The efficient management structure at Shamrock Rovers suggests that the club will spend its Europa League money wisely, something the country could replicate if oil and gas reserves are struck off the west coast
As a boy, my dad and my uncle Frank used to take me every other Sunday to Glenmalure Park in Milltown to see Shamrock Rovers play. We’d park in Donnybrook and walk up Eglinton Road with hundreds of others, through the turnstiles and into, what seemed to me at the time, an impressive stadium.
For a star-struck boy, Milltown was a Mecca where you might snatch the autographs of legends such as Ray Treacy, Johnny Giles or Eamon Dunphy. If not these big names, you might get the autograph of up-and-coming Pierce O’Leary or the man with the best hairstyle in football, former Arsenal full-back John Devine.
At Milltown, there was a gap between the stand and the terrace, just in front of the dressing room where, if you stood and waited, you’d have a great chance of getting your programme signed by one of the greats. The players came out of the dressing-room and walked diagonally across gravel to a little gate just by the bottom left-hand corner flag.
This little iron gate was a perfect bottleneck because the players had to line up to get through, and that was your opportunity to stick your programme and pen under their noses.
Fast forward to 2011 and I am in a bar in Croatia, watching Rovers play Partizan Belgrade in the Europa League. Here, the hatred of all things Serbian endures after the years of bitter conflict, and the locals display a particular dislike of Partizan. Much of the ethnic hatred in the crumbling Yugoslavia was fanned from the football terraces of Belgrade.
As a result, and based on the age-old logic that ‘‘my enemy’s enemy is my friend’’, an Irishman in Croatia watching an Irish team beat Partizan Belgrade is a king, and is treated as one! It was a long night. Enough said.
Rovers’ historic victory, and entry to the group stages of the Europa League, means a massive windfall for the club and, by extension, for Irish football. The way Rovers spend the money will be crucial. Economics is full of examples where countries or companies get windfalls and blow them.
The most obvious cases are countries that strike oil and blow the cash. The windfall makes the country worse off in the long term: a few at the very top get all the cash and blow it, and the vast majority get nothing, bar higher prices and dented expectations.
The reason Rovers are interesting now is that they could well be a microcosm for Ireland if we do indeed exploit the oil and gas resources off our west coast.
It is worth considering the general proposition of how football clubs and countries spend money. I have a hunch that Ireland could learn from the management of Rovers. But before we explore that, lets see what economics tell us about windfalls.
Interestingly, blowing an economic windfall is called the ‘Dutch disease’. After the Dutch found huge gas resources in the North Sea, their manufacturing industry declined. Why was this? When you strike oil or gas, huge resources move into the new sector and the old manufacturing sectors can decline.
In addition, the price of everything in the country rises because of the huge new revenues the oil/gas strike generate; this pushes up government spending and all prices, making the old industries less competitive internationally. We see this in many countries, including Britain but, interestingly, not Norway.
Now, armed with these observations, let’s go back to football to see what economies can learn from the game.
Consider a club like Rovers, who are going to get a huge, one-off gain from last Thursday’s victory. If they follow the present English Premier League approach – let’s call it the Manchester City model – they will blow the cash looking for instant success. But if Rovers are more thoughtful, they will succeed where other clubs have failed.
The omens in Tallaght are good. The rebuilding of Rovers has been impressive. After 20 years in the wilderness following the sale of Milltown, hard work and commitment by a core group of supporters has seen the club rebuilt.
The decision to work with the local council at Tallaght was also inspired. No one produced a huge chequebook and tried to ‘buy’ the league, as happened with other clubs.
There is a sense that Rovers are a grounded club, run by grounded people who are now forging deep new roots in Tallaght. This all gives grounds for optimism that the club will avoid the Manchester City approach.
In the same way that a country can follow the Norwegian example when it finds oil or gas, a club can follow a different model to the one set down by the Premier League. In fact, the way football is managed can tell us a lot about how the general economy is managed and performs.
For example, unlike the debt-financed English clubs, German football clubs are not allowed to run a deficit. This financial brace ensures that they don’t splash out on foreign superstars. They have to find local talent. This means they invest at every level – and, as anyone who has ever had a kick-around in Germany will attest to, the facilities are impressive.
Even huge clubs like Bayern Munich take much of their talent from their junior team. As has been noted by Irish economist Aidan O’Regan (http://aregan.wordpress.com), this local focus and fiscal disciple in Germany doesn’t detract from competition – the argument put forward by the big spenders in the Premier League. They argue that the freer the market, the better the competition. The opposite is the case.
Look at the variety of German teams who have recently thrived in the Europa League and Champions League. Unlike the English Premier League, which is dominated by the teams with the most money, any one of ten clubs can reasonably expect to win the Bundesliga. This implies more competition, not less.
