The collapse of the European Super League on Tuesday, less than 48 hours after it was announced, should provide a valuable lesson for those who support the movement of ideas, capital and people across borders to expand opportunity and prosperity.
Globalization demands that it occur in a legitimate fashion and not appear to be rigged for the wealthy and the well-connected.
Not everything needs to be globalized, and when something is, it must occur in a legitimate fashion and not appear to be rigged for the wealthy and the well-connected. Global policymakers, investors and chief executives should take heed from this lesson.
Yes, globalization can proceed, but one cannot do so without trying, no matter how inefficiently or marginally costly, to bring others along to prosperity.
Over the past five years, globalization has faced a challenge with the fracturing of everything from trade agreements to international cooperation on health and the environment. That backlash is at the core of why what makes sense on paper economically has failed in the court of global public opinion.
The backlash, which is most associated with rising global populism, calls for a more equitable distribution of the economic gains of globalization. The retreat into nativist identities around the world has shaken global leaders to their core.
Echoes of Brexit
That is why it is not surprising that one can easily observe the echoes of Brexit in the response to the proposed formation of a 12-team “super” European football league with the wealthiest clubs. To the legions of fans in the U.K. and Europe, this was interpreted as just another example of those at the top chasing greater gains at the expense of beloved football clubs and their fans.
To put it another way: Those who make the decisions have gradually stripped us of our identities with their state and economy—but they do not even have the common sense to leave alone that which we love. We have subsumed our identities into sport, the argument goes, and now they want to relegate us to permanent subordinate status.
To American ears, this may seem somewhat odd.
Most Americans may not understand that many of the teams that populate the elite U.K. and European leagues such as the Premier League are in places other than London.
Those teams have connections with towns that in some cases go back more than a century. As Europeans have discarded blood and soil as the connective tissue of the nation to avoid any more wars, they have adopted these teams as a substitute to express their own identities and to seek community in a world where change is accelerating.
The fan bases also like jeopardy—the risk that their team might be relegated to a lower league. That is something that doesn’t align to globalized operations or American sports leagues.
Of course, one cannot tell this story of economic change disrupting existing social contracts without American financial interests playing a role.
In 2005, the Glazer family took control of Manchester United, and LeBron James owns shares of Liverpool, whose principal owner is John Henry, who also owns the Boston Red Sox. This American influence in a European game is not lost on those publics.
Now, with the failed Super League, one does not have to look far for a financial villain. The American bank J.P. Morgan put up $4 billion in financing.
And one would be right to look at the financials of the teams forming the league. They are all based on exceptional leverage to finance the teams. Tottenham is carrying 685 million euros in debt, Manchester United 524 million euros, Barcelona 318 million euros, Real Madrid 170 million euros and Milan 104 million euros. Of the teams forming the league—data was not available on Liverpool—only Chelsea has a balance sheet with no debt.
A play for revenue
In forming the league, the teams were seeking better payouts and the guaranteed largesse that may not exist under current league and media contracts—a need made more acute by the economic disruption of the pandemic.
Media contracts have long financed a sport where Manchester United jerseys are as ubiquitous in India as they are in the U.K. This logic applies to the National Basketball Association, Major League Baseball and the National Football League, as well as to the top 12 golden teams across the Atlantic.
To the fans of the teams that were shunned and kept from participation in the Super League, the prospective wealthy global league almost surely parallels an unfortunately erroneous view of the global economy—that it’s fixed for the wealthy and educated few or the technologically savvy. Interestingly enough, teams that would have been the founders of the Super League would not have faced relegation. After all, relegation is for others.
For those decision makers in Washington, London and Brussels observing the populist anger sweeping across the globe, there should be one major takeaway. The time of extreme globalization is in the rear-view mirror. You cannot stand idly by and watch as jobs are made redundant by technology and as identities fade under the logic of globalization. You need to provide a means to mitigate and cushion the transition.
Globalization is not going away. But it needs a human face, and deciding to leave well enough alone is sometimes the better part of discretion.