WEBVTT - Why Saudi Arabia Is Spending Millions on Soccer Stars 0:00:10.240 --> 0:00:13.600 Hello, and welcome to another episode of the Odd Lots Podcast. 0:00:13.680 --> 0:00:15.400 I'm Tracy Alloway and I'm Joe. 0:00:15.440 --> 0:00:16.759 Why isn't Joe? 0:00:16.800 --> 0:00:20.480 I think we need to figure out something extremely important 0:00:20.560 --> 0:00:22.720 before we even begin this discussion. 0:00:23.880 --> 0:00:25.720 I know what you're gonna say, and I was wondering 0:00:25.760 --> 0:00:29.080 if we should we should have figured this out before that. No, no, no, 0:00:28.880 --> 0:00:29.320 it started. 0:00:29.440 --> 0:00:29.760 Let's do. 0:00:29.960 --> 0:00:33.559 Let's let's force our work process on everyone listening to this. Now, 0:00:33.640 --> 0:00:35.479 are we going to call this soccer or football? 0:00:35.680 --> 0:00:39.320 This is a call whatever you want. It's fine, Okay, 0:00:39.320 --> 0:00:42.760 I must I say soccer. But I also don't really 0:00:42.800 --> 0:00:44.760 pay attention to this bart and I know you do, 0:00:44.920 --> 0:00:46.280 so maybe you should get to choose. 0:00:46.360 --> 0:00:48.559 I don't as much as I used to, But for 0:00:48.640 --> 0:00:51.159 AUDLTS listeners, I lived in the UK for more than 0:00:51.159 --> 0:00:54.639 ten years, and in the UK, uh, soccer is kind 0:00:54.680 --> 0:00:56.840 of inflicted on you, whether you like it or not. 0:00:57.000 --> 0:00:59.960 So let me just say I if we do start 0:01:00.080 --> 0:01:05.640 saying football in this conversation unless otherwise specified, we mean soccer, 0:01:05.720 --> 0:01:07.400 unless we say American football. 0:01:07.520 --> 0:01:08.520 What if they call it in Japan? 0:01:09.560 --> 0:01:10.920 I don't know, that's a good question. 0:01:11.080 --> 0:01:13.959 What they call it in Austria? 0:01:13.520 --> 0:01:14.840 Football? Right? 0:01:15.640 --> 0:01:16.679 What do they call it in Hong. 0:01:16.600 --> 0:01:20.800 Kong uh soccer? I think no, it must be football 0:01:20.800 --> 0:01:23.760 because that's British. I have no idea. Okay, okay, look, 0:01:24.200 --> 0:01:27.200 soccer and football are going to be interchangeable on this discussion. 0:01:27.240 --> 0:01:29.480 But I think we've given away what we are going 0:01:29.480 --> 0:01:30.400 to be talking about. 0:01:30.720 --> 0:01:33.720 Yes, yeah, And we brought it up very briefly in 0:01:34.200 --> 0:01:37.680 episode with Brad Setzer because at the time I asked him, 0:01:37.720 --> 0:01:39.800 I was like, what's the deal of Saudi Arabia offering 0:01:39.840 --> 0:01:42.800 like half a billion dollars to Lionel Messi. Then like 0:01:42.880 --> 0:01:45.040 two days later that deal never actually happened and he 0:01:45.080 --> 0:01:45.760 went to Miami. 0:01:46.200 --> 0:01:47.200 There is but it all. 0:01:47.319 --> 0:01:49.000 But he of course he was being Brad. He had 0:01:49.000 --> 0:01:52.080 this great like macro answer about the Saudi's current account 0:01:52.120 --> 0:01:54.400 surplus and all that stuff, and so there is a 0:01:54.440 --> 0:01:58.120 lot there with like the Ecan the Macro right of soccer. 0:01:58.360 --> 0:02:01.240 Right. It is no secret that's Saudi Arabia has been 0:02:01.280 --> 0:02:06.560 on something of a soccer star spending spree recently. I 0:02:06.560 --> 0:02:09.400 think it all kicked off when they bought Rinaldo earlier 0:02:09.400 --> 0:02:12.959 in the year, and since then they bought some prominent 0:02:13.000 --> 0:02:16.400 people like Benzima. I think I'm probably mispronouncing all of 0:02:16.440 --> 0:02:20.160 these names. We're recording this on June twenty first, and 0:02:20.240 --> 0:02:22.600 I saw that they just picked up Conte, who's like 0:02:22.639 --> 0:02:25.880 a very well known Chelsea midfielder, and they had a 0:02:26.080 --> 0:02:29.760 very strange video to go along with it, which maybe 0:02:29.760 --> 0:02:33.799 we can get into. But anyway, why is Saudi Arabia 0:02:33.960 --> 0:02:36.520 doing this? Is I guess the big question, and what 0:02:36.560 --> 0:02:40.440 does it mean for both European football and American soccer? 