Thursday, September 17, 2009

Economic recession and football

Recession is a negative economic growth for 2 quarters ( 1 quarter is 3 months). It involves less income, less spending, less demand, increasing prices, inflation. So how can economic recession influence on football. I think that it can hurt small teams or teams with a low budget. For example large teams, such as Chelsea, Real Madrid, Manchester City, etc. Lets have a look on this teams. Chelsea is owned by Russian businessman Roman Abramovich, witch sell oil and gas. We know that demand on oil and gas is almost perfectly inelastic, so if prices on this products go up almost everybody will still buy this products. The  reason of successful business of Manchester City owners is similar to Chelsea's. The other point is Real Madrid. They spent near 250 million Euros on summer transfer period. In the same time Real Madrid has a huge dept in Spanish banks, but club can still spend  a lot of money, because Real Madrid is very famous in the whole world. The club has a big support from the  Spanish government and some banks in Spain are under government pressure, so Real Madrid doesn't have to pay all its loans immidiatly. But some economists think that the club will fail when its dept will grow to the value of 500 billions Euros. 

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