European Super League and so much for Joseph Schumpeter

Economist Joseph Schumpeter talked about creative destruction in that to survive capitalists continually seek more profits through the pursuit of new markets. With the presence of new markets this brings about more innovation removing the old businesses and opening opportunities for the new.

The free market, in which business is supposed to thrive, is based on weak barriers to entry, competition and less regulatory constraints. The extreme of this theory is perfect competition although in football we don’t have homogeneous products in that all teams are different. However the market does give teams the chance to gain promotion from lower divisions in English Football. Take for instance Leicester City winning the EPL and before them teams like Blackburn Rovers, Aston Villa, Nottingham Forest – the latter winning the league having just been promoted from the Second Division (in those days). These teams used innovation, coaching, strategically delving into the transfer market (not with the funds that some clubs have today) etc to form a successful team.

Nottingham Forest – Div 1 Champions 1977-78

The proposed ESL was all but free-market capitalism with an American style franchise system with 12 teams guaranteed a place in the competition – significant barriers to entry and not conducive to competition. So much for Joseph Schumpeter’s creative destruction with a group of elite clubs protecting their market and the owners being rentier capitalists. The ESL’s proposed move is similar to what has been happening in the market place – a structure of businesses taking huge debt and taking little interest in competition as long as they are making money. Manchester United, probably the most famous club in the world, got knocked out of the Champions League in the group stage but are still making a lot of money for the owners. It seems that the desire to win trophies has been superseded by profit – the proposed ESL avoids competition as member clubs are protected against the risk of failure. Not to say this is not already happening as the EPL and many other leagues in Europe are dominated by a small number of clubs which have significant funds available. This makes it near impossible for the other clubs to be competitive – remember Wimbledon winning the FA Cup in 1988 with the ‘crazy gang’. They had the worst stadium, poorly paid players and the lowest gates. It is hard to see supporters of less wealthy clubs being too enthusiastic about the excitement of victory.

The ESL has demonstrated that global capitalism operates on the basis of rigged markets not free markets, and those running the show are only interested in entrenching existing inequalities. It was a truly bad idea, but by providing a lesson in economics to millions of fans it may have performed a public service. Larry Elliott – The Guardian – 22-4-21

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