0:02:41.040 --> 0:02:44.240 Yeah, I have no idea about any of these things. 0:02:44.320 --> 0:02:47.400 I only found out recently that, like, I mean, I knew, 0:02:47.480 --> 0:02:50.840 like the Major League soccer in the US was kind 0:02:50.840 --> 0:02:52.760 of like big, but I didn't realize it was quite 0:02:52.760 --> 0:02:54.000 as big. It was like booming. 0:02:54.200 --> 0:02:55.000 You didn't know, not. 0:02:55.040 --> 0:02:57.760 Really, you know, my husband was briefly a youth coach 0:02:57.880 --> 0:02:59.040 for the New York Cosmos. 0:02:59.280 --> 0:03:00.680 I had no idea. Yeah that's great. 0:03:00.919 --> 0:03:04.200 Yeah, all right, Well, we have a lot to talk about, 0:03:04.240 --> 0:03:06.760 and I am very pleased to say that we truly 0:03:07.440 --> 0:03:10.040 have the perfect guests. We are going to be speaking 0:03:10.080 --> 0:03:14.160 with the co hosts of the Double Pivot pod, which 0:03:14.240 --> 0:03:18.280 describes itself as the world's most agreeable soccer analytics podcast. 0:03:18.600 --> 0:03:22.160 I love that tagline. We have Michael Cayley. In addition 0:03:22.240 --> 0:03:25.000 to being the co host of Double Pivot Pod, he 0:03:25.120 --> 0:03:28.840 is also the fourth coming author of a book with 0:03:28.960 --> 0:03:34.000 the very interesting title of the First Apocalypse of James 0:03:34.040 --> 0:03:37.200 Martyrdom and Sexual Difference, So not necessarily what you would 0:03:37.240 --> 0:03:41.480 expect from a soccer commentator. And we also have Mike Goodman. 0:03:41.560 --> 0:03:45.680 He is the senior editor for soccer at cbssports dot com, 0:03:45.720 --> 0:03:49.240 so really the perfect people to thread the needle between 0:03:49.280 --> 0:03:52.600 the soccer world and also Saudi Arabia's current account surplus. 0:03:53.160 --> 0:03:55.480 Welcome to the show. Michael and Mike. 0:03:55.680 --> 0:03:57.760 Thrilled to be here. We're both big fans, so it's 0:03:57.840 --> 0:04:00.480 great that we have the chance to do this. So excited. 0:04:00.520 --> 0:04:03.760 I feel like we were probably the only soccer podcast 0:04:03.880 --> 0:04:07.240 to base an episode around Brad Setster's research on the 0:04:07.280 --> 0:04:08.800 Saudi herb account balance. 0:04:08.840 --> 0:04:10.560 So amazing, amazing, love it. 0:04:11.000 --> 0:04:14.640 Okay, so first, one more bit of housekeeping. I'm just 0:04:14.720 --> 0:04:17.960 gonna you know, Mike and Mike is a little confusing, 0:04:18.440 --> 0:04:21.680 so I'm going to refer to Michael Kayley as Kaylee 0:04:21.760 --> 0:04:24.840 and Mike Goodman as Mike or Michael, if that makes sense. 0:04:24.880 --> 0:04:26.919 I think that's what you do on your podcast anyway, 0:04:27.320 --> 0:04:30.560 So hopefully that works for everyone. But I guess the 0:04:30.640 --> 0:04:34.280 big question for me is, you know, watching all this activity, 0:04:34.360 --> 0:04:37.880 it kind of started in January when we saw Christiano 0:04:38.000 --> 0:04:42.880 Ronaldo moved from Manchester United over to a Saudi Arabian 0:04:42.920 --> 0:04:46.520 team called Al Nasser, and that was for some insane 0:04:46.680 --> 0:04:49.400 amount of money, like two hundred million euros for a 0:04:49.440 --> 0:04:52.880 two and a half year deal. And I think when 0:04:53.000 --> 0:04:56.400 that first happened, there was a lot of discussion that 0:04:56.560 --> 0:05:02.080 maybe this was just an opportunistic move by Saudi Arabia. 0:05:02.160 --> 0:05:06.360 You know, he was out of contract and maybe they 0:05:06.560 --> 0:05:09.160 just saw an opportunity there and seized on it. But 0:05:09.279 --> 0:05:12.880 since then, we've just seen them making more and more 0:05:12.880 --> 0:05:15.960 approaches to football stars and snapping some of them up. 0:05:16.720 --> 0:05:21.960 So what's happening here, Like, is this the first salvo 0:05:22.200 --> 0:05:26.080 of a long plan development in Saudi football or did 0:05:26.240 --> 0:05:31.120 the transfer open the Saudi government's eyes to what was possible? 