Wed. Oct 27th, 2021


This week I joined a surrealistic media call featuring former football stars, including Arsenal manager Arsène Wenger, legendary Brazilian attacker Ronaldo and Danish goalkeeper Peter Schmeichel. They made the argument on behalf of Fifa, world football’s governing body, for the World Cup occurs every two years, instead of four.

Arsène Wenger and former soccer stars meet in Doha this week: league of legends

Arsène Wenger: man ideas © Valeriano Di Domenico / Pool via Reuters

With a bunch of legends to rely on for a charm offensive, it’s no wonder Gianni Infantino, Fifa’s president, does not have to appear on Zoom. This is a sharp step. Domestic leagues and clubs, fearing it will be overshadowed, will find it much harder to kill an idea backed by revered greats of the game. While the breakaway European Super League quickly collapsed after it was unveiled earlier this year, expecting a more protracted battle over the future calendar of football.

Look out for the FTs Big Read about this story in the coming days. But in this week’s scoreboard, we dispel some financial myths about Cristiano Ronaldo‘s move to Manchester United, and analyze even more plans to revamp global rugby. Read more – Samuel Agini, Sports Business Reporter

Dealing with myths about the move from Ronaldo to United

© Manchester United / Getty Images

Cristiano Ronaldo is set to play Manchester United on saturday thereafter return to the English Premier League club he left more than a decade ago. The blockbuster movement has caused some popular misconceptions. The scoreboard is here to make financial sense of the transfer.

Ronaldo’s transfer fee was a bargain

Kind of. Manchester United will pay Italy’s Juventus € 15 million, with the potential for extra € 8 million in performance-related bonuses. It is much less than the € 100 million paid Juventus for the same player in 2018.

But if a club bears the transfer costs, they record the “book value” for players. Transfer costs are written down – or amortized – over the duration of their contract. Ronaldo was entering the final year of a four-year contract at Juventus. Its book value amounted to approximately € 30 million.

Manchester City was close to signing Ronaldo but did not want to pay a transfer fee for a 36-year-old with little or no resale value. United use this opening to gazump City and offer a small fee to Juventus. Even then, the Italian club will record a loss of € 14 million in its 2020-21 records. United will also write off the fee over five years – not as usual, over the two-year life of Ronaldo’s contract.

Pep Guardiola, Manchester City coach: search for free for free © Rui Vieira / AP

Right, so the deal is cheap then?

Not really. The biggest costs for clubs are wages, transfer costs not. United have made Ronaldo the highest paid player in the Premier League, with a package worth only slightly less than his net annual salary of € 31 million at Juventus for at least two years.

The club has committed to spend 5 percent of its annual income on one man’s salary for the next two years. At any business, it costs a lot for a single rental. Club executives likened it to ‘swallowing a whale’ – an exceptional fiscal event that is unlikely to be repeated.

Yes, but United will earn money back in shirt sales and sponsorships.

That old chestnut brown. The vast majority of the revenue from the sale of replica shirts is taken by the manufacturer, Adidas, although the club makes a bigger margin on sales through its official website run by the US retailer Fanatics. People close to the club do not believe that Ronaldo’s shirt sales will have a significant impact on United’s end.

They also do not expect much new sponsorship money, as most of the approval transactions have been in effect for years.

Ronaldo on Instagram: sensation on social media

So there is a financial sense to the transaction?

Consider it a merger of brands. Ronaldo is the most result person to Instagram, able to attract a new generation of fans to a club that has not had much glory over the past few years.

Becoming a supporter is often an emotional decision for a young person who becomes a lifelong financial commitment, such as buying tickets and goods, later in life.

The bet is that Ronaldo will help create more United fans. The impact must be measured over years, even decades.

Read the FT’s financial analysis on the Ronaldo transfer here

World 12s join scrum to reform global rugby

Rugby Union: redesign © Mike Hutchings / Reuters

A proposal to launch a new rugby union tournament this week is the latest proof of how sport is sharpening tradition as it tries to stay relevant in a period of video games and short-lived TikTok videos.

