,680 Speaker 4: they had an idea for growing a league that was 523 00:30:24,760 --> 00:30:28,440 Speaker 4: not crazy. You know, there is a lot of potential 524 00:30:28,480 --> 00:30:32,600 Speaker 4: revenue in Chinese consumers, and then you can imagine a 525 00:30:32,640 --> 00:30:36,560 Speaker 4: successful Chinese league drawing in a lot of East Asian 526 00:30:36,600 --> 00:30:41,680 Speaker 4: revenue internationally as well, but they started losing money very 527 00:30:41,800 --> 00:30:47,280 Speaker 4: very quickly. Because European soccer as an entity, because it 528 00:30:47,440 --> 00:30:52,200 Speaker 4: needs that capital it has through agents through clubs, built 529 00:30:52,400 --> 00:30:57,520 Speaker 4: up a real capacity for going and getting capital. If 530 00:30:57,520 --> 00:31:00,680 Speaker 4: they're somewhere that has that may give it up. And 531 00:31:00,720 --> 00:31:02,959 Speaker 4: I think that it seems to me that the Chinese 532 00:31:03,000 --> 00:31:07,840 Speaker 4: government recognized that they were getting fleeced by a bunch 533 00:31:07,880 --> 00:31:10,960 Speaker 4: of soccer agents. The Carlos Tevis transfer, where he came 534 00:31:11,000 --> 00:31:13,600 Speaker 4: over at the very last minute before these rules were 535 00:31:13,600 --> 00:31:15,880 Speaker 4: put in place. I think he made like thirty million 536 00:31:15,880 --> 00:31:19,280 Speaker 4: a year, wildly over the hill. He comes in and 537 00:31:19,360 --> 00:31:21,200 Speaker 4: immediately starts saying that none of the players are any 538 00:31:21,200 --> 00:31:22,920 Speaker 4: good and doesn't really want to play here be still 539 00:31:22,920 --> 00:31:26,480 Speaker 4: getting paid, And like these sorts of deals were happening 540 00:31:26,480 --> 00:31:30,160 Speaker 4: to China, And because I think China, like the NASL 541 00:31:30,960 --> 00:31:35,040 Speaker 4: was a I think there's really there's really strong reasons 542 00:31:35,040 --> 00:31:37,680 Speaker 4: why it probably wouldn't work, But there was an idea 543 00:31:38,040 --> 00:31:41,560 Speaker 4: that there was an ultimate business growth plan here as 544 00:31:41,640 --> 00:31:46,080 Speaker 4: well as an ultimate growth plan for the national team. Certainly, 545 00:31:46,120 --> 00:31:48,680 Speaker 4: the NASL wanted the US national team to get better, 546 00:31:48,680 --> 00:31:51,080 Speaker 4: and that didn't happen. For quite a while. But as 547 00:31:51,080 --> 00:31:54,719 Speaker 4: you're saying, Saudi Arabia really isn't doing either of those things. 548 00:31:55,040 --> 00:31:57,880 Speaker 4: And it really strikes me how different it is from 549 00:31:58,080 --> 00:31:59,800 Speaker 4: the Chinese Super League and from the NASL. 550 00:32:00,320 --> 00:32:03,320 Speaker 3: Yeah, I mean to the extent that we see what 551 00:32:03,360 --> 00:32:06,680 Speaker 3: Saudi Arabia is doing in the world of sports, it 552 00:32:06,920 --> 00:32:11,680 Speaker 3: has much more i think similarities to soft power and 553 00:32:11,720 --> 00:32:13,680 Speaker 3: the exercise of soft power that we see sort of 554 00:32:13,840 --> 00:32:18,360 Speaker 3: across other industries than it does to the various ways 555 00:32:18,400 --> 00:32:22,080 Speaker 3: in which other foreign leagues have for relatively short time arises. 