International inequality in football leagues: stumbling over colonial remnants?

Victo José
Nov 1 · 12 min read

Five years ago, I came across an ESPN article highlighting how two Portuguese clubs, Benfica and Porto, bought Brazilian players at “banana prices” and resold them for astronomical values in the European market:

“Brazilian football players are commodities that Portugal knows very well to turn into products of accumulated value. Recently, seven of these athletes that Brazil produces on such a large scale left the country as raw diamonds, at a reduced price, to be resold by the Portuguese for much more money, representing a total profit of stratospheric R$ 476.51 million [around € 110 million in 2019 exchange rate]” (ESPN, 2014)

Right away I thought about this trade relations as some kind of neocolonialism: the exploitation of a raw material in the periphery at low prices to be traded at high prices in central markets. However, I never went beyond imagining (with a bit of resentment) this supposed colonial pact 2.0. Until I discovered transfermarkt.

Transfermarkt is a German website that provides transfer data for the major football leagues in the world. The filters in the transfermarket database allow us, for example, to access transfers that a particular country’s league (say, Portugal) have made with athletes coming from another specific country (say, Cape Verde), on a specific date (say, the ten-year period between seasons 07–08 and 17–18). In addition, the site allows us to identify expenses, revenues and the balance resulting from these transfers. All of a sudden, I no longer had to leave that neocolonial hypothesis only in my imagination.

I collected some data and what I present here is divided into three parts: first, a brief historical rescue of trade relations between metropolises and their colonies between the sixteenth and nineteenth centuries. In the second part I present the data. I’ve chosen a temporary cut of ten seasons (07–08 to 17–18) for two leagues: Primeira Liga, the main Portuguese league and Ligue 1, the main French league. I present the transactional values ​​(revenues, expenses and balances) and a very simple return on investment (ROI) calculation of these leagues in relation to players from their former colonies. There is evidence of a special relationship between these leagues and the leagues from their former colonies. Finally, I discuss the results: are we observing a neocoloniasist relationship disguised as a free market or are we observing the formation of something else? We hope this brief and introductory essay sheds light upon a reality that, regardless of the conceptual classifications assigned, focuses on the international inequalities between football leagues in the world: some leagues are real barns of talents and end up receiving very little for the formation of athletes.

Colonial Trade: assymmetries and price determination

I will not dive deep into the peculiarities of the colonial commerce — but if that was the case, I would turn to Fernando Novais classic Portugal and Brazil in the Crisis of the Ancient Regime (NOVAIS, 2005). The author demonstrates how the metropolis main exports (i) came from the colonies (mainly Brazil in the portuguese case) and (ii) how prices were determined.

Fernando Novais

The metropolitan exclusivity — colonies’ trade with other nations was forbidden — allowed the metropolis to make profits twice: buying by the lowest possible price from the colonies and selling by the highest possible price in Europe. In other words, they were a monopsony and a monopoly at the same time (NOVAIS, 2005, p.89). The power position that enabled the metropolis to pay the minimum to their suppliers kept the colonial income in a very low level — almost at the level of subsistence — draining any possible source of surplus, not simply to improve the metropolis level of income, but also to keep the colonies in that state of inertia — since any surplus could be directed at activating new economic forces.

What about today? Are european leagues enjoying a similar power position?

Building on Transfermarkt Data

First, I must present some key information about the major football leagues. Table 1 summarizes the important numbers for the purpose of this essay. It brings six european leagues (Premier League — Great Britain; Serie A — Italy; La Liga — Spain; Bundesliga — Germany; Ligue 1 — France; Primeira Liga — Portugal) and one south-american league (Serie A — Brazil). In the second column we have the percentage of foreign players for each league in the current season (18/19 for the europeans; 19 in Brazil). The third column presents the current market value for each league (the sum of market values of all players for each league) in billions of euros. Finally, the last three columns show expeditures, revenues and the final balance of transactions for each league in the last ten completed seasons (from season 07/08 to season 17/18) in millions of euros.

