G.Q. magazine called Mark Blyth, “The Economist Who Predicted Trump and Brexit”. For me, he’s “The Guy I Want to Hear from Whenever I Need Someone to Make Sense of the World”. Way less catchy, but the Dundee-born Blyth has everything I want in an economist: a dry, sharp wit, a wild imagination, a disdain for established economic theory, an ability to explain complex financial processes in a way that a 10-year-old might understand, and a thick Scottish brogue. Blyth teaches political economy at Brown, and his most recent book, Angrynonmics, explains the modern predicament through institutional inactivity and sometimes-misguided emotion. Before that, he wrote a book with a title that needs no explanation, Austerity: The History of a Dangerous Idea.

It only took about 48 hours for the proposed Super League to collapse, but now with the majority of the original members renouncing their participation in the breakaway competition, it seems like it’s already time take stock of why this all happened and what it might mean for the future. To answer those questions, there’s no one better than Mark Blyth, so I called him up on Wednesday morning to discuss. Our conversation has only been lightly edited for clarity.

What a wild 72 hours. How are you wrapping your head around everything that happened?

My favorite line from The Matrix is: "That, Mr. Anderson is the sound of inevitability". And that, Mr. Anderson was the sound inevitability. These clubs aren't businesses; they don't make any sense. You think of a Manchester United balance sheet, right? The whole thing was a leveraged buyout. Then they dumped the debt on the company, and the only way they can manage to pay off the loans that they've got, which are seven-percent or higher with all these hedge funds that they borrowed from, is ever increasing revenues. And they've done practically everything they can do. They've done the Chinese licensing deals. They're doing the tours in the middle of the summer, and the whole lot. And it's just about viable. But now you've got a position where by just a couple of days ago, Paul Pogba, who I view as basically a kind of the bellwether for the prostitution of the athletic classes, basically said I'll stay at Man United if you pay me a half-a-million a week I mean, half a million a week for a guy that plays half time and occasionally shows up when he can be arsed -- this is completely unsustainable. 

So you throw COVID into the mix of these highly levered balance sheets, and basically they're all in deep, deep shit. The only question was: what's the other source of financing? So you've maxed out your TV revenue. Given the rescheduling with COVID, the lack of fans, the fact that people aren't watching as much -- you're not going to get anymore out of TV, so what do you do? Basically what you do is you generalize Manchester United's business model for the entire league. And that's when JP Morgan comes in. And JP, Morgan's going to give them all like 3.5 billion, leveraging its balance sheet, so that they can solve their financial problems And then they put together an NBA structure, so nobody ever goes bust in terms of relegation. And then you just play each other, and it totally makes sense ... apart from the fact that football fans are football fans, and not American sports fans. That's the critical difference. 

There's a lot of cheap shots being made about American sports and stuff like that by the European commentators. But I think there's actually a very fundamentally important difference in here, and it has to do with the 19th century. There's a fabulous book by a guy called Andy Markovits from 2006. (The book: Offside: Soccer and American Exceptionalism.) And if you go back and look at what happened, the biggest sport in the United States once was football. This was in the 19th century. Everybody came over, and the immigrants played. I mean, St. Louis had a professional league, Chicago had a professional league, and then there was this move after the 1880s. And it's sort of an anti-immigrant wave to make people more American and to break down these ethnic boundaries that were becoming political flashpoints. And one of the ways that this was done was by inventing “American” sports. So baseball was the front-runner on this, and then it became football -- or the American understanding of football. These were all attempts to forge a collective identity. Because of that, American sports have never been endogenous grassroots. It's always in a sense been -- I don't want to say "manufactured", but essentially "manufactured", right? And also the funding for making this happen has always been, as people like to point out, wonderfully socialist. And the only way that you can make this happen is if you basically have transfer rights whereby the weakest teams get the strongest players, you have salary caps, you have no relegation ...

Drafts.

Exactly, drafts, the whole nine yards. And that basically gives you a business model that is actually sustainable. Now this works because Americans grew up with a kind of franchise mentality towards football, and basketball, and baseball. For example, I live in Providence. And one of the baseball teams nearby was the A-league team, the Pawtucket Red Sox. Then, the owners for this team went to this dirt-poor town in Rhode Island and said, "We need 75 million for a new stadium”. And the town correctly said, "Fuck you. If you want a new stadium so bad, why don't you build it?" So, they took it somewhere else, up to western Massachusetts. There's no way that happens in Europe, right? These are tribal identities that have grown and been passed through families for generations. And that's the people that actually buy your season tickets. Those are your real fans, not your television, franchise fans.

