BRING FOOTBALL INDUSTRY TO THE NEXT LEVELPlayRatings develops and applies advanced economic evaluation processes specialized for the football industry.
All these processes are objective, rational and purified from biases typical of a market, where passion, estraordinary events and athletes' image and reputation tend to overcome economic fundamentals and threaten to combine with market sentiment to retrain financial optimization and generate speculative phenomena.
The OpenEconomics scientific team has developed a family of computational models focusing on the economic evaluation in the sports sector. They include:
- The economic evaluation of investments in infrastructures and sports events. In this area, among other tasks, OpenEconomics on behalf of the Italian Olympic Committee has performed an impact assessment of the Olympic and Paralympic Games "Roma 2024".
- The economic evaluations of sports clubs. Consulting activities for the economic evaluation of clubs and their assets, as well as estimates of evolutionary economic scenarios to support strategic choices and budgetary policies.
- Economic evaluation of players.PlayRatings is a web platform that publishes the market values of the players with a weekly update for the benefit of clubs, professionals and football fans. It allows to estimate the market value of a player, both from the point of view of the club holding the related rights, and of a possible buyer.
- OpenEconomics also carries out in-depth and timely assessments of individual players for the benefit of sports managers, private investment funds and sports clubs.
Among the global sports, football is by far the most important in terms of dissemination and turnover, and certainly the dominant one in Europe, Africa, South America and Asia. To illustrate its importance, it is sufficient to say that over 600 million viewers in over 200 countries watched the last final match of the FIFA World Cup.
Furthermore, the 20 most important football clubs last year recorded annual revenues for over 6.6 billion euro with an annual growth rate of 8%. This makes Football a mass cultural phenomenon and also a rapidly expanding global industry, that even maintaining gray transparency areas, typical of emerging sectors, is now experiencing a deep modernization process.
The sector's recent attempts to comply to international financial standards and management best practices don't seem to be able to significantly reduce dysfunctions, such as the growth of the ratio between the debt and the capitalization of the companies, as well as the performance gap between the most important clubs and the smaller ones. The disparities between the clubs in modern football have always existed, but because of their linkages with economic more than to sports factors, they have been growing in recent years.
The integration of the football industry in the global economy thus appears to fuel a strong concentration in the market. A few clubs and a small group of excellent players end up draining much of the resources gathered by an industry that is enjoying growing and widespread acceptance of consumers, but depends excessively (more than 50%) on obsolete financing instruments (television rights). This extreme inequality depends to the so called "Superstar" effect, typical of oligopolistic markets like the entertainment industry.
A side effect of this modernization is the threat coming from the unsustainability of the transfer market, the main reason for the high debt in the sector, which shows several characteristics of a speculative bubble. Just consider that the total aggregate net debt for the sole Premier League in 2014 exceeded 2.7 billion Euros (according to the Deloitte Football Money League 2017). On the other hand, in 2016 the top 20 top European clubs have registered a turnover of more than 7.4 billion euro, with an increase of 12% over the previous year.
In response to this growing dysfunction of the system, which also relates to the dangerous oligopolistic power of the richest clubs, UEFA managers have introduced the concept of "Financial Fair Play" together with a set of practices and rules designed to reduce the debt flow and the disparities between the clubs.
In this context of positive changes and persistence of market imbalances, in line with the recent directives from UEFA, OpenEconomics tries to give timely, concrete and rational answers to the growing needs in the football industry for efficient programming tools and regulations. These tools should not only aim to improve economic and financial performance, but they should also help the clubs, as well as all other companies in the sector, to a self-sustainable and transparent management. More generally, the aim of OpenEconomics is to contribute to the wellbeing of the football industry, of the professionals and ultimately of the people who experience football as a passion.
To this aim, the methodologies that OpenEconomics applies to the study of the football industry, according to the economic practices and international accounting standards, are based on the twofold principle of efficiency and fairness.
They focus on objective evaluation processes, rational and purified from biases typical of a market, where image and reputation tend to overcome economic fundamentals and threaten to combine with market sentiment to generate speculative phenomena.