If you compare the number of German teams who have done well in Europe in the past few years, and then consider the recurring dominance of two or three English clubs, you can see that debt-financed football doesn’t produce more success.
We see similar patterns in the Netherlands, where local focus means that small clubs have a chance. For example, Ajax – the biggest club in the country – won the Eredivisie last year, but this was their first league title in seven years. Trends in Nordic countries, where small clubs regularly feature in the big European competitions, also attest to the success of local, gradual spending, rather than the massive, ‘‘all or nothing’’ approach.
It would be great if Rovers spent the windfall like a German team and not an English one. The omens are good for the first time in years. Looking forward to our possible national oil and gas windfall, wouldn’t it be wonderful if we followed the Norwegian example, rather than the British one?
And speaking as someone who was lifted over the turnstiles at Milltown all those years ago, it would be particularly satisfying if, for once, rather than representing greed and short-termism, a local football club could become the example for the nation to follow.
sounds good to me …
Wonder if Franz Beckenbauer would be interested in the Irish Presidency???
What bugs me is why contracts with energy companies aren’t structured on a more win/win basis. Ireland’s deal on the west coast opportunity is considered one of the softest in the world. There should be a sliding scale where the greater the extraction the greater the return to the state. Shared risk and shared gain is what partnerships are about. (As an aside, gas prices are increasing again yet there was a massive glut a few years ago. Prices were expected to decrease but as this would hit profits the energy companies switched their resources back to the more lucrative… Read more »
I for another one agree, but the way things are going and the way things were run in the past in regard to oil and gas finds in this country I can’t see it happening for the simple reason that this country is run for the elite and not for the ordinary citizen.The ordinary citizen is being crucified every which way but loose in order to keep this so called ‘elite’from the damage caused by their own greed. Look what happened with the Corrib Gas Field and the Shell to Sea debacle? And who was the fecking idiot of a… Read more »
Rovers when in Milltown never supported local talent, I do wish that they use part of their windfall to develop youth football in and around Tallaght. This could give the greatest return to the club in the long term, and be an example to us all.
Advice to Shamrock Rovers – don’t hire Bertie Ahern as a consultant to help you decide what to do with your windfall. And definitely, do not consult the FAI (his mates, incidentally), either.
David, Theres something you spoke about in your article but didn’t expand on that I’m very curious about – that is Norways vs Britian/Hollands national exploitation of natural resources and how there were adverse affects on existing industries in Britian and Holland compared to Norway. Any chance that you could elaborate a little? The situation generally with the league of Ireland has been a joke over 5/6 years in general – you are correct – you quoted JP Morgan before as saying “that nothing so undermines your financial judgment as the sight of your neighbour getting rich” – so I… Read more »
There would be not a word about the Corrib Field deal, were it not for a bunch of plucky pensioners in the far West. It would have been very quickly been non-news, and the owners could have continue to comment about it’s presumed value. The strange thing is that this time it was not an Irish business interest making off, at the expense of the citizenry. There are Irish outfits in the Hydrocarbon exploration business, but the local branch of the League of European Liberals or whatever FF call themselves these days, had to find an outfit that was up… Read more »
Ireland is part of the league. Just like East Germany was part of a league run by the Soviets in the 1980s. And to be part of the league, you have to agree to the rules. Power centres like Washington and Brussels outline the rules of play. Agressive stances on natural resources are not eagerly entertained. In fact if your throw away your resources you get brownie points, and a seat up closer to the top table. Your Taoiseach gets to say “Is Feidir Linn” close to the head of the US Administration and to copy his meaningless mantras for… Read more »
Does anyone really understand what actually went on rearding our oil and gas reserves on the west coast.From what I have been reading that Enterprise oil sold the rights to shell re drilling and extraction.Can anyone confirm this. I believe the old republican party and one Mr Ray Burke were involved in some deal that stinks from high heaven and has all the hallmarks of A South American style banana republic type deal for Ireland and its people. There is this notion that we cannot go back and change the deal that was done . Well thats a load of… Read more »
Great Article.
The freer the market the less the competition.
How true and another poke in the eye for the Chicago Boys. Assholes
With the revenues from our natural resources our glorious politicos could;
– Redistribute the wealth amongst those who really matter and spend billions on consultancy, legal fees and reports or
– Buy an election or two?
– Propose an Enda Arena?
Or they could prudently put funds into a pension reserve fund, drive themselves blindly into a self made crisis while ignoring warnings and denegrating any detractors.
– Then claim no responsibility for any of the mess and handover the funds to save the poor bankers.
Nah? couldn’t happen????
What a dreadful load of old waffle. I would have liked to have found out how Norway managed to responsibly control their prices and oil bonanza. As if we didn’t get enough football ‘anaylsis’ on the sports pages. Good luck to Shamrock Rovers but football is utterly irrelevant in the grand scheme of things. I spent enough time running around a field chasing a piece of inflated leather to know. Am back training on Wednesday as it happens, haha, but seriously David stick to what you know best and enjoy the rest of your holiday!
