Monday, 10 May 2021

Super League Self Defeat

Posted by Allister Marran

Picture credit: Dan Leydon, The Beautiful Game.

The current Super League debacle is simply a good example of how modern capitalism destroys humanity and innovation in exchange for pure greed.

There is an investor in Japan who owns one share of Nintendo stocks, and every year he goes to the shareholder meeting and asks the dumbest of questions, always relating to something like, "Why don't Nintendo start making and selling X?” (replace X with dog food, or electric cars, or anything that is selling well) which will make the company more profits.

The Japanese, as courteous and likeable fellows that they are, always answer the same way, "We are a games company at heart. We make games that make people happy. It's about the fans, not the shareholders."

Many games and technology companies have come and gone, because they followed the Western model of profits and return on investment over customer experience. Atari, Sega, Intellevision, Colecovision, Sinclair, Commodore, IBM, Amstrad, the list is endless.

A small business owner exists to service the needs of a customer base. He puts his name and face to a product, and his personal integrity attracts new clients. 

A large listed corporate company insulates its investors from any liability, responsibility, personal association or any other kind of accountability. As a result, many people don't even know what companies they invested in when they modified their share portfolio. For all they know, they could have shares in a company that dumps nuclear waste into the water of an orphanage for needy children. They don't need to know or care, as long as they make money.

Manchester United were the richest sports club in the world until a takeover by the Americans a few years ago. Those investors did not use much of their own money, but took out loans and investment money and leveraged it back to the team. 

Overnight the club went from kings to paupers, owing hundreds of millions to banks and struggling to make loan and interest repayments, whilst disbursing any profits in the form of dividends and cash payouts to the shareholders who invested little in the first place.

Football is the game of the people. It is owned by the people. FIFA represents their interests, as small, poor local clubs vote for committees that vote for regional representatives that vote for national representatives who sit on the body of FIFA. They have their own issues, but they represent the small boy without shoes in a small township in Brazil who owns an old ball and a dream of playing for his country and winning a world cup.

The Super League is the very worst of corporate greed, return on investment and unaccountable capitalism ruining another important business sector. It removes the fans from the game, and funnels profits from FIFA who are supporting grass roots efforts to find the next Pele or Messi or Bale or Mane, and redirects them to the disinterested ultra rich in the USA or Dubai or the Far East. People who don't care about soccer, who don't watch the game on Saturday or Sunday, who don't buy the merchandise, or know the words to the team song.

It could be argued that Nintendo, the Japanese multinational consumer electronics and video game company, are still around because they continue to tell that one shareholder that the fans are more important than the profits. It's a bad strategy for annual ROI and dividends, but clearly great for long term sustainability and output. It allows them to plan for the bad times, when game machines start their cycle of decline before new technology renews it. 

I hope the fans of the English Big Six are ready to demand the same of their fat cat owners. 

Atari, Mattel, Intellevision, Commodore, IBM and many others were the big players in the games industry in the 80s, and for all intents and purposes they are gone today. Nobody believed they could fail, but they did not listen to the demands of the market and fell to smaller, nimbler, more attuned competition.

There is a chance that the same will happen to the Liverpools, Manchester Uniteds, and Chelseas of the world. No company is too big to fail. It is a lesson history has taught us over and over again. The philosophical theologian Paul Tillich put it radically: “The fundamental virtues in the ethics of a capitalist society are economic efficiency, developed to the utmost degree of ruthless activity.” But ruthlessness eats its own.

“You Will Never Walk Alone" are the words any Liverpool fan lives by. But trust is a two way street. Football is more than a business. Let us hope we are not left deserted on the roadside on our journey.  

2 comments:

Keith said...

To my mind, Allister, capitalism, as an economic model, is two-edged. I’d argue that, in many important regards, capitalism ought to be credited as having been a force for good, to build economic strength, like powering countries’ GDP growth, leading to developmental advantages and people’s quality of lives.

However, what you condemn here sounds like ‘predatory capitalism’. Or more specifically, a ‘leveraged buyout’: private equity firms aggressively target businesses, essentially requiring them to pay for their own acquisition through loans they themselves are oddly obliged to take out (that is, target companies having to use their own assets as collateral).

Often targeted businesses are broken up, with the stronger bits sold off by the equity firm for the latter’s financial gain. Too often, bankruptcies eventually result; in other instances, businesses never even have the opportunity to emerge from the acquisition. Might some variant of this ‘hostile’ (yet legal) behaviour be what’s going on here? If countries really disapprove, perhaps they ought consider changing the law.

Thomas Scarborough said...

A question I had as I read this was, how have people manoeuvred themselves into a position where they can milk the cow? Then, how much does it have to do with them, and how much with our culture?

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