0:05:32.360 --> 0:05:34.400 So I, honestly, I think I'd start by taking a 0:05:34.440 --> 0:05:36.440 step back and doing something that maybe we do a 0:05:36.480 --> 0:05:39.560 lot on our podcast, which is sort of questioning the 0:05:39.560 --> 0:05:42.719 premise here a little bit. I would honestly say, I 0:05:42.720 --> 0:05:46.160 would honestly say that Saudi Arabia's involvement directly in soccer 0:05:46.200 --> 0:05:51.160 predated Ronaldo. They bought Newcastle United. The PIFF bought Newcastle 0:05:51.279 --> 0:05:54.920 United last summer basically, and it has been a long 0:05:55.640 --> 0:06:00.520 going actually more than like eighteen months ago. This had 0:06:00.560 --> 0:06:04.520 been sort of a longgoing negotiation where Saudi Arabia PIFF 0:06:04.520 --> 0:06:08.559 had wanted to purchase it and the UK had stood 0:06:08.600 --> 0:06:10.040 in the way, and the Premier League had stood in 0:06:10.080 --> 0:06:12.920 the way saying we despite the fact that another club, 0:06:12.960 --> 0:06:16.159 Manchester City, is owned by United Arab Emirates, we won't 0:06:16.160 --> 0:06:21.600 allow a sovereign nation to buy this club. There were 0:06:21.640 --> 0:06:27.120 ongoing negotiations. Eventually Saudi Arabia is satisfied the UK and 0:06:27.160 --> 0:06:31.400 said we are not a sovereign nation, we are PIFF, 0:06:31.440 --> 0:06:35.080 we are independent, and UK accepted this. Premier League accepted 0:06:35.080 --> 0:06:36.920 this and they bought Newcastle. I would say this was 0:06:36.960 --> 0:06:40.440 going on at the same time that PIFF founded liv 0:06:40.640 --> 0:06:45.000 Golf to be now merged with the PGA Tour. And 0:06:45.080 --> 0:06:47.320 what you've seen, I think a better way to understand 0:06:47.320 --> 0:06:49.560 it is really looking at the soccer spending first on 0:06:49.640 --> 0:06:53.240 Newcastle than on these players. In addition to some other 0:06:53.240 --> 0:06:55.479 ways that they are putting money into the game as 0:06:55.520 --> 0:06:58.080 in concert with what they were doing in golf, as 0:06:58.120 --> 0:07:02.160 a concerted effort to spend their capital on sports for 0:07:02.279 --> 0:07:03.920 various reasons. Yeah. 0:07:03.960 --> 0:07:06.200 I think the other thing to add here is in 0:07:06.320 --> 0:07:09.640 terms of what is the Saudi Arabian timeline? And obviously 0:07:09.680 --> 0:07:13.760 these things can change, but their vision twenty thirty, this 0:07:13.920 --> 0:07:18.840 big you know, economic modernization plan twenty thirty is also 0:07:19.040 --> 0:07:21.920 the next World Cup that is up forbidding, and Saudi 0:07:21.960 --> 0:07:25.280 Arabia is one of the probably the leading bidder at 0:07:25.320 --> 0:07:27.520 this point. You know, you know how the bids for 0:07:27.680 --> 0:07:32.400 for FIFA things work and so very transparent and. 0:07:33.280 --> 0:07:37.120 On the up and up. Everything's good, everything's kosher exactly. 0:07:37.560 --> 0:07:40.720 There's no advantages to being a sovereign nation that can 0:07:40.800 --> 0:07:44.120 just expense money in various random ways, and so they 0:07:44.200 --> 0:07:47.440 are like as they're looking to build for soccer. I 0:07:47.440 --> 0:07:50.840 think the timeline is probably best understood as a twenty 0:07:50.880 --> 0:07:53.800 thirty timeline, both in terms of the vision project and 0:07:53.960 --> 0:07:55.680 in terms of the World Cup. 0:07:56.320 --> 0:07:59.160 God, I already have so many questions. You know, one 0:07:59.160 --> 0:08:01.720 thing that brand brought up what we mentioned, and I 0:08:01.760 --> 0:08:04.720 think this case, this was an issue with the last 0:08:04.800 --> 0:08:08.040 where was the last World Cup. Cutter was that, Yeah, 0:08:08.040 --> 0:08:09.480 the most the most recent one. 0:08:09.720 --> 0:08:11.880 What's the much controversy offense? 0:08:12.000 --> 0:08:16.320 Too much controversy absolutely, like how difficult is it and 0:08:16.440 --> 0:08:20.600 costly to build sort of climate controlled stadiums in that climate? 