It'll be interesting to see in 20 years how Major League Soccer develops -- can you franchise that model in the way that you can with other American sports? Maybe, but you just can't do that with Real Madrid, with Celtic FC. There's just no way you can do this with Everton. I don't know what Liverpool were thinking of. Yes, it's absolutely true that they have more fans who are non-Liverpudlians than any other team, but taking that out of Liverpool and turning it into a franchise was just never gonna work.

Now why did they get this wrong? Because they're listening to the lawyers, because they're listening to the bankers. Because they're desperate. Because very rich, old white men with control rights over assets think they can do whatever they want. And the reason for that is because for the past 40 years, they have been able to do whatever the fuck they want and no one's told them otherwise. And this is really emblematic of this moment in general, whereby the limits of neoliberal capitalism -- have control rights and it's my say, fuck you. Think share-holder value running into limits, the whole sort of [Joe] Biden "We're just going to do stimulus, fuck inflation". And this is, this is kind of part of this: In principle, yeah, you can take these teams and create a closed shop, but no one will ever go to watch your matches. There will be an active campaign against you. Advertisers will think you are toxic because you attract opprobrium for doing this. And there was just no conception that what is actually a private asset in the hand of an investor is a public asset in the hands of the community, simultaneously. And they completely forgot that.

We’ve been hearing these rumors of a Super League forever. Florentino Perez started talking about this 20 years ago. So, were you surprised by just how bad the plan was? They didn’t even have all the teams lined up. They had no arguments ready to anticipate the backlash. How was it executed so poorly?

They simply look at these as investment vehicles and they're driven by the balance sheet constraints that they find themselves under for having a ludicrously levered business model, which relies on ever-greater revenues coming in the door in order to keep it going. They've built an unsustainable machine and this is a signal of its sustainability. Take the German example. You'd think the lawyers would have told them that you literally can't do this with German teams. The fans own 51 percent of the shares. This just shows that the people involved might be what Roy Keane once called "the prawn sandwich brigade". They show up to football matches and have no clue what's going on but kinda like the snacks. But in terms of actually understanding anything about the mechanics of the game and how it works? No.

This could actually be really healthy for the sport over the long run because what it means is some of these really over-levered clubs like Barcelona, Real Madrid, and Manchester United are going to have to find one of two things. They're going to have to find a country to run them like Manchester City -- basically you have the printing press of a fucking oil producer. Or alternatively they're gonna have to massively restructure their internal operations and just downsize that balance sheet and try to get some kind of cost control. If you want a simple, easy one to do, just ban agents. That'll take 15 percent of your revenues out. No more Mineolas (Mino Raiolas) or whatever the guy's name is. 

Of all the things you could do to solve your balance sheet problems, this was the dumbest and the least likely to work -- and they went for it.

It seemed like Manchester City and Chelsea were the two Premier League teams most hesitant to join, and they were the quickest to leave. Roman Abramovich and Abu Dhabi don’t own these teams for whatever extra money they’d make from the Super League. It’s all about prestige and reputation-laundering, and once it was clear that everyone hated this league, it no longer served their purposes.

That's exactly right. They're a throwback to the type of ownership that appeared in the 19th century in professional football in England. It was industrial barons. You're almost owning the team on behalf of the community because you don't need this as an asset and it has other benefits for you to hold this. In Roman Abramovich's case, it's prestige, legitimacy, and money laundering. For Abu Dhabi, it's basically, "Can everyone stop thinking we're a bunch of thugs? And we run airlines; you might wanna fly them". So they've got other side benefits for doing this, and it's absolutely not about the revenues. But if you think of Fenway Sports Group, John Henry made his money in hedge funds back in the day, but now Fenway Sports Group is actually a going concern, and that's how he makes his cash. I don't know if you read his public letter of apology. Like, "This is all on me". The real information in there is that yes, it's all on you because you were looking at this purely as a balance sheet question.

You're not diving in front of the bullet if you fired the gun.

Another way to think of this is, say there's a group of world-class chefs who got together one night and they all got high and they said, "Let's reinvent food". So, they got un-high, then they started to do it, and they only talk to themselves. And the guy from El Bulli made ice cream out of snails and Gordon Ramsey made curse words into custard. And you did all this and you never once gave any of this to a normal person to taste it. And then you opened up the most expensive restaurant in the world and said, "Come in". And then you're surprised when people say, "I'm not eating that shit. What's that?"

In addition to the various corporate pressures, it really does seem like the fan reaction made a material difference. Do you find that heartening at all?

I think it's heartening in the following sense. It's emblematic of broader shifts that are going on right now. Basically we're all struggling to find a capitalism 4.0, and we're all fed up with capitalism 3.0, and this is a huge example of the limits of capitalism 3.0. This "I own it. It's my right. I'll do what i want with it". Except, no