Don't Restrict Free Trade in Footballers!

by Jimmy Reade

Football is receiving more and more attention from academic economists around the world for a whole host of reasons – not least game theorists have a rich field in which to apply theories on the effects of observing effort of employees, and because sports betting markets can offer an interesting insight into how markets function. 

However, it appears that many of those making decisions within football suffer from bad economics:  FIFA, football’s governing body, "overwhelmingly" voted for a proposal by its president Sepp Blatter to restrict the number of foreign players allowed in a football (soccer) team. The plan is dubbed “6+5”, allowing only 5 foreign players to play in a team of 11.

This idea follows hot on the heels of a number of other developments.  Firstly, England, home of the Premiership, a league in which around 70% of players are non-English, failed to qualify for the Euro 2008 competition between Europe’s finest national teams.  Then the semi-finals of Europe’s premier club competition, the Champions League, were dominated by English sides: Liverpool, Manchester United and Chelsea made up the last four alongside Barcelona of Spain.  Finally, the BBC produced some rather alarmist research on the number of foreigners plying their trade in the English Premiership.

These developments might seem unconnected to the untrained eye, but not to Sepp Blatter of FIFA.  The English Premiership is too dominant, and accumulates the best players from all over the world in large squads at Chelsea, Arsenal, Manchester United and Liverpool - in 2007-08 season, just 34% of players in the Premiership were English.  The spillover of this, it is argued, is that the England national team is suffering: witness the shoddy failure to qualify for the regional tournament, let alone the World Cup.

So enter Sepp Blatter with a proposal to limit the number of foreign players in teams, a protectionist measure if ever one was devised.  Economists have long argued for the free movement of resources, be it goods, capital, or inputs, and for good reason: they can then move to their most productive use, giving a greater overall output, a bigger pie for all to share, as Greg Mankiw recently wrote about on his blog.

Arguments like those of Blatter are popular, and clearly struck a note with many national league representatives at FIFA.  But they are just like the calls for trade protection in the US– populist and short-termist.  In the longer term, just as trade protection will not contribute to more wealth for Americans, so 6+5 will not contribute to better national sides (not least because they all compete against each other!). Better English players won’t come from restricting the number of foreign players, because English players will not get the exposure they currently do to the best players in the world, week in week out: the virtue of free competition.

A better English football team will also come from better management; the main cause of England’s recent failure is the mismanagement of their previous manager – an Englishman in Steve McClaren (who incidentally has backed the plan to limit foreigners), allied with the unpredictability in football, something which dictates its popularity the world over – it was only two years ago that England were being touted as serious contenders for the World Cup under the management of the Swede Sven Goran Eriksson. 

There is some hope though: such restrictions on the free movement of labour are illegal in Europe, so FIFA faces stiff opposition to implementing its “bad economics” plans, thankfully...