556 00:32:22,160 --> 00:32:25,040 Speaker 3: It's not just China. Russia has gone through this period 557 00:32:25,040 --> 00:32:27,880 Speaker 3: with their domestic league. Turkey has gone through this period 558 00:32:27,880 --> 00:32:31,800 Speaker 3: with their domestic league. As Kelly was saying, like European 559 00:32:31,800 --> 00:32:35,120 Speaker 3: soccer has a lot of experience going through these cycles 560 00:32:35,120 --> 00:32:37,240 Speaker 3: of okay, where is the next influx of cash to 561 00:32:37,320 --> 00:32:39,680 Speaker 3: our business going to come from? But what you can 562 00:32:39,720 --> 00:32:43,800 Speaker 3: sort of clearly see with Saudi Arabia is and this 563 00:32:43,960 --> 00:32:47,160 Speaker 3: is also true of Abu Dhabi and Kada. You know, 564 00:32:47,720 --> 00:32:51,640 Speaker 3: Kater owns PSG. Cautter's head at PSG now sits on 565 00:32:51,720 --> 00:32:56,080 Speaker 3: the Yuefas board, right, and you can sort of see 566 00:32:56,120 --> 00:32:58,880 Speaker 3: with Abu Dhabi with Manchester City. They now own teams 567 00:32:59,200 --> 00:33:01,760 Speaker 3: under that umbrella in one that plays in MLS, one 568 00:33:01,800 --> 00:33:04,200 Speaker 3: that plays in Australia. They have a South American team. 569 00:33:04,440 --> 00:33:07,880 Speaker 3: If you're trying to draw inferences about what the region 570 00:33:07,920 --> 00:33:09,960 Speaker 3: is doing and about what these individual actors in the 571 00:33:10,000 --> 00:33:11,920 Speaker 3: region are doing, it seems to me that it is 572 00:33:12,040 --> 00:33:16,160 Speaker 3: much more about the exercise of soft power, the exercise 573 00:33:16,240 --> 00:33:20,080 Speaker 3: of in some ways having Europe, the Western economic world 574 00:33:20,360 --> 00:33:24,440 Speaker 3: in various areas coming to depend on Saudi Arabia and 575 00:33:24,480 --> 00:33:28,000 Speaker 3: the money coming from Saudi Arabia, because that instills a 576 00:33:28,040 --> 00:33:29,640 Speaker 3: degree of power in the relationship. 577 00:33:30,040 --> 00:33:32,000 Speaker 2: Can I ask a question about the business from the 578 00:33:32,040 --> 00:33:36,600 Speaker 2: perspective of the players, You know, if Lebron James were 579 00:33:36,680 --> 00:33:39,080 Speaker 2: to go play the final couple of years, I don't 580 00:33:39,120 --> 00:33:43,640 Speaker 2: think this over happened in the Chinese Basketball League. I 581 00:33:43,640 --> 00:33:47,719 Speaker 2: imagine that like people would pay less attention to Lebron 582 00:33:47,800 --> 00:33:48,880 Speaker 2: James's basketball than. 583 00:33:48,840 --> 00:33:49,360 Speaker 3: They do now. 584 00:33:49,720 --> 00:33:53,320 Speaker 2: Maybe some like hardcore fans would like start following those games, 585 00:33:53,320 --> 00:33:56,040 Speaker 2: but I suspect his like sort of status would diminish 586 00:33:56,200 --> 00:33:58,840 Speaker 2: when these players go, whether they go to Saudi Arabia 587 00:33:59,000 --> 00:34:01,240 Speaker 2: or whether they go in the case of Leonel Messi 588 00:34:01,360 --> 00:34:05,360 Speaker 2: going to Miami, Like, do they retain their huge global 589 00:34:05,400 --> 00:34:07,320 Speaker 2: fan base and they really are massive? I mean I 590 00:34:07,440 --> 00:34:11,200 Speaker 2: just look at on Instagram, Rinaldo Messi, etcetera. Money more 591 00:34:11,239 --> 00:34:14,080 Speaker 2: followers than someone like Lebron James, Like, do they have 592 00:34:14,160 --> 00:34:17,839 Speaker 2: this huge mass that will just follow them from team 593 00:34:17,880 --> 00:34:19,920 Speaker 2: to team and be fans of that new team. 594 00:34:20,880 --> 00:34:23,920 Speaker 3: Certainly it has been the case when massive players have 595 00:34:24,000 --> 00:34:26,920 Speaker 3: moved within the top echelon of the game. When Cristiano 596 00:34:27,000 --> 00:34:31,440 Speaker 3: Ronaldo went from Real Madrid to Juventus, for example, it 597 00:34:31,560 --> 00:34:35,920 Speaker 3: is relatively untested because there is nobody like Ronaldo and Messi, 598 00:34:36,200 --> 00:34:40,160 Speaker 3: because Ronaldo and Messi's super popularity, They're super