In the previous part I talked about how football clubs are being run stupidly and that it is one of the main two reasons why football is a great investment because you wouldn't need to do a lot of work to keep up.

This post is about the second reason: Inflation

Football Inflation

Football is a great investment for the likes of Duncan L. Niederauer and other mid/lower table club investors. Even clubs near the bottom of the football pyramid are still a great investment because of inflation.

Inflation can be a double-edged sword.

For investors like the Glazers, inflation was good since they bought Manchester United in 2005 for around a billion. Now the club is valued at around 4.2 billion.

The rights of local broadcasting alone doubled 26 times between 1992 and 2019 for the Premier League. The reason for that is also because of how stupidly the Premier League was run in its early year, people knew their football but not their finances.

Players' Prices

This is the downside for the Glazers as they're the ones buying those price-inflated players. It is where someone like Niederauer would benefit.

To understand how insane football inflation is we need to take a lot at a player like Alan Shearer's move from Blackburn to Newcastle for 15 million pounds. According to Sterling pound, he should cost 30 million pounds. However, according to football price inflation, Alan Shearer would cost 222 million.

30 million vs 222 million: That's the difference between reality and the football world.

How Does That Relate To The First Wave Being Afraid Of The Second And Third Wave?

People like the Glazers and Kroenke rode the inflation wave. They bought the clubs just to put them in the fridge and take them out years later and sell them for profit. They didn't even need to manage those clubs well, they just needed to do enough to silence the fans every now and then.

Now, lazy investors find themselves in danger because the second and third waves are more interested in bottom clubs.

The third wave in specific includes investors not buying clubs in the Premier League or even The English Football League Championship, they buy clubs in divisions 3, 4, or even 5 and just lay down a great, simple foundation as Niederauer did with Venezia FC. That's because...

Analysts Are The Real Signings

That's the real investment for the second, and more specifically the third wave. These clubs pay to have professional board members, marketing specialists, and data analysts. Those are positions that cost much less to fill than paying a third-choice keeper in some clubs.

They also live longer in a club and have increased value with time. And their influence on a club's foundation is worth much more than any player could for any club no matter how much he would cost.

Relegation And Promotion

Since there are relegations and promotions, you could buy a club in League Two or League One and take it to the Premier League (See Brentford F.C). The profit margin between League One, EFL, And Premier League is insane.

Inflation and the chaotic management of football clubs would allow third and second-wave investments to advance faster to top-flight without spending large sums of money each transfer window.

The New Class

We're now seeing a new class of clubs forming. A class of overachievers threatening the likes of the Glazers of taking their spots if they act content or lazy. Now, we have clubs seeking to take their spots.

The new class is also a thorn in the throat of top clubs as they no longer can farm talents like Chelsea used to do. Instead, we now have clubs willing to purchase the same talents, and even though they might not have a lot of money, they still could either convince the players with their projects or raise the prices of those players.

The new class allows clubs to withhold their best players for a few years instead of early selling.

In Conclusion

We have a war between American/American-styled investors waging at the moment. That war has already changed a few things in football (See Financial Fair Play) and has the potential to change a few things in the future (See Project Big Picture and The European Super League).

This takes us back to Charlie Stillitano's words that started this series.

We own your game.

The third wave of American investments is trying to do is limit the number of random decisions and chaotic management and replace them with logic, which is a part of what makes football so fun to watch.

With that logic comes a great amount of predictability. At the moment, that's a good thing as it lights fire under top clubs. However, with football being a balanced and successful investment project with more people following a similar formula, will it be good to have a greatly predictable game submitting to logic?