topcat Posted February 3, 2009 Share Posted February 3, 2009 Football Clubs across the world will either already be experiencing a drop in income or be preparing for it to happen soon. A combination of Supporters having less spare money to spend on tickets and merchandise Companies having less money to spend on sponsorship and hospitality Multimillionaire benefactors becoming less numerous and finding themselves with less spare cash to spend on pet projects. And crucially Falling TV advertising Revenues which mean that the next round of broadcasting deals will be substantially less generous There will be exceptions, some clubs (or even leagues) may kick the trend by securing a larger slice of a shrinking pie but overall budgets are going to have to be tightened throughout the global game. Even in clubs that are held up as models of financial prudence most of the revenue is accounted for by players wages and as any first year economics student will tell you an expected effect of the anticipated drop in revenue will be downwards pressure on wages and transfer fees. However this market adjustment can't happen instantly. Players are invariably on contracts that last for several years and wage bills agreed by clubs during good financial weather still need to be met during bad times. Thus most players will now find themselves commanding wages that exceed what they could hope to get if they were selling their services in the current market. In times like these players registrations are liabilities as well as much as they are assets. To sign a player who's contracted to another club you generally need to not only pay a transfer fee you also need to agree terms with the player which will involve an increase on their existing wages. In an environment where deflation means that players' existing wage deals now exceed the market rate, The prospect of paying a substantial fee for the opportunity to pay a player too much becomes less attractive even to those clubs who might have some spare cash around. The fact that prospective buyers for players have become scarcer is amplified by a deflationary cycle as the idea of buying promising players with a view to selling them on at a profit becomes less viable which in turn reduces demand. This helps explain why the transfer window has been so quiet. The few deals that have gone through have tended, even more than usual, to be players whose genuine value has clearly increased greatly since they last negotiated their wages. Of course this situation isn't permanent. All the player contracts that were negotiated pre credit-crunch will eventually expire to be replaced by ones more in keeping with what the market can sustain but for the next few years a lot of clubs are going to be stuck with paying more than they can really afford to players they can't offload. Link to comment Share on other sites More sharing options...
Coco Posted February 3, 2009 Share Posted February 3, 2009 Our team have bought a lot of lemons in the past. VR has suffered from asymmetric information issues: http://en.wikipedia.org/wiki/The_Market_for_Lemons Link to comment Share on other sites More sharing options...
Charlie-Brown Posted February 3, 2009 Share Posted February 3, 2009 Correct! Link to comment Share on other sites More sharing options...
grumpyespana Posted February 3, 2009 Share Posted February 3, 2009 Football Clubs across the world will either already be experiencing a drop in income or be preparing for it to happen soon. A combination of Supporters having less spare money to spend on tickets and merchandise Companies having less money to spend on sponsorship and hospitality Multimillionaire benefactors becoming less numerous and finding themselves with less spare cash to spend on pet projects. And crucially Falling TV advertising Revenues which mean that the next round of broadcasting deals will be substantially less generous There will be exceptions, some clubs (or even leagues) may kick the trend by securing a larger slice of a shrinking pie but overall budgets are going to have to be tightened throughout the global game. Even in clubs that are held up as models of financial prudence most of the revenue is accounted for by players wages and as any first year economics student will tell you an expected effect of the anticipated drop in revenue will be downwards pressure on wages and transfer fees. However this market adjustment can't happen instantly. Players are invariably on contracts that last for several years and wage bills agreed by clubs during good financial weather still need to be met during bad times. Thus most players will now find themselves commanding wages that exceed what they could hope to get if they were selling their services in the current market. In times like these players registrations are liabilities as well as much as they are assets. To sign a player who's contracted to another club you generally need to not only pay a transfer fee you also need to agree terms with the player which will involve an increase on their existing wages. In an environment where deflation means that players' existing wage deals now exceed the market rate, The prospect of paying a substantial fee for the opportunity to pay a player too much becomes less attractive even to those clubs who might have some spare cash around. The fact that prospective buyers for players have become scarcer is amplified by a deflationary cycle as the idea of buying promising players with a view to selling them on at a profit becomes less viable which in turn reduces demand. This helps explain why the transfer window has been so quiet. The few deals that have gone through have tended, even more than usual, to be players whose genuine value has clearly increased greatly since they last negotiated their wages. Of course this situation isn't permanent. All the player contracts that were negotiated pre credit-crunch will eventually expire to be replaced by ones more in keeping with what the market can sustain but for the next few years a lot of clubs are going to be stuck with paying more than they can really afford to players they can't offload. Well if the last bit of your statement becomes true Vlad has won a watch as we have a few of our first team sqaud out of contract. Grumpy. Link to comment Share on other sites More sharing options...