Table 1 — Major Leagues’ Aggregate Data

What can we gain from these numbers? Well, first, that there are two different groups: buyers and sellers. Almost all the european leagues, with the exception of Primeira Liga, are buyers. The 10-year negative balance in transactions testifies that those leagues do not rely on sales to finance their budgets (this is an aggregate view — within each league this is not an homogeneous feature). Among the buyers, there is some stratification too. Premier League is clearly in it’s own division. First, its expenditures equal the combined expenditures of Serie A (Italy) and La Liga in the last 10 years. Then, look at that accumulated negative balance! The Premier League really is not worried about saving any money when it comes to buying players. More than five billion euros in deficit show that these guys are not joking around. This is twice the combined negative balances of all the other four buyer-leagues. Also, this says something about Premier League’s market value. The four other leagues are also rigging the world with cash in exchange for players — only in a smaller scale. With respect to this quarteto, it is interesting to note that Serie A (Italy) has spent several years equilibrating expenditures and revenues (a sign that the other sources of finance were not that good) but lately it recovered its buyer impetus; League 1 has a more equilibrated record, almost breaking even in the 10-year balance. Still, last year saw a huge increase in transactions deficit (app. 90 million euros), an evidence that the french are determined to increase spending.

In the other group, we have the sellers. Primeira Liga and Serie A (Brazil) bring with then a historical record of players exportation. Actually, these are the two leagues in the transfermarkt universe who have profited the most with players transactions in this 10-year period. This is a strong evidence that selling players is not just a complementary source of finance to this leagues: its in the base of their business model. However, there is something curious in this group. If these sellers are liquid exporters, we should expect to find a low percentage of foreign players in their clubs, right? Not necessarily. This happens to be the case for Serie A (Brazil) with 9% of foreigners, but Primeira Liga — and its impressive 63% foreign legion — finds a way to (i) make money selling players while (ii) keeping some of then for itself. Let’s see how they do that.

Primeira Liga

The figure below shows the countries analyzed: former colonies with significant commercial relations among their leagues and their former metropoly’s main league.

Portugal and Former Colonies

The table below concentrates the relevant data for Primeira Liga transactions in the period 07–08/17–18. There are two blocks of data. The first one is available directly in transfermarkt: expenditures, revenues and the resulting balance of transactions concerning players from specific countries. The fourth columm — ROI — is a simple calculation of the balance/expenditure ratio. This block of data is resumed in the “former colonies total” line — where we can see that, in the aggregate, 21% or a fifth of Primeira Liga balance ir originated from selling players from Portugal’s former colonies. Ok, that’s not much, one can argue — and I would agree. But take a closer look at some countries numbers and the ROI, e.g., Brazil. In the mean (for this period), Primeira Liga received an extra euro for each euro spent in brazilian players, therefore the 106% ROI. This is certainly a good bargain: Primeira Liga is selling brazilian players for twice the price it has payed for them. But for the other countries, the numbers skyrocket. Angola and Guinea-Bissau players are providing Primeira Liga with astounding 227% and 245% ROI respectively. Cape Verde players present a yield of 418%. And Mozambique players are, by far, the best investment in the market: 722% ROI can’t be found anywhere.

Table 2 —Primeira Liga Aggregate Data

The second block of data brings information regarding the representativeness of different groups: of former colonies players, of other foreigners and, specially, the ration between these two groups. The interesting point here is the different roles played by former colonies players and foreign players from other nations. 66% of Primeira Liga’s expenditure was directed into buying foreign players from other places (other than from its former colonies). However, only 18% of the league’s balance can be credited to transactions regarding this group. In the other hand, former colonies players contributed with 21% of the total balance, even though they account for only 22% of the league’s expenditure. Finally, the ratio depicted in the last line conceals a strong message: 54% of the balance provided by foreign players transfers must be credited to former colonies players; they really are raw diamonds.

Ligue 1

I proceed here in the same way. The figure below sinthesizes the nations within the scope of the exercise: only France’s former colonies with significant commercial ties envolving their leagues and Ligue 1.

France and former colonies

Table 3 contains aggregated data from Ligue 1 comprising seasons 07–08 / 17–18. Again, we can divide the analysis of this data into two blocks. The first block concerns transactions between Ligue 1 and the leagues of its former colonies. The positive ROI pattern holds (with the exception of Congo and Burkina Faso), although it is much more heterogeneous than that presented by the First League. Again we come across this stratospheric ROI for two countries: Morocco (233%) and Gabon (196%). But overall, the aggregate ROI for all transactions between Ligue 1 and former French colonies has a modest value: 41%. The First League average, for comparison, is 113%.

Although the Ligue 1 model is different from that of its Portuguese counterpart, it is possible to glimpse a special relationship between the league and the former French colonies when analyzing data from the second data block. Although only 14% of Ligue 1 spending is on players from its former colonies, these same players represent 40% of the total revenue from trading foreign players. That is, while business transactions involving players are not the primary income source — or business model — of Ligue 1, transactions with leagues from former French colonies yield quite well to the coffers of French clubs.