0:08:20.680 --> 0:08:22.640 Like how did that even go, like with the heat 0:08:22.680 --> 0:08:23.200 and everything. 0:08:24.200 --> 0:08:27.120 So I don't know the specifics of the cost. If 0:08:27.160 --> 0:08:30.840 certainly it's a it's a massive money losing effort. They 0:08:30.880 --> 0:08:35.840 they were more or less successful at getting stadiums where 0:08:35.840 --> 0:08:39.840 players could play soccer that was recognizable as soccer in 0:08:39.880 --> 0:08:42.760 the heat. They did have to move that. The initial 0:08:42.840 --> 0:08:45.720 bid from Cutter did say they were going to play 0:08:45.720 --> 0:08:47.800 on the normal World Cup schedule, it is going to 0:08:47.800 --> 0:08:51.920 be played in June, and that just that they were 0:08:51.960 --> 0:08:55.280 not able to produce the climate controlled stadiums that would 0:08:55.280 --> 0:08:58.040 make it possible play in June. In Cutter, that was 0:08:58.120 --> 0:09:01.079 why the World Cup moved to November, and this because 0:09:01.120 --> 0:09:03.920 that was the only time that they could pull it off. 0:09:04.080 --> 0:09:08.560 And it's worth pointing out that that decision was incredibly contentious. 0:09:08.600 --> 0:09:11.760 There are contracts that had to be renegotiated, there were 0:09:11.800 --> 0:09:16.880 amends that had to be made. Media companies bid lots 0:09:16.920 --> 0:09:21.520 of dollars to broadcast the World Cup, and an American 0:09:21.559 --> 0:09:25.720 broadcaster broadcasting something in the summer Versus an American broadcaster 0:09:25.840 --> 0:09:28.600 broadcasting something when the biggest game for American audiences is 0:09:28.640 --> 0:09:34.000 the day after Thanksgiving, is a massive difference in terms 0:09:34.080 --> 0:09:36.079 of what you were paying for and why. 0:09:37.200 --> 0:09:40.880 So let me ask the big picture question that you 0:09:41.640 --> 0:09:44.280 were kind of hinting at in your first answer. But 0:09:44.880 --> 0:09:47.319 it is well known at this point that there is 0:09:47.400 --> 0:09:50.880 a lot of Middle Eastern money floating around the world 0:09:50.880 --> 0:09:54.400 of football in various ways, either through the World Cup 0:09:54.720 --> 0:09:59.840 in Katar or through ownership of teams, primarily in Europe. 0:10:00.080 --> 0:10:02.320 I know, when I was in Abu Dhabi, if you 0:10:02.400 --> 0:10:05.760 wanted to have a nice conversation with Kal Dun al Mubarak, 0:10:06.200 --> 0:10:08.880 you would bring up Manchester City and he would talk 0:10:08.920 --> 0:10:10.800 a lot about it, you know, provided that they were 0:10:10.840 --> 0:10:14.600 actually having a good season. But what is it about 0:10:15.160 --> 0:10:20.400 soccer slash sports that makes these attractive assets for a 0:10:20.440 --> 0:10:24.199 country like Saudi Arabia or even the United Arab Emirates. 0:10:24.960 --> 0:10:28.040 Yeah, so I would say the starting point here is 0:10:28.080 --> 0:10:33.920 that foreign money flowing into soccer is not new. The 0:10:34.080 --> 0:10:38.240 soccer economy is set up to not really be a 0:10:38.280 --> 0:10:42.079 healthy economy. So there is a long history of soccer 0:10:42.120 --> 0:10:46.280 clubs testing around for money to either sell to a 0:10:46.280 --> 0:10:49.040 new owner, to sell their most saleable assets, which are 0:10:49.240 --> 0:10:53.440 player contracts, to you know, people outside of Europe who 0:10:53.559 --> 0:10:56.199 maybe have lots of money to spend on it. What 0:10:56.360 --> 0:10:59.640 is new and different right now is that it's only 0:10:59.720 --> 0:11:02.800 since two thousand and eight, when Abu Dhabi in particular 0:11:02.840 --> 0:11:05.480 bought Manchester City that we come to understand these teams 0:11:05.480 --> 0:11:09.360 as being owned by sovereign nations as opposed to rich 0:11:09.440 --> 0:11:12.679 individuals from these sovereign nations. Manchester City was not the 0:11:12.679 --> 0:11:15.400 first club