The founders of “World 12s ” wants to start a new 12-sided competition — fewer players than the traditional 15-sided rugby union. Matches last only 30 minutes, instead of 80. The idea is to pack more tries and entertainment in less time.

The new competition is led by the likes Ian Ritchie, former CEO of Rugby Football Union, the governing body for England, Steve Tew, former CEO of New Zealand Rugby Union and former Welsh Rugby Union chair Gareth Davies.

Ian Ritchie: Upload © Rosie Hallam / Financial Times

Supported by an unidentified financial consortium in the UK, World 12s also plans to play eight new teams in just three weekends. The aim is to create a competition that can generate revenue of £ 250 million over five years. The proposals include an auction on which teams would bid for the best players in the world.

If it all seems familiar, it’s because it’s so. World 12s follow a blueprint that by the Indian Premier League, the “Twenty20” cricket competition launched in 2008 with shorter matches than traditional cricket and which has become a billion dollars annual contest.

Others followed this model. The Hundred, an English cricket competition inspired by the success of the IPL, led to a strong commercial start this summer.

The Hundred: new spin on an old game © Paul Childs / Action Images via Reuters

But World 12s will have to rely on the thorough knowledge of their founders about the sport to support the idea. Rugby has long struggled under a busy calendar, with teams from the northern and southern hemispheres struggling to accommodate each other.

Ritchie says his group had ‘informal’ but ‘constructive’ talks World Rugby, the global governing body. But they will also have to navigate the interests of private equity firms, such as CVC Capital Partners, what it heavily invested in the existing rugby tournament and American buyout group Silver lake what is looking to invest in New Zealand Rugby.

In rugby, there is a scrum among different groups that each want to reform the sport. With ambitious plans to launch as early as August next year, Rugby 12s are facing a bigger battle than was possible.

Highlights

India's Virat Kohli bats during the third day of the third Test

England vs India Test match canceled: end of summer © PA

  • The fifth cricket Test match between England and India has been canceled after a coronavirus outbreak in the Indian camp meant they could not play a team. The move comes just days before the Indian Premier League, the money-spinning cricket tournament in which players earn far more salaries than playing for the Test team.

  • The International Olympic Committee agreed to a renewed broadcasting contract with the state China Media Group, the body that manages CCTV channels, to broadcast the four Olympic Games between 2026 and 2032. Financial details have not been released, but the latest deal covering the four Olympic Games until the Beijing Winter Games next year is estimated to be worth $ 550 million.

  • Emma Raducanu‘s rise from ambiguity to the final of Saturday’s US Open final, gives the teenager fame on and off the tennis court. The Canada-born Brit, whose parents’ roots are in Romania and China, can unlock great commercial appeal with continued success in the sport. She stands in front of fellow teenager Leylah Fernandez of Canada (19), who also delivered a breakthrough performance to reach the championship final.

  • Data provider Ingenious sport income seen double up to $ 55 million in the most recent quarter, helped by an exclusive agreement with the National Football League to license his data to professional bookmakers signed in April. The net loss for the period exploded from $ 7.4 million in 2020 to $ 464.1 million due to compensation on inventory. Genius’s biggest competitor in licensing US sports data, Sports radar, is set to IPO on Tuesday.

Transfer market

Jill Ellis: Woman at the Top © Mikoaj Barbanell / SOPA Images / Getty
  • Fifa, the governing body of world football, said Jill Ellis will lead a technical advisory group on how to grow the women’s game. Ellis coached the U.S. women’s soccer team to two consecutive World Cup victories.

Final whistle

The NFL season opened on Thursday night with the defending Super Bowl champions Tampa Bay Buccaneers beat the Dallas Cowboys 31-29. It was also the opening of the 11th season for which Tom Brady and Rob Gronkowski played together in the same team, including nine seasons with the New England Patriots. How did they celebrate the occasion? By of course joining a few touchdowns. Apparently this never gets old.

The scoreboard was written by Samuel Agini, Murad Ahmed and Arash Massoudi in London, Sara Germano, James Fontanella-Khan and Anna Nicolaou in New York, with contributions from the team covering the Due Diligence newsletter, the FT’s worldwide network of correspondents and data, manufactured. visualization pan

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