David,
Invest at every level is the moral of the tale.
Only problem is, accessing investment means having to get involved with private banking and debt financing.
Problem with that is its a usury ponzi scam in operation now since 1694 when it became standardized by the Bank of England and went global over the next centuries and mutated the free market system into an engine of funds for financial and property criminal syndicates.
David The insiders have the Great Oil and Gas Giveaway in the bag shttp://politico.ie/social-issues/7851-oil-and-gas-sins-of-the-father.html
The latest installment in that soft landing that we were promised…..
http://www.independent.ie/business/personal-finance/property-mortgages/property-prices-down-125pc-but-decline-not-so-rapid-2860452.html
As usual, a well constructed argument supported by solid historical precedent. I only have one quibble. While Norway did grasp the opportunities of its deep, the age of oil may now be ending and the fracking of gas fields is coming under overdue scrutiny as a cause of water contamination and earthquakes. I am involved in the alternative energy sector and am especially interested in the electric vehicle (EV) niche. We (terraintegra.org) have been advancing the cause of an Irish EV industry for some months. All the ingredients are in place and Ireland is no more at a disadvantage than… Read more »
The article wouldn’t be of any great interest to an Irish Truth and Justice Commission. It might be suitable for waiting room mags that score goals for a Bulmers United or similar business teams. It might even score a goal for Shamrock Rovers. Its got a certain nostalgic, indulgent rapport with the past that may even be slightly narcissistic, but I’ve seen worse spillages in that zone. As an exercise in lateral thinking drawing together DmcW expertise in both economics and european football, its not bad. But its got a Fr Ted Bulmers United whiff of false optimism in a… Read more »
I reckon Noonan is fibbing….
http://www.breakingnews.ie/ireland/noonan-banks-have-capital-for-debt-forgiveness-518454.html
And I also reckon that IBEC will be up in arms over this, given the pressure that business is under with respect to bank credit.
ICTU will also provide superficial sympathy, but an aggressive stance to make sure that this does not come as a result of public sector pay cuts or layoffs to members of the IBOA.
Noonan has walked into this one….
First Buffet, then the French elite, now the German uber-wealthy ask to be taxed more for the sake of their country, the silence from the Irish power-elite speaks volumes, fumbling in the greasy till, what a shameful little place Ireland has become.
Tax us more, say wealthy Europeans
http://www.guardian.co.uk/world/2011/aug/29/tax-us-more-say-wealthy-europeans
Le Comprador Islensku
The national lands of Iceland in a certain northern coastal region now form a predicate over Icelandic Nationalism .Mr Huang an ex primate of the Chinese Central Propaganda Dept and a billionaire has lodged his purchase of 300sq km of land to the Icelandic Parliament on payment of $8.8m to local landowners and a promise to develope the remote area into an ecosystem under ‘private ownership’.
Its a matter of time when they will arrive here .
( We in Ireland have a few well known compradors from the higher orders of the Irish civil service )
In relation to the above soccer article I would like to ask a a pertinent question .Did you pay to get inside when you were lifetd over the turnstiles ? Were you heavy then?
I really have no interest in soccer …sorry.
Like in all third world countries, our ignorant tribal chiefs will give away any oil or gas finds, probably in exchange for some glass beads. The price tag on our natural resources has always read “Free!”
You doing a few nixers for NPR these days too David? :)
http://www.npr.org/blogs/money/2011/08/26/139972557/the-friday-podcast-norways-got-advice-for-libya
An insightful article from Fintan: http://www.irishtimes.com/newspaper/opinion/2011/0830/1224303188746.html If you read through the comments below the article you will see the two parallel states (of mind) he talks about in the article demonstrated before your very eyes. We see it here on this blog too. Those who stand with the ordinary citizens of this country and the world and those who are delighted to see them suffer and get what they believe they deserve. Those who are outraged that hospitals and schools and other social infrastructure is being shut down while billions are pumped into zombie banks; and those who think the… Read more »
Quiz: Name Ireland’s Minister for Finance, is it 1. Mr Not One 2. Mr Not Alone 3. Mr Un Known 4. Mr Noonan 5. Mr Shopper 6. Mr V Tricky 7. Mr Clue Less 8. Mr D Fault 9. Mr T ItAnic 10. Mr Pu Pet 11. Mr Capital Isebank 12. Mr Brain Less 13. Mr Rubber Necker Meltdown 14. Mr I M F 15. Mr T R Oika 16. Mr Negative Equity 17. Mr Bank Losses 18. Mr CanT Pee Itback 19. Mr Gimme More 20. Mr N My Mistake 21. Mr F Nama 22. Mr S Disaster 23.… Read more »