to be bought by somebody with the title 0:11:15.400 --> 0:11:19.680 of Sheik. It wasn't, but before that you would understand 0:11:19.679 --> 0:11:22.160 them to be a rich individual who was doing this 0:11:22.200 --> 0:11:24.959 instead of buying super yacht. Basically, if sports teams have 0:11:25.000 --> 0:11:29.840 for a long time been luxury goods, and then that changed, 0:11:29.960 --> 0:11:32.640 and that changed first with Abu Dhabi, then with Kadar 0:11:32.760 --> 0:11:35.600 and Paris Saint Germain and twenty eleven, then with Saudi 0:11:35.640 --> 0:11:39.040 Arabia and Newcastle, and now what we're seeing is the 0:11:39.080 --> 0:11:43.440 sort of secondary extension of that, which is the players 0:11:43.559 --> 0:11:47.120 going the opposite direction. With Saudi Arabia now attracting a 0:11:47.240 --> 0:11:49.920 number of big names and seeming to have no end 0:11:50.000 --> 0:11:52.120 insight to what they want to do. Why they want 0:11:52.160 --> 0:11:53.880 to do that is I think an interesting question is 0:11:53.880 --> 0:11:57.160 a question of politics. It's a question of you know, 0:11:57.280 --> 0:11:59.520 influencing the Western world in a lot of ways. But 0:11:59.559 --> 0:12:03.120 I think the the place to start is this is 0:12:03.160 --> 0:12:06.720 a vulnerability that the sport has had for a long time, 0:12:06.880 --> 0:12:11.680 this need for capital because until very recently these clubs 0:12:11.679 --> 0:12:15.400 have not been at all profitable, and being even a 0:12:15.400 --> 0:12:18.400 little bit profitable is an extremely new development. And you've 0:12:18.400 --> 0:12:21.480 seen then American owners come in because of this. You've 0:12:21.520 --> 0:12:25.280 seen lots of different changes in ownership as it's become 0:12:25.360 --> 0:12:29.520 big business. But the fundamental of Bedrock premise here is 0:12:29.559 --> 0:12:33.320 that soccer as an entity, especially European soccer, but all 0:12:33.360 --> 0:12:36.720 soccer as an entity, needs to find find influxes of 0:12:36.720 --> 0:12:37.960 capital pretty regularly. 0:12:38.640 --> 0:12:41.560 And I think it's worth here making a contrast to 0:12:41.640 --> 0:12:44.840 the way that most American league sports work. This is 0:12:45.080 --> 0:12:49.480 very very different from MLB baseball, from NBA basketball, from 0:12:49.559 --> 0:12:54.560 NFL football, all of those are effectively run as ownership cartels. 0:12:54.960 --> 0:12:58.720 There is you cannot just get a team and have 0:12:58.760 --> 0:13:01.840 it joined the NBA be approved by the NBA owners. 0:13:02.040 --> 0:13:03.439 There's all sorts of rules. 0:13:03.720 --> 0:13:08.160 The NFL rules not only explicitly do not allow for 0:13:08.240 --> 0:13:10.280 a sovereign, well fundo team, they don't even allow for 0:13:10.320 --> 0:13:14.000 a private, private equity to own a team. And so 0:13:14.720 --> 0:13:19.080 all of these are done in order to ensure profits 0:13:19.160 --> 0:13:21.200 for all of the ownership groups. And then there is 0:13:21.200 --> 0:13:23.880 a collective bargaining agreement with the players that sets the 0:13:24.000 --> 0:13:26.760 terms of this and continue to guarantee those profits. And 0:13:26.840 --> 0:13:30.680 there are two really crucial ways that European soccer is 0:13:30.840 --> 0:13:35.000 different from that. One is promotion and relegation, So top 0:13:35.040 --> 0:13:38.640 teams in the second league get to join the top league. 