fan base 599 00:34:40,800 --> 00:34:44,560 Speaker 3: is unique to kind of the timing of the explosion 600 00:34:44,600 --> 00:34:48,160 Speaker 3: of social media and the Internet. We really don't know 601 00:34:49,120 --> 00:34:52,200 Speaker 3: what this is going to mean. We don't know. We 602 00:34:52,640 --> 00:34:56,560 Speaker 3: can look at other lesser stars and the career path 603 00:34:56,719 --> 00:34:59,160 Speaker 3: of hitting a point where you have been an excellent 604 00:34:59,200 --> 00:35:01,799 Speaker 3: superstar player and your skills begin to decline, and you 605 00:35:01,880 --> 00:35:06,160 Speaker 3: basically have these choices between continuing to get paid stratospheric 606 00:35:06,280 --> 00:35:09,120 Speaker 3: money but leaving the upper echelons of the game, or 607 00:35:09,160 --> 00:35:11,680 Speaker 3: getting paid less and staying in the upper echelons of 608 00:35:11,680 --> 00:35:13,960 Speaker 3: the game. We've seen that pattern happen over and over 609 00:35:14,000 --> 00:35:16,640 Speaker 3: and over again, and there is a diminishment sort of 610 00:35:16,640 --> 00:35:19,680 Speaker 3: in your relevance when you leave the upper echelons of 611 00:35:19,680 --> 00:35:22,279 Speaker 3: the game. It's just untested at the Messi Renaldo level, 612 00:35:22,320 --> 00:35:22,759 Speaker 3: it really is. 613 00:35:23,719 --> 00:35:26,680 Speaker 1: So I have a sort of player focus question, but 614 00:35:26,719 --> 00:35:30,160 Speaker 1: I guess from a different perspective. So, you know, Messi 615 00:35:30,719 --> 00:35:34,120 Speaker 1: supposedly turned down an offer from Saudi Arabia in favor 616 00:35:34,280 --> 00:35:38,080 Speaker 1: of earning millions of dollars and living in Miami, and 617 00:35:38,200 --> 00:35:41,440 Speaker 1: it does seem to me like there is also a 618 00:35:41,520 --> 00:35:45,840 Speaker 1: lifestyle question mark around moving to Saudi Arabia, you know, 619 00:35:45,920 --> 00:35:48,640 Speaker 1: particularly if you're a football star who might be used 620 00:35:48,680 --> 00:35:51,560 Speaker 1: to going out to clubs and you know, drinking a 621 00:35:51,600 --> 00:35:55,440 Speaker 1: lot and having that sort of fun. We were talking 622 00:35:55,480 --> 00:35:59,600 Speaker 1: earlier about the idea of Saudi Arabia potentially making itself 623 00:35:59,719 --> 00:36:05,080 Speaker 1: a sort of global capital for football, maybe attracting soccer 624 00:36:05,160 --> 00:36:09,520 Speaker 1: tourists into the country. Are all these hires the first 625 00:36:09,560 --> 00:36:16,000 Speaker 1: step maybe towards a relaxation of some Saudi restrictions around 626 00:36:16,160 --> 00:36:22,280 Speaker 1: things like alcohol, or or maybe you know, I should 627 00:36:22,560 --> 00:36:25,640 Speaker 1: pay more attention to some of the more recent hires 628 00:36:25,719 --> 00:36:30,359 Speaker 1: like practicing Muslims like Kante, the Chelsea midfielder. You know, 629 00:36:30,480 --> 00:36:32,560 Speaker 1: is that the direction they're going in trying to snap 630 00:36:32,640 --> 00:36:36,280 Speaker 1: up Islamic players or do we think they are making 631 00:36:36,320 --> 00:36:40,600 Speaker 1: a real play for superstars from the West who they 632 00:36:40,680 --> 00:36:43,640 Speaker 1: can attract and keep in the Kingdom. 