“Go West, young man.” It is a prolific rallying cry for the colonization of the American West, attributed to the late Horace Greeley, an American politician and founder of the Liberal Republican Party. It is also a hit single by the Village People in the 1970’s, based on the speech by Greeley. The first two words of the quote could easily be attributed to the world of professional sports, although the term has no relation whatsoever with colonization of some sort. It does however with the term power.
Therefore, it seems only fitting that Yves Leterme, prime-minister of Belgium, used the same quote to express his views on the global economic shift during the latest Asset International Conference on the 29th of September 2011. Is that a mere coincidence?
Most definitely not.
In the past centuries, professional sports have been dominated by Western-oriented countries, primarily the United States and their Western-European counterparts. During the last few decades however, the dominance of those aforementioned countries has shrunk in favor of the surge of the former Soviet Union and countries in the Middle-East. Recent transfers of Axel Witsel from Benfica and striker Hulk from Porto to Zenit St-Petersburg underline that development.
Changing of the guards
The emergence of these countries is no coincidence. During the late twentieth century, political and economical reformations caused these regions to grow rapidly. Privatization and subsequent economic growth did wonders not only for the country’s gross domestic product, but also for a handful of very influential entrepreneurs with the right connections. Restructuring society was never this profitable.
In the former Soviet Union, corporations went from being state property, to being privatized and focused on commercial gains. This is particularly the case in the energy sector. More importantly, the small group of people who were in control of oil corporations such as Gazprom, Lukoil and Sibneft, made billions of dollars during the decentralization and privatization of the former Soviet Union.
The Middle-East, on the other hand, has seen a vast increase in the production and exploitation of natural resources, mainly oil and gas. Countries, or emirates, as they are called in the Arabic part of the world, are ruled by wealthy monarchs. So is the case in Qatar, where the immensely wealthy Al-Thani family have ruled from the mid-19th century.
The seemingly never-ending sources of income have lead to very interesting developments in the two regions, especially in the field of professional sports. In fact, one of the main expenditures of billionaires these days is the sports sector. Entrepreneurs try to build their own utopias within sports, leading to a wave of new ‘superteams’.
One could give a plethora of examples from Russia alone. The best known example is that of Roman Abramovich, oil tycoon and owner of soccer clubs Chelsea FC and CSKA Moscow. But there are more names who fit the blueprint of a billionaire owner with a passion for sports. Just think of the Russian Kontinental Hockey League (KHL), the basketball league (PBL) and the emergence of privately backed soccer teams such as Rubin Kazan, Anzhi Makhachkala and Terek Grozny.
Even in the Middle-East, there is a big passion for sports visible among billionaires. Recently, soccer teams in Spain (Getafe, Racing Santander, Malaga), France (Paris Saint-Germain) and England (Manchester City) have been taken over, and the own national competitions are filled with European or South-American players who collect heavy payloads.
The competitiveness of owners from these emergent countries has given professional sports clubs a much needed quality boost. However, their ambition does not end at a domestic club level. As they are often patriotic, billionaire sports owners also tend to draw big events to their respective countries. That is why the Qatari MotoGP is considered the opening race on the calendar since 2004, and the Abu Dhabi Formula 1 Grand Prix is the only Formula 1-race that is driven by night. Furthermore, Russia and Qatar have been selected as hosts for the world’s biggest sport event, the soccer World Cup. It seems that the sky-high ambitions of owners are finally met with the realization of such large scale projects.
The question is, whether the efforts of billionaires are of benefit to the country as a whole, or are just egotistical street signs, perceived visible external denotations that depict one’s wealth and success.
In Russia, one could argue that sports have definitely become more popular and successful because of private billionaire investors. Soccer clubs are a force to be reckoned with in European Cup competitions, as evidenced by the UEFA Cup wins of CSKA Moscow, Zenit Saint-Petersburg and Shakhtar Donetsk. Furthermore, the Russian national soccer team has reaped the benefits of the rise in attention from outside the country, leading to a third place at the European Championships of 2008 and the transfers of players to foreign competitions. Indeed, in these cases, investments would have a positive effect on the nation as a whole.
On the other hand, Russia is not the force it once was regarding Olympic sports, after finishing 11th in the Vancouver 2010 Winter Olympics medal table. The past ten years each saw a drop in the relative performance of athletes during Olympic Games. This feat has lead to the decision of the Russian government to invest a staggering amount of 1.4 billion dollars in sports, in order to be highly successful in the near future.
The conclusion can be drawn that while the behavior of billionaires should facilitate the basis for a higher level of sports and sports participation throughout the country, the opposite is true. In fact, while players individually have benefited from investments in the team, training methods, facilities and the subsequent foreign exposure, the only sport in Russia that has truly collected profits from these investments, is football. However, of the Russian national team, there are but a few players that are employed in foreign countries, and not one of them is a regular in the starting lineup. The successes that were enjoyed by teams from the former Soviet Union came mostly because of the influence of foreign players and managers. That should be worrying when one is trying to establish national sports growth, not only on a quantitative level, but also on a qualitative one.