0:13:38.679 --> 0:13:41.160 So there's a ton of teams and there is just 0:13:41.320 --> 0:13:45.679 more competition. This has historically made it very very difficult 0:13:45.960 --> 0:13:49.760 for any individual league to put in place any kind 0:13:49.760 --> 0:13:52.960 of cost controls in the way that you expect in 0:13:53.000 --> 0:13:56.480 American sports, because if your league puts in plays cross controls, 0:13:56.720 --> 0:13:59.520 someone else is going to sign your players. And then 0:13:59.600 --> 0:14:03.439 on top of that, of course, European soccer is multinational, 0:14:03.920 --> 0:14:06.880 so instead of having one league, which is you know 0:14:07.559 --> 0:14:10.280 bas In America as a Canadian team, or two you know, 0:14:10.360 --> 0:14:12.600 there is an English league there is a Dutch league, 0:14:12.600 --> 0:14:14.720 there is a Spanish league, there is an Italian league, 0:14:15.120 --> 0:14:19.240 and so all of these individual leagues are competing with 0:14:19.360 --> 0:14:22.200 each other at the same time as the clubs are competing, 0:14:22.520 --> 0:14:26.680 and it creates a situation where it is just a 0:14:26.840 --> 0:14:32.840 far far more cutthroat, capitalist kind of world. And it 0:14:32.920 --> 0:14:36.040 means that, and what it is effectively meant is it's 0:14:36.160 --> 0:14:38.800 very very hard for any team to retain any kind 0:14:38.800 --> 0:14:42.400 of profitability and there is a need for external money. 0:14:42.880 --> 0:14:47.680 And then as people have found this opportunity, then it 0:14:47.720 --> 0:14:52.200 is an opportunity for them to use soccer to advance 0:14:52.320 --> 0:14:55.200 national interests in a way that again just really kind 0:14:55.200 --> 0:15:10.280 of isn't happening in American sports. 0:15:13.880 --> 0:15:17.560 Let me ask a totally innocent and completely unloaded question, 0:15:18.400 --> 0:15:23.360 but in Europe, don't we have financial fair play rules 0:15:23.400 --> 0:15:27.680 that are supposed to limit some of this influx of capital. 0:15:29.080 --> 0:15:32.520 It is a great question, and we do. Sort of 0:15:33.280 --> 0:15:37.440 financial fightplay comes about, honestly, specifically because of Abu Dhabi 0:15:37.520 --> 0:15:40.760 and Katar buying Manchester City and Paris centermen and spending 0:15:40.840 --> 0:15:43.960 tons of money in the attempt to improve their teams. 0:15:44.080 --> 0:15:47.760 And what financial fireplay rules are, They're structured fairly differently 0:15:47.800 --> 0:15:50.360 from an American sports salary cap. Right, an American sports 0:15:50.400 --> 0:15:54.000 salary cap just says, here's the negotiated amount of money 0:15:54.000 --> 0:15:56.240 that each team can spend. They can't spend more than it. 0:15:56.480 --> 0:15:58.680 Here's the floor. They have to spend more than the floor. 0:15:58.720 --> 0:16:00.680 This is the range of acceptable money to spend on 0:16:00.720 --> 0:16:05.400 contracts more or less. FFP financial fair play says you 0:16:05.480 --> 0:16:09.120 cannot spend more than the revenue you are bringing in. 0:16:10.000 --> 0:16:11.720 We average it out over a number of years. There 0:16:11.720 --> 0:16:15.120 are exceptions here and there, but the bottom line is 0:16:15.200 --> 0:16:19.200 the intent of financial fair play is to structure your 0:16:19.240 --> 0:16:22.280 finances such that you are not going into increasing amounts 0:16:22.280 --> 0:16:26.280 of debt now, because those are different, you will hear 0:16:26.440 --> 0:16:29.720 not unfair critiques of financial fair play from the likes 0:16:29.720 --> 0:16:32.560 of Manchester City, who will say, this is not actually 0:16:32.600 --> 0:16:36.280 about responsible spending. This is about protecting the old rich 0:16:36.400 --> 0:16:39.120 clubs from the rise of the new rich clubs. Because 0:16:39.120 --> 0:16:41.920 we have tons of money that we can responsibly spend. 0:16:42.040 --> 0:16:44.880 We're owned by a nation state, but you are instituting 0:16:44.960 --> 0:16:48.280 rules to prevent us from spending that money in order 0:16:48.360 --> 0:16:52.200 to sort of reify your place at the top. And 0:16:52.240 --> 0:16:56.000 then you have the additional complication of the fact that 0:16:56.120 --> 0:16:59.320 FFP may not be legal under Europe in law, that 0:16:59.440 --> 0:17:02.200 it may be anti competitive. It may not be, but 0:17:02.640 --> 0:17:06.080 if it was legally challenged, nobody is super confident it 0:17:06.080 --> 0:17:11.640 would survive. So there is a lot of effort to 0:17:11.800 --> 0:17:15.480 use financial