633 00:36:44,360 --> 00:36:47,600 Speaker 3: So I would hit that from two angles. The first 634 00:36:47,600 --> 00:36:49,439 Speaker 3: thing I would say is looking at the Cada World Cup, 635 00:36:49,440 --> 00:36:52,480 Speaker 3: as I think fairly instructive here when Kada got the 636 00:36:52,480 --> 00:36:56,400 Speaker 3: World Cup there. You know, FIFA has deals with Budweiser, 637 00:36:56,600 --> 00:37:01,480 Speaker 3: and the initial agreements were that as a nation would 638 00:37:01,520 --> 00:37:05,080 Speaker 3: make exceptions for these things. As the World Cup came, 639 00:37:05,840 --> 00:37:10,080 Speaker 3: we saw, like in the two weeks before the World Cup, 640 00:37:10,440 --> 00:37:12,919 Speaker 3: there was a whole lot of we're altering the deal, 641 00:37:13,040 --> 00:37:15,080 Speaker 3: pray we don't alter it further when it came to 642 00:37:15,120 --> 00:37:19,719 Speaker 3: things like alcohol, when it came to things like lgbtqu 643 00:37:20,080 --> 00:37:25,239 Speaker 3: rainbows and outward appearances of support that had again previously 644 00:37:25,280 --> 00:37:29,440 Speaker 3: been agreed to being quite rapidly unagreed to once it 645 00:37:29,480 --> 00:37:31,200 Speaker 3: was too late for the tournament to go anywhere else. 646 00:37:31,440 --> 00:37:34,320 Speaker 3: So I do think when you're looking at the possibility 647 00:37:34,400 --> 00:37:35,960 Speaker 3: of this in the future, that is something to keep 648 00:37:35,960 --> 00:37:37,680 Speaker 3: in mind. And then you bring up the other The 649 00:37:37,719 --> 00:37:39,880 Speaker 3: second part, which I would say it's is that it 650 00:37:39,960 --> 00:37:42,160 Speaker 3: is unclear to me whether it is by design or 651 00:37:42,200 --> 00:37:47,200 Speaker 3: whether it is just happenstance that Muslim players, North African players, 652 00:37:47,200 --> 00:37:50,799 Speaker 3: players from the Middle East have seemed to be more 653 00:37:50,840 --> 00:37:54,400 Speaker 3: comfortable taking money to go to Saudi Arabia than other players, 654 00:37:54,520 --> 00:37:57,279 Speaker 3: or if that's who they're specific specifically targeting. But it 655 00:37:57,320 --> 00:38:01,759 Speaker 3: is unquestionably true that bet and Kante, for example, who 656 00:38:01,760 --> 00:38:04,320 Speaker 3: are the two biggest names from this summer, have agreed. 657 00:38:04,719 --> 00:38:09,080 Speaker 3: And Benzima is French but Algerian French, Conte is French, 658 00:38:09,160 --> 00:38:12,400 Speaker 3: but very publicly Muslim, that it is. You know that 659 00:38:12,480 --> 00:38:16,440 Speaker 3: it is an eas probably an easier ask for these things. 660 00:38:17,120 --> 00:38:19,920 Speaker 4: One of the things I think here is that because 661 00:38:20,840 --> 00:38:25,120 Speaker 4: Saudi Arabia is this is not a like clearly, this 662 00:38:25,160 --> 00:38:27,799 Speaker 4: is not a scheme aimed at making money. They have 663 00:38:27,920 --> 00:38:31,120 Speaker 4: said that their hope is to grow their league revenues 664 00:38:31,200 --> 00:38:34,080 Speaker 4: by twenty thirty to four hundred and eighty million a year, 665 00:38:34,440 --> 00:38:37,560 Speaker 4: which is like not remotely comparable to the money that 666 00:38:37,560 --> 00:38:40,440 Speaker 4: they are spending in wages and transfer fees. And so 667 00:38:40,840 --> 00:38:44,920 Speaker 4: when what you're trying to do isn't really constrained by 668 00:38:44,960 --> 00:38:47,759 Speaker 4: profitability in the same way, it gives you a lot 669 00:38:47,760 --> 00:38:50,160 Speaker 4: of room to improvise. You throw a lot of money 670 00:38:50,160 --> 00:38:51,759 Speaker 4: at Ronaldo, and then you try to throw a lot 671 00:38:51,760 --> 00:38:53,680 Speaker 4: of money at Messi and try to be the Ronaldo 672 00:38:53,719 --> 00:38:56,200 Speaker 4: Messi League, and that doesn't work. But you've got lots 673 00:38:56,200 --> 00:38:58,400 Speaker 4: of money, and suddenly it turns out that a number 674 00:38:58,480 --> 00:39:01,480 Speaker 4: of Muslim players, North African and Middle Eastern players are 675 00:39:01,520 --> 00:39:02,200 Speaker 4: more interested. 