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- 🔔 Buffett's economic castles & the European Super League
🔔 Buffett's economic castles & the European Super League
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Right, you don't have to be a football (soccer) fan to understand how significant this European Super League is...
It's a fascinating example of how the modern economic landscape works...
Football clubs have become businesses & this is an inevitable next step...
And what's good for the business is good for the shareholders...
Juventus Football Club shares jumped the most in a year after the Italian soccer club joined a group of the game’s wealthiest teams in announcing plans for a new “super league” that could transform revenue streams at the top level of the sport
'transform revenue streams'
How's that going to work then?
Proponents argue the new Super League would create a more exciting competition because the top teams would play each other more often.
It would also be lucrative for them, with permanent membership removing the uncertainty of the Champions League, whose teams must qualify annually or risk losing broadcasting and sponsorship revenue.
Ah yes, socialism for the rich etc...
There's nothing investors love more than certainty...
Certainty that the moat is wide enough to keep the competition out...
And this is where Buffetts' quote rings especially true...
"I look for economic castles protected by unbreachable moats"
🏰 The castle represents the business, the moat is the competitive advantage...
How does a football team sporting enterprise increase the size of the moat around its castle?
"The Super League is a new European competition between 20 top clubs comprised of 15 founders and five annual qualifiers"
These 15 founders guarantee their position at the top of the footballing hierarchy, with five rotating spots available for qualifiers each season...
That's one way to build a bigger moat, what else...?
"I keep saying it is about money, and if you look at the finances, a club like Man Utd playing in the Champions League, they make between £40m and £80m on a good year if they win it," he said.
"If they play in this new competition, they get a cheque for £250m-£300m to begin with, then in the future they will get three times as much money a season as they get from the Champions League.
"You are looking at £200m-£250m in TV rights, they will be able to sell some of the rights to the games themselves on their own channels, the broadcast rights all over the world." Kaveh Solhekol - Sky Sports News
Massively increasing your own revenues whilst freezing others out - the ESL will end up like one of those islands in the Atlantic...
Visual representation 👇
Yes, I did fail my art GCSE - thanks for asking
Everyone HATES the idea...
This lot think they can sweep up £300m more each season than the other teams and then wander back on a Saturday and play with that advantage in the PL . Deduct points , fine heavily and embargo transfers. I hope they haven’t bought some of the other 14 clubs. #stopthesuperleague— Gary Neville (@GNev2) April 19, 2021
Arsenal made 55 redundancies while simultaneously discussing a £350m payment to join this creepy elitist commercial cult. Embarrassing.— Freddie Paxton (@Freddie_Paxton) April 18, 2021
But the boards don't care...
Board member at one of English clubs joining Super League: "This isn't a civil war, it's a nuclear war. To be honest though the owners are not that worried about bad PR, they were expecting it. Their job is to maximise profits. The wider good of the game is a secondary concern"— Kaveh Solhekol (@SkyKaveh) April 19, 2021
Consider that quote...
'THEIR JOB IS TO MAXIMISE PROFITS'
It's not just their job, many would argue it's their fiduciary duty...
Directors and officers have two main fiduciary duties: the duty of loyalty and the duty of care.
The duty of loyalty is a responsibility to act in the best interest of the corporation, even when that action may conflict with a personal interest
Did anyone truly believe the Glazers & Kroenke (and others) were buying these teams for their love of 'soccer'?
The big question: Will it happen?
Let's ask Albert Einstein:
“Three great forces rule the world: stupidity, fear and greed.”
Thanks Albert 👍
Disappointing as it is for the purists, I know where I'd place my bets...