fair play to enforce some things without ever 0:17:15.640 --> 0:17:18.560 using it emphatically enough to get it challenged where it 0:17:18.640 --> 0:17:19.480 might get struck down. 0:17:19.920 --> 0:17:24.440 What is the difference between financial fair play because, as 0:17:24.560 --> 0:17:28.679 you described, the situation in which an environment of relegation 0:17:28.840 --> 0:17:33.160 and promotion a sort of lack of barriers of entry 0:17:33.440 --> 0:17:38.440 into competitive soccer competition between different nation soccer leagues, So 0:17:38.520 --> 0:17:40.840 the Premier League versus the Spanish League versus the Dutch 0:17:40.920 --> 0:17:46.800 League versus the Bundesligue the German one. So what is 0:17:46.840 --> 0:17:52.000 the mechanism via which financial fair play is supposed to 0:17:52.040 --> 0:17:54.880 constrain how much any given team spends on sailors? 0:17:55.560 --> 0:17:59.600 So financial fair play is as currently there are individual 0:17:59.640 --> 0:18:03.280 leagues that have their own rules. Barcelona is presently being 0:18:03.320 --> 0:18:08.399 heavily constrained in their spending by La Liga's own internal rules. 0:18:08.640 --> 0:18:10.639 But the main financial fair play that was put in 0:18:10.680 --> 0:18:13.879 place with put in place europe wide through UEFA, which 0:18:14.119 --> 0:18:17.760 so UEFA is both the entity that runs the EUROS, 0:18:17.880 --> 0:18:24.040 the European international soccer competition, as well as the interclub 0:18:24.080 --> 0:18:27.480 competitions like the Champions League. And so the financial fair 0:18:27.520 --> 0:18:30.400 play that we're mostly talking about is one that only 0:18:30.440 --> 0:18:34.480 applies to teams that are competing in a European competition 0:18:34.800 --> 0:18:36.920 such as the Champions League or the Europa League. 0:18:37.200 --> 0:18:39.840 And then the penalty mechanism is one of both fines. 0:18:39.880 --> 0:18:42.200 But also if you are in violation, we can prevent 0:18:42.240 --> 0:18:44.719 you from playing in this competition even if you were 0:18:44.760 --> 0:18:49.200 qualified for it, which is itself both an expensive penalty 0:18:49.200 --> 0:18:51.520 but also sort of you know, the prestige of it, 0:18:51.600 --> 0:18:53.280 Like the idea is you're trying to qualify for the 0:18:53.359 --> 0:18:55.560 Champions League and then win the Champions League. So I 0:18:55.600 --> 0:18:58.719 mean it's a significant penalty should it be implemented. 0:18:59.000 --> 0:19:02.639 And these were put in place, it was pretty clear 0:19:03.080 --> 0:19:07.800 that Cutter and and Abu Dhabi were violating these rules. 0:19:07.800 --> 0:19:13.120 They both got very very large sponsorship contracts from the 0:19:13.160 --> 0:19:16.840 airlines of their respective countries right at the time that 0:19:16.960 --> 0:19:21.280 financial fair play was put in place. But YUEFA did 0:19:21.359 --> 0:19:24.520 bring charge, tried to bring charges against them, and then 0:19:24.600 --> 0:19:29.439 like settled for extremely minor levels of punishment. So this 0:19:29.520 --> 0:19:31.359 has been, you know, continued to be a thing that 0:19:31.400 --> 0:19:34.240 they push up against, even as they are no longer 0:19:34.359 --> 0:19:37.840 allowed to run the kind of humongous book profits that 0:19:37.880 --> 0:19:41.840 they did before financial book losses, before financial fair play. 0:19:42.720 --> 0:19:44.800 So, you know, we talked a little bit about the 0:19:44.840 --> 0:19:48.720 World Cup in Katar most recently, and I guess when 0:19:48.760 --> 0:19:53.120 I see so, I understand your point about football consuming 0:19:53.280 --> 0:19:56.480 a lot of capital, and Saudi Arabia at this point 0:19:56.520 --> 0:20:00.679 has spent hundreds of millions, maybe even some billions at 0:20:00.680 --> 0:20:05.720 this point on its soccer ambitions. Are there any suggestions 0:20:05.880 --> 0:20:11.919 that it wants to I guess, succeed consistently in the 0:20:11.960 --> 0:20:15.200 