676 00:39:02,480 --> 00:39:03,440 Speaker 3: You can pivot. 677 00:39:03,160 --> 00:39:04,960 Speaker 4: To do that and try to make something out of that, 678 00:39:05,040 --> 00:39:07,960 Speaker 4: and that might work better with a plan to be 679 00:39:08,080 --> 00:39:11,200 Speaker 4: more restrictive with your with your social laws rather than 680 00:39:11,239 --> 00:39:13,399 Speaker 4: loosening them more. And like I think, I think they 681 00:39:13,440 --> 00:39:18,080 Speaker 4: have a lot of room to maneuver and improvise because 682 00:39:18,360 --> 00:39:21,600 Speaker 4: they're not as focused on the bottom line in any 683 00:39:21,640 --> 00:39:22,480 Speaker 4: kind of normal way. 684 00:39:23,600 --> 00:39:26,520 Speaker 2: I just have one more question, and we didn't really 685 00:39:26,520 --> 00:39:28,520 Speaker 2: get too much into the US. Maybe we'll have you 686 00:39:28,600 --> 00:39:32,439 Speaker 2: back for like an MLS focused episode at some point 687 00:39:32,600 --> 00:39:35,600 Speaker 2: in the future, But what's the deal with the lack 688 00:39:35,680 --> 00:39:40,600 Speaker 2: of relegation and promotion in the US, Because my impression 689 00:39:40,880 --> 00:39:44,840 Speaker 2: is that the MLS was founded as a condition to 690 00:39:44,920 --> 00:39:47,120 Speaker 2: get what was it, the ninety four World Cup like 691 00:39:47,160 --> 00:39:49,200 Speaker 2: if we had to like have our own, like we 692 00:39:49,239 --> 00:39:51,959 Speaker 2: had to launch our own like big time serious soccer league, 693 00:39:52,640 --> 00:39:56,080 Speaker 2: why don't we have the same back and forth as 694 00:39:56,120 --> 00:39:58,400 Speaker 2: others And would it benefit us soccer? Would it make 695 00:39:58,440 --> 00:40:00,880 Speaker 2: it more exciting? Would it make people more invested in 696 00:40:00,960 --> 00:40:03,440 Speaker 2: their teams if there was that thrill of are you 697 00:40:03,480 --> 00:40:05,480 Speaker 2: gonna like get demoted or promoted? 698 00:40:06,120 --> 00:40:09,160 Speaker 1: The answer? The answer is Americans can't deal with failure 699 00:40:09,360 --> 00:40:10,520 Speaker 1: soccer snowflakes? 700 00:40:11,560 --> 00:40:13,920 Speaker 2: Or is it because it's just really more profitable to 701 00:40:13,960 --> 00:40:15,759 Speaker 2: have the cartel here and we just sort of like 702 00:40:16,520 --> 00:40:18,759 Speaker 2: we like our profitable sports cartels. 703 00:40:19,480 --> 00:40:22,279 Speaker 3: It's mostly that, I mean, there's there's other things around it, 704 00:40:22,320 --> 00:40:24,440 Speaker 3: but it's mostly that. I mean, Like, I think we 705 00:40:24,480 --> 00:40:28,960 Speaker 3: talked a little bit about how the promotion and relegation system, 706 00:40:28,960 --> 00:40:31,680 Speaker 3: which look, I mean, the majority of my job is 707 00:40:31,719 --> 00:40:34,640 Speaker 3: European soccer. I love promotion and relegation. I think it 708 00:40:34,719 --> 00:40:38,280 Speaker 3: is a great competitive model for sports. It is fun, 709 00:40:38,360 --> 00:40:41,120 Speaker 3: it is exciting, It keeps more fan bases involved on 710 00:40:41,160 --> 00:40:43,279 Speaker 3: a year out year and basis it gives hope to 711 00:40:43,440 --> 00:40:46,080 Speaker 3: like everybody in the country for their team. It's great, 712 00:40:46,680 --> 00:40:49,239 Speaker 3: but as we were talking about, it's really hard to 713 00:40:49,280 --> 00:40:51,560 Speaker 3: invest in a team as an owner. In a promotion 714 00:40:51,640 --> 00:40:55,200 Speaker 3: relegation system, it's hard to make modern stadiums, it's hard 715 00:40:55,239 --> 00:40:59,319 Speaker 3: to have you know, up to par medical facilities like 716 00:40:59,400 --> 00:41:03,040 