Does the sun rise in the East?
In the Middle-East on the other hand, there are some different problems that have lead to worldwide criticism. Qatar, the hosts of the 2022 World Cup, have drawn criticism from human rights organizations due to the high level of season employment in the country. The unique socio-economical structure of the country creates a huge demand for employment in the near future, regarding the organization of the 2022 World Cup and other major tournaments. Qatar already has more than one million migrant workers, mostly labor forces. It is feared that this stream of migrant workers will only grow, and subsequently will lead to less intensive screening of labor forces. This opens the door for human trafficking, child labor and extortion.
That is not the only problem that rises in the Middle-East, but it is a controllable problem. The other, non-controllable problem is the climate in the Middle-East. Due to the extreme weather conditions in this region of the world, it has already been suggested that large events, including the 2022 World Cup, should be held in the winter. However, the change in event dates is highly unlikely due to the strict schedules of the involved stakeholders. Thus, organizing committees, backed by immensely wealthy billionaire investors, seek other ways to please the respective associations. A couple of the extreme measures that have contributed to the realization of large sports events in the Middle-East are the night race for the Formula 1 in Abu Dhabi, the MotoGP race by night in Losail and completely new, recyclable football stadiums with airconditioning for use in the 2022 World Cup. Furthermore, the Middle-East have launched a serious marketing campaign in order to promote the region. This included the persuasion of some highly-rated public sports figures such as Barcelona-coach Josep Guardiola as ambassadors of the region, as well as some record breaking sponsor deals, most notably those of Barcelona (Qatar Foundation) and Manchester City (Etihad Airways).
The most fundamental wrongdoing in these efforts is that the national quality of sports in the Middle-East does not improve. Countries stay mediocre in every professional discipline, which leads to the belief that the billionaire investments do nothing for the development of countries as sport nations. It seems that the Middle-East suffers from the same kind of problem that Russia has encountered. While sports are improved on an individual level, such as clubs and facilities, circuits, race tracks, the overall national sport level does not improve. That leads to the same worrying situation as mentioned earlier.
That also leads to a misinterpretation of the Keynesian principle. The Keynesian principle states that in order for an economy (or in this case, an entire sport nation) to grow, one should stimulate this growth through investments. However, while Keynes stated that this should be done through government actions, in practical terms, this could also be realized otherwise (e.g. through private investments). That leads to an economical view that is more parallel to the late Milton Friedman, who firmly believed in the stimulation of the economy through privatization, and practiced this principle in South-America, among other regions.
Perhaps that is the one fatal mistake made by investors. If there is no nationwide platform, no governmental support to distribute funds on an equal level thereby ensuring nationwide development and stimulation of an entire sport nation, then this form of investment will fail. It is a bold assumption, but it is a realistic one. In a capitalistic world such as the sports world, there is much need for a small, coordinating governance role, in order to ensure the development of all parties involved.
Narcissistic behavior leads to moral dilemma
The narcissistic behavior of billionaire investors is the root of the moral dilemma which presents itself through the creation of sports utopias. Is it really morally justified to splash such large amounts of money for the sole purpose of enhancing the profile of a region, and thereby not developing the nation as a whole? Furthermore, is it justified to enhance the profile of a region by the organization of large sport events, while the region in itself is nothing more than an economic air castle, waiting to implode? The billionaire investors would most definitely agree with this statement. These self-proclaimed Maecenas’s thrive on the self-indulgent kind of exposure and publicity that is generated through private investments in sports and sport clubs. In a way, this is the exact egotistical behavior which comes with making a lot of money. Greed and narcissism tend to get in the way of actually developing and improving a nation. Subsequently, the national quality of sports does not improve one bit. Could it be that John Maynard Keynes, who was a sport enthusiast himself, was right all along?
Future perspective: Go farther East
It is interesting to see what the future of professional sports holds. While it can be concluded that the investments in the former Soviet Union and the Middle-East create a new front in sports, this effect is most likely to be only temporary. The greatest question mark hangs over what will happen if the billionaire support drops out and the rivers of money dry up. Will these regions be able to be self-sufficient by the time that happens, or will the once so proud sporting nations collapse in an unprecedented manner? Perhaps investors will depart due to loss of interest, or maybe even incrimination of some sort, leaving sports ventures and facilities unattended and neglected. This will ultimately lead to a throw back in the national quality of sports, where it is possible that sports facilities will end up in the abysmal state of several Olympic villages, most notably the 1980 Moscow Olympic village, with its deteriorated buildings.
And then there is the emergence of other economic forces with a huge untapped sporting potential, such as India and China. What will happen if these countries start developing well-structured sport systems, facilities and subsequent athletes that can participate in tournaments other than the Olympics? What will happen if these upcoming heavyweights combine the two most well-known economical stimulances of the 20th century: the power of billionaire investors with coordination and semi-regulation by the government? The ramifications may well be unheard of, and there is a very good chance that the music business will have to get the Village People to reunite, in order to rewrite the now-dated battle cry into a new hit single.