world of football or is this basically a one time 0:20:15.320 --> 0:20:17.800 cash splurge to try to get the World Cup? 0:20:18.480 --> 0:20:21.440 So I don't think there's a lot of suggestion that 0:20:21.560 --> 0:20:26.040 they want their national team, the Saudi Arabian national team 0:20:26.440 --> 0:20:30.320 to be competitively successful. You're not seeing from them, at 0:20:30.400 --> 0:20:32.719 least not yet, the kinds of things that you have 0:20:32.800 --> 0:20:34.920 to do as a nation. And these things all take 0:20:34.960 --> 0:20:37.600 extremely long time horizons. I mean, talk to any US 0:20:37.600 --> 0:20:40.320 men's national team fan who loses their mind every three years. 0:20:40.400 --> 0:20:43.480 But these things are like decades long processes, we're not 0:20:43.480 --> 0:20:47.520 seeing any indications of that. What we are seeing possibly 0:20:48.240 --> 0:20:54.480 is the beginning of an economic plan that would basically 0:20:55.480 --> 0:20:58.800 could in years to come, make Saudi Arabia more of 0:20:58.840 --> 0:21:01.840 the central hub of size in the world club soccer. 0:21:02.040 --> 0:21:03.480 So you know that if you want to see the 0:21:03.520 --> 0:21:09.200 best teams, the best players, the best competitions, you would 0:21:09.280 --> 0:21:12.200 be associating them. They would be owned in some manner 0:21:12.320 --> 0:21:14.639 or other by Saudi Arabia. I think that's where you 0:21:14.680 --> 0:21:17.680 could see this going, including the World Cup. But I 0:21:17.720 --> 0:21:20.760 think that's the direction you could see this going, much 0:21:20.800 --> 0:21:23.159 more so than say the Saudi Arabian national team becoming 0:21:23.160 --> 0:21:27.480 a powerhouse. How the details of that would eventually work 0:21:27.520 --> 0:21:31.080 are I think, really cloudy, and maybe it doesn't happen. 0:21:31.280 --> 0:21:34.959 We've seen instances before where, if not nation states, at 0:21:35.040 --> 0:21:38.639 least actors closely associated with nation states have spent a 0:21:38.640 --> 0:21:41.560 lot of money to bring soccer talent into the country 0:21:41.840 --> 0:21:43.920 and then seen it fizzle out after a few years. 0:21:43.920 --> 0:21:45.480 So I don't think anybody wants to get to ahead 0:21:45.480 --> 0:21:47.920 of themselves. But if you're thinking about what is Saudi 0:21:48.000 --> 0:21:51.320 Arabia possibly doing, I think the answer is spending a 0:21:51.320 --> 0:21:54.520 lot of money, so that Saudi Arabia conceivably could be 0:21:55.400 --> 0:21:57.640 the sort of king maker of club soccer. 0:21:58.040 --> 0:22:01.879 One thing I think is an interesting sort of piece 0:22:01.920 --> 0:22:04.760 of context here and contrast, because I think that what 0:22:04.920 --> 0:22:08.280 is going on in saudier Aba is notably different from 0:22:08.320 --> 0:22:09.960 what went on in China. 0:22:10.040 --> 0:22:12.399 Between a bell, Yeah, I was going to ask you 0:22:12.880 --> 0:22:15.200 about Saudi versus China, but go ahead. 0:22:15.720 --> 0:22:20.159 Yeah, So the Chinese Super League in twenty fourteen, she 0:22:20.359 --> 0:22:23.920 makes some remarks about how he wants China to be 0:22:24.000 --> 0:22:27.800 more of a global soccer power, and he specifically says 0:22:27.840 --> 0:22:30.720 that he wants China to have a national team that 0:22:30.800 --> 0:22:34.720 is competitive in men's and women's soccer and to host 0:22:34.760 --> 0:22:38.040 and eventually compete for World Cups. And that was part 0:22:38.080 --> 0:22:39.760 of it, but he also said that he wanted to 0:22:39.840 --> 0:22:43.760 build a league that would be successful, and I think 0:22:43.800 --> 0:22:48.440 also suggested wanted to see Chinese you know, major Chinese 0:22:48.440 --> 0:22:52.119 interests buy into European leagues as well, and so between 0:22:52.119 --> 0:22:55.680 twenty fourteen and twenty seventeen especially, you see a ton 0:22:55.960 --> 0:22:59.920 of this investment in the Chinese Super League and also 0:23:00.160 --> 0:23:03.840