Speaker 3: all of these. It's really really difficult to do in 717 00:41:03,080 --> 00:41:05,120 Speaker 3: an open system. And now, if you're telling me, we're 718 00:41:05,120 --> 00:41:07,960 Speaker 3: founding a league in the nineties, and at least the 719 00:41:08,000 --> 00:41:10,399 Speaker 3: stated goals of the people founding and running that league 720 00:41:10,440 --> 00:41:12,160 Speaker 3: is we want to this league to lead to the 721 00:41:12,200 --> 00:41:16,000 Speaker 3: improvement of American players internationally, and we aim to be 722 00:41:16,239 --> 00:41:19,880 Speaker 3: a great league in the next thirty years. You're starting 723 00:41:19,880 --> 00:41:22,560 Speaker 3: from behind and you're not giving yourself any advantages when 724 00:41:22,560 --> 00:41:26,400 Speaker 3: you don't have prorel In theory, you can do a 725 00:41:26,400 --> 00:41:30,440 Speaker 3: lot more investment. I think in practice maybe that is 726 00:41:30,440 --> 00:41:32,359 Speaker 3: not so much the case, but that is I think, 727 00:41:32,400 --> 00:41:33,560 Speaker 3: at least on a theory level. 728 00:41:33,560 --> 00:41:38,560 Speaker 4: What we're talking about the second Division in England, the Championship. 729 00:41:38,600 --> 00:41:41,640 Speaker 4: I believe that the most recent data had like half 730 00:41:41,640 --> 00:41:43,760 Speaker 4: of the clubs or a significant number of the clubs. 731 00:41:43,960 --> 00:41:47,480 Speaker 4: We're spending more just in player wages than they were 732 00:41:47,520 --> 00:41:50,959 Speaker 4: making in revenues. Like at lower down the Pyramids, teams 733 00:41:50,960 --> 00:41:53,760 Speaker 4: are trying to get into the Premier League. It becomes 734 00:41:54,160 --> 00:41:56,920 Speaker 4: just like the the incentives are crazy. 735 00:41:57,040 --> 00:41:58,640 Speaker 3: The other thing I'd say about promotional. 736 00:41:58,280 --> 00:42:03,359 Speaker 2: Relatives capital great is labor. We're opening out the other. 737 00:42:03,520 --> 00:42:05,759 Speaker 4: The other wild thing with with European sports, when you 738 00:42:05,760 --> 00:42:08,440 Speaker 4: think about the numbers is that the salaries these like 739 00:42:08,600 --> 00:42:11,360 Speaker 4: huge salaries. Oh my god, they're making twenty five million. 740 00:42:11,560 --> 00:42:14,360 Speaker 4: That's like what like RJ. Barrett mix for the Knicks. 741 00:42:14,680 --> 00:42:19,280 Speaker 4: That European soccer, there are so many more players making 742 00:42:19,320 --> 00:42:22,920 Speaker 4: money then there are the number of players certainly in 743 00:42:22,960 --> 00:42:25,800 Speaker 4: the NBA, but also in all of the individual of erically, 744 00:42:25,880 --> 00:42:28,160 Speaker 4: because you have all of this competition you both have, 745 00:42:28,480 --> 00:42:31,480 Speaker 4: you know, I think generally you typically have higher amounts 746 00:42:31,520 --> 00:42:33,960 Speaker 4: of higher percentage of the revenue going to players, and 747 00:42:34,280 --> 00:42:38,840 Speaker 4: there are so many more players making good money playing soccer. 748 00:42:39,200 --> 00:42:42,279 Speaker 4: Again because of this, there there's an interesting labor angle. Lot. 749 00:42:42,640 --> 00:42:46,239 Speaker 2: Yeah, there's a great lesson in when companies actually have 750 00:42:46,280 --> 00:42:50,040 Speaker 2: to compete for talent that it's good for workers pretty much. 751 00:42:50,560 --> 00:42:53,480 Speaker 3: I mean, there's there's other there's there's other complicating factors. 