Economics of Football

Football has been at the forefront of the entertainment sector for the last 50 years. Masses of people gather around to watch their favorite team play. Not only do they fill the stadia, but also they use televisions or their phones to follow their teams’ performance on the pitch.

Because it has been so popular all over the world, football generates an insane amount of income for the clubs. Tickets, sponsorships, and advertisements bring in cash to the clubs. With such a steady source of income, clubs invest in bigger stadiums, which in turn lead to more income through sales of more tickets than before. Clubs also buy young talents who have the potential to grow into robust players, who could be sold to richer clubs for a considerable profit. This is the business cycle that we see surrounding the triangle formed by clubs, players, and fans.

Yet, football cannot always be profitable as one would expect. Ill-decisions given by clubs as to the transfer policies might be a step backwards. Make too many of such transfers and you will end up with an income loss. If clubs do not behave professionally in managing the team, they might also lose their competitiveness in the sports arena, which might deprive them of a valuable fan base. Without a reliable fan base, the club will not be able to sell tickets or merchandise, which poses as another loss-incurring reality.

Clubs getting poorer in such a fashion experience a downward spiral that can see the team off, making them struggle for years in lower leagues.

No matter how dependent on money football is nowadays, it still is beautiful.

On Rural Income

Rural lands are known for their contribution to the national income through agricultural production. Acres and acres of land are allocated for the sole purpose of feeding the population that lives in cities. What if the allocation of resources is disrupted in a way that spoils the welfare of the people living in these rural areas? What if they find that growing wheat, grains, or vegetables no longer sounds profitable? In that case, the villagers or their offspring would flee their homes, looking for new prospects outside their world. Discouraged, they would stop producing food, causing prices of the food to plummet at the country level.

Such a scenario has been coming true in many parts of the world. Masses of villagers move to cities at a greater pace than ever. They find it difficult to raise their family merely by harvesting crops. Family ranches with less than an acre of land barely make ends meet, as it is costlier to practice farming on a small scale. Big farmers with hundreds of acres of land can minimize their costs by making use of economies of scale.

Governments must act in such cases by coming up with policies that can encourage these small farmers to continue producing. Subsidies are one of these policies since they have the potential to raise their income to levels that enable them to keep going.

Small farmers can also form what is called "co-operative farming", getting together with neighboring farmers to produce on a larger scale. Such a practice has cost-saving features that help farmers cope with the ever-rising costs of agricultural production.