The Economics of Football

I’ve donned my economics hat for this week’s newsletter as the topic of the economy, tax and inflation has dominated the news since the beginning of the year.

The start of 2011 brought with it (in the UK) a 2.5% increase in VAT to 20% coupled with rising fuel and commodity prices, the worry is how the economy will react. UK inflation has been running above the 2% target rate for 40 of the last 49 months and is edging towards 4%.

Yesterday’s response by the Bank of England to hold interest rates at 0.5% for the 22nd month is a desperate attempt to keep inflation under control and boost confidence in the market.

But for consumers and football fans alike, the financial pressures on everyday life are reducing the disposable income they have. The likely response for 2011 will be a consumer that is ever more discerning on where and when they spend their cash and will seek quality and best value in equal measures.

Coercing that spare cash from our pockets will be tough. Niall Quinn, Sunderland’s Chairman, expressed his disappointment at the below anticipated attendances at the Stadium of Light despite the club’s high league position.

But Sunderland sits in an area that is baring the brunt of the Government’s austerity measures, with more than a third of the region’s population working in the public sector, spending confidence is low.

Fans are the life blood of the club, but to buy a ticket for the game, a replica shirt, a pie and a pint has become an increasingly expensive luxury. The inertia of the past must be replaced with a dynamic display of innovation by clubs.

And most have, but there is still a lot to do.