752 00:42:53,520 --> 00:42:57,120 Speaker 3: I think because it's so hard to invest in things 753 00:42:57,160 --> 00:43:00,920 Speaker 3: that aren't players, it pushes players outleries as a percentage 754 00:43:00,920 --> 00:43:03,399 Speaker 3: of revenue up because if you get relegated, you can 755 00:43:03,480 --> 00:43:07,040 Speaker 3: sell a player. I'm an Everton fan, Everton R. 756 00:43:07,239 --> 00:43:10,640 Speaker 1: I'm an Everton fan. I was really. 757 00:43:12,200 --> 00:43:13,120 Speaker 4: I'm sorry for you both. 758 00:43:13,360 --> 00:43:16,880 Speaker 3: Yeah, yeah, right, But you know, Everton a three quarters 759 00:43:16,880 --> 00:43:19,160 Speaker 3: of a way through horribly funding a new stadium had 760 00:43:19,160 --> 00:43:22,840 Speaker 3: they gotten relegated this year like they were in like 761 00:43:23,160 --> 00:43:27,720 Speaker 3: you know, club ending type financial trouble, losing the revenues 762 00:43:27,760 --> 00:43:31,400 Speaker 3: of the Premier League because you can't sell the stadium 763 00:43:31,400 --> 00:43:33,799 Speaker 3: that you're building the way you can sell off a 764 00:43:33,880 --> 00:43:36,279 Speaker 3: contract if you get relegated. So if you know, the 765 00:43:36,360 --> 00:43:40,440 Speaker 3: open system pushes money into player salaries in a way 766 00:43:40,680 --> 00:43:43,680 Speaker 3: that is just very again, very different than American sports. 767 00:43:44,600 --> 00:43:46,040 Speaker 1: We're gonna have to leave it there. I mean, we 768 00:43:46,080 --> 00:43:50,040 Speaker 1: didn't even get to the conspiracy theory about Chelsea and 769 00:43:50,120 --> 00:43:53,840 Speaker 1: Saudi Arabia. But we have like five other football episodes 770 00:43:53,840 --> 00:43:55,480 Speaker 1: that we need to take off the back of this, 771 00:43:55,719 --> 00:44:01,200 Speaker 1: including European soccer as a model in labor. Yeah, that'll 772 00:44:01,200 --> 00:44:05,279 Speaker 1: be fun. Well, Mike Kayley and Mike Goodman, the co 773 00:44:05,360 --> 00:44:09,120 Speaker 1: hosts of the Double Pivot Pod, really appreciate you coming on. 774 00:44:09,320 --> 00:44:13,200 Speaker 1: You guys were indeed the perfect guests for this particular topic. 775 00:44:13,239 --> 00:44:14,040 Speaker 1: So thank you so much. 776 00:44:14,320 --> 00:44:16,120 Speaker 3: Oh, we appreciate it. This It's been a throw Thanks 777 00:44:16,120 --> 00:44:16,600 Speaker 3: for having us on. 778 00:44:16,719 --> 00:44:31,720 Speaker 2: It's a lot of fun. Thank you, Joe. 779 00:44:32,040 --> 00:44:33,920 Speaker 1: Are you a Are you a soccer person? 780 00:44:33,960 --> 00:44:34,759 Speaker 3: Now? I might be. 781 00:44:35,120 --> 00:44:38,239 Speaker 2: I enjoyed that conversation so much. I learned so much. 782 00:44:38,320 --> 00:44:40,719 Speaker 2: I might actually start paying attention to soccer just so, 783 00:44:41,160 --> 00:44:43,560 Speaker 2: just so I can follow the macro side of it. 784 00:44:43,880 --> 00:44:45,880 Speaker 1: I mean, I will say I'm not a big sports 785 00:44:45,880 --> 00:44:49,160 Speaker 1: person in general, but soccer for me is by far 786 00:44:49,560 --> 00:44:53,600 Speaker 1: the more interesting game and business model. As you might 787 00:44:53,600 --> 00:44:55,759 Speaker 1: have just discovered from this podcast. 788 00:44:55,680 --> 00:44:58,200 Speaker 2: There were so many interesting aspects of the business. And 789 00:44:58,280 --> 00:44:59,719 Speaker 2: like I sort of, you know, I kind of knew 790 00:44:59,719 --> 00:45:02,040 Speaker 2: about relegation. I was like, okay, that makes it more exciting. 791 00:45:02,200 --> 00:45:06,280 Speaker 2: But actually thinking through the business elements and the unconstrained spending, 792 00:45:06,640 --> 00:45:10,360 Speaker 2: the volatility, the risks that you imagine. Imagine building a 793 00:45:10,400 --> 00:45:14,640 Speaker 2: gigantic stadium for your team and a huge medical facility 794 00:45:14,640 --> 00:45:17,560 Speaker 2: and then getting relegated, like the volatility that creates the 795 00:45:17,640 --> 00:45:19,520 Speaker 2: management it's super interesting stuff. 