topcat Posted February 3, 2009 Author Share Posted February 3, 2009 Well if the last bit of your statement becomes true Vlad has won a watch as we have a few of our first team sqaud out of contract. Grumpy. Indeed the last time a transfer bubble burst was in the wake of the ITV digital fiasco. CPR had bought into that one big time and right at the top of the market with HBOS and SMG's money. Whether by accident or design Vlad started closing the throttle on the speculative spending well in advance of the crash. Link to comment Share on other sites More sharing options...
Buffalo Bill Posted February 3, 2009 Share Posted February 3, 2009 Top Cat will be appearing all week in The Golden Rule. Tomorrow: Prince Phillip - Greek tosser or lizard from outer space? Buffalo Bill . Link to comment Share on other sites More sharing options...
topcat Posted February 3, 2009 Author Share Posted February 3, 2009 Our team have bought a lot of lemons in the past. VR has suffered from asymmetric information issues:http://en.wikipedia.org/wiki/The_Market_for_Lemons But on the bright side it's asymmetric information issues that make it more likely we'll keep hold of Aguiar after his current contract. Link to comment Share on other sites More sharing options...
Coco Posted February 3, 2009 Share Posted February 3, 2009 But on the bright side it's asymmetric information issues that make it more likely we'll keep hold of Aguiar after his current contract. Assuming he's not a lemon and Rima can recognise that Link to comment Share on other sites More sharing options...
Charlie-Brown Posted February 3, 2009 Share Posted February 3, 2009 Whilst in no way a lemon i think Aguiar prolonged injury absence & the seriousness of his ankle injury may cause more cautious & stringent club doctors concerns. Link to comment Share on other sites More sharing options...
leginten Posted February 3, 2009 Share Posted February 3, 2009 Lemons are not the only fruit. Link to comment Share on other sites More sharing options...
Guest JamboRobbo Posted February 3, 2009 Share Posted February 3, 2009 Indeed the last time a transfer bubble burst was in the wake of the ITV digital fiasco. CPR had bought into that one big time and right at the top of the market with HBOS and SMG's money. Whether by accident or design Vlad started closing the throttle on the speculative spending well in advance of the crash. That'll be why we didn't get left with a load of players on big money contracts who we had to pay off then, and why we didn't have to sell our captain just to keep ourselves ticking over till the end of the season........oh, wait a minute, we did. Agree with the general thrust of your argument about whats going on in football. Don't agree for a second that Vlad did anything well ahead ahead of anything. Link to comment Share on other sites More sharing options...
Carl Spackler Posted February 3, 2009 Share Posted February 3, 2009 Did Hearts put Aguiar on another contract? If so that's another "transfer window" positive. Not losing him I mean. Link to comment Share on other sites More sharing options...
Coco Posted February 3, 2009 Share Posted February 3, 2009 Lemons are not the only fruit. We should try to reduce the assymetric information issues by watching the potential lemon play ... not just by accepting the salesman's patter. Then we could sign some top bananas. Link to comment Share on other sites More sharing options...
topcat Posted February 3, 2009 Author Share Posted February 3, 2009 That'll be why we didn't get left with a load of players on big money contracts who we had to pay off then, grumpyespana's point was that a lot of the big money contracts are coming up for expiration in the summer. and why we didn't have to sell our captain just to keep ourselves ticking over till the end of the season........oh, wait a minute, we did. Last time we ended up selling the stadium From here we may as well skip straight to the bit where I point out that "things could be worse" and you maintain "they should be better". Agree with the general thrust of your argument about whats going on in football. Don't agree for a second that Vlad did anything well ahead ahead of anything. I did say it was either "by accident or design" Link to comment Share on other sites More sharing options...
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