Table 3 — Ligue 1 Aggregate Data

Discussion

Before returning to the central question — whether or not there is neocolonialism in professional football’s trade practice — we need to point out a few things. The extremely asymmetric bargaining relationship between European leagues and their counterparts in developing countries must be taken into account. There is no doubt that trade relations benefit players and leagues in the periphery as well, but the abysmal ROI we find for some bilateral relations is too high (between 200–700%!) — even to be compensated for by FIFA’s solidarity mechanism (5% of future sales return to the player’s team (s) between the ages of 12 and 23). This should be concerted multilaterally, at the FIFA forum level, but it also depends on the advancement of professionalization of football in peripheral countries (although the professionalization of this sector in peripheral economies has deleterious effects such as the exclusion of popular classes from stadiums — subject for another article).

One could defend the position of the European leagues by stating that they are actually building on established commercial channels and language compatibilities to foster football in otherwise forgotten backyards of global football. But again: nothing justifies a 700% leverage. There is a clear power position being leveraged by European leagues when negotiating with their former colonies.

Still, there are some pretty good arguments against the neocolonialism hypothesis too. First and foremost, the study is at least incomplete — its necessary to look into ex-colonies’ leagues complete data, e.g., maybe their barganing position is inferior but not specifically in relation to its former metropoly — it could configure a weak position in general, in relation to a big set of other countries stronger leagues (and even weak leagues compared to the European scenario may replicate the power position when dealing with their less fortunate neighboors, e.g.: Brazil in latin-america). If corroborated, this would indicate that the global trade rules resemble much more like a centre-periphery approach (has anyone read early ECLAC publications, such as Celso Furtado’s and Raul Prebisch’s?) than a neocolonial market. And actually, there is some evidence that this could be true: if instead of looking to the buyer I look to the seller — specifically brazilian Serie A, what can I see? Who is profiting from transactioning with brazilian players? In the first place, well, Brazil. Serie A is the largest profiter, followed by Primeira Liga. But then, there is a third winner! Ukraine league happens to be profiting a lot in the past 10 years selling brazilian football players. And there is no historical colonial connections between Brazil and Ukraine whatsoever.

Raul Prebisch articulated the centre-periphery framework of international economic structure in the first half of the XXth century

However, a key takeaway from this short exercise is: Portugal is something different. As we have seem, Primeira Liga is the only example in the universe covered by this exercise that is at the same time full of foreign players and still registering growing profits in transactions. It seems to have developed somewhat of a platform position, or platform model: they keep a few players from their negotiations, but they keep in mind that selling is as important as keeping. One explanation for this could be in a more disaggregated level, if we look inside the league: at the club level, who reaps the profits? Benfica and Porto, mainly. These clubs are at the same time in a high level continental context (champions league) and in a low level (in terms of competition) national context. The 86 editions of the portuguese championship register only five winners, and Boavista and Belenenses won only once each. The other 84 trophies were split amongst Benfica (37), Porto (28) and Sporting (18). Therefore, they concentrate the benefits of being in a national league where teams can scout with more freedom and take risks (opportunity costs are lower than in more competitive leagues), since they are not threated by any other club, while at the same time showcasing in the highlights of the champions league.

To sum up, this inquiry is not closed by the short numeric exercise developed in this article. Its purpose is exaclty the opposite: to open the debate regarding this subject. Recently, brazilian teams have started a movement for profissionalization. It is important that they bear in mind this international context. European leagues have an important tradition: they have created the sport. Still, inequalities such as the ones showcased here are probably hampering the development of the sport in many places — places all around the world that, with better infrastructure, could be the stage for their native talent.

References

https://www.transfermarkt.com/

ESPN, 2014. Comprando barato e vendendo caro, portugueses lucram quase R$ 500 milhões com apenas sete brasileiros. Available in < http://www.espn.com.br/noticia/406994_comprando-barato-e-vendendo-caro-portugueses-lucram-quase-r-500-milhoes-com-apenas-sete-brasileiros >.

NOVAIS, F. 2005 [1979]. Portugal e Brasil na Crise do Antigo Sistema Colonial (1777–1808). São Paulo: HUCITEC.

Victo José

Written by

Writer. Drummer. Digital Economy Researcher. BA in Economics @UNICAMP PhD in Science and Technology Policy @UNICAMP

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