796 00:45:19,640 --> 00:45:23,080 Speaker 1: Yeah, and I guess you know, the next World Cup 797 00:45:23,440 --> 00:45:26,640 Speaker 1: in twenty thirty, or at least the next bid for 798 00:45:26,680 --> 00:45:30,440 Speaker 1: the twenty thirty game. I guess we'll see Saudi Arabia gets. 799 00:45:30,239 --> 00:45:30,680 Speaker 3: It will be there. 800 00:45:31,239 --> 00:45:32,960 Speaker 2: I thought that we're gonna be there live doing a 801 00:45:33,000 --> 00:45:34,320 Speaker 2: series of Yeah. 802 00:45:34,440 --> 00:45:36,759 Speaker 1: I mean, I guess it'll be interesting to see if 803 00:45:36,800 --> 00:45:39,440 Speaker 1: they have beer and things there. 804 00:45:39,480 --> 00:45:43,279 Speaker 2: But it's your questions though about China's strategy versus I 805 00:45:43,280 --> 00:45:45,600 Speaker 2: thought that was like really interesting and like some of 806 00:45:45,600 --> 00:45:48,400 Speaker 2: the different impulses that Chijin Ping had about building up 807 00:45:48,440 --> 00:45:51,240 Speaker 2: great domestic soccer, so many interesting angles. 808 00:45:51,280 --> 00:45:53,280 Speaker 1: I mean, it is crazy to me. It was crazy 809 00:45:53,280 --> 00:45:55,440 Speaker 1: to me to think that China Evergrand had all these 810 00:45:55,440 --> 00:45:58,719 Speaker 1: business interests, you know, real estate, car making at one 811 00:45:58,719 --> 00:46:01,839 Speaker 1: point I think anyvs and a professional football team and 812 00:46:01,880 --> 00:46:06,719 Speaker 1: now Saudi Aramco, the state owned oil giant in Saudi Arabia, 813 00:46:06,800 --> 00:46:10,440 Speaker 1: also has a football team. A side gig in football management. 814 00:46:10,520 --> 00:46:13,160 Speaker 1: Is pretty crazy to think about. But on that note, 815 00:46:13,160 --> 00:46:13,839 Speaker 1: shall we leave it there. 816 00:46:13,920 --> 00:46:15,200 Speaker 2: Let's leave it there, all right. 817 00:46:15,239 --> 00:46:18,120 Speaker 1: This has been another episode of the Odd Thoughts Podcast. 818 00:46:18,200 --> 00:46:20,600 Speaker 1: I'm Tracy Alloway. You can follow me on Twitter at 819 00:46:20,680 --> 00:46:21,920 Speaker 1: Tracy Alloway. 820 00:46:21,600 --> 00:46:24,720 Speaker 2: And I'm Joe Wisenthal. You can follow me on Twitter 821 00:46:24,840 --> 00:46:28,279 Speaker 2: at the Stalwart. Follow our guests the co hosts of 822 00:46:28,320 --> 00:46:32,839 Speaker 2: the Double Pivot Pod Michael Kayley he's at MC Underscore 823 00:46:33,280 --> 00:46:37,759 Speaker 2: of Underscore A, and Mike Goodman he's the m Underscore 824 00:46:37,920 --> 00:46:42,040 Speaker 2: l Underscore G. Follow our producers Carmen Rodriguez at Carmen 825 00:46:42,160 --> 00:46:44,880 Speaker 2: Rman and dash O Bennett at Dashbot, and check out 826 00:46:44,920 --> 00:46:48,600 Speaker 2: all of our podcasts at Bloomberg under the handle at podcasts, 827 00:46:48,640 --> 00:46:51,520 Speaker 2: and for more Oddlogs content, go to bloomberg dot com 828 00:46:51,520 --> 00:46:54,120 Speaker 2: slash odd Lots, where we have transcripts, a blog in 829 00:46:54,160 --> 00:46:57,279 Speaker 2: a newsletter, and check out the discord at discord dot 830 00:46:57,320 --> 00:46:59,000 Speaker 2: gg slash online. 831 00:46:59,200 --> 00:47:03,200 Speaker 1: And if you enjoy listening to odd Lots, please leave 832 00:47:03,280 --> 00:47:07,719 Speaker 1: us a positive review on your favorite podcast listening platform. 833 00:47:08,000 --> 00:47:10,200 Speaker 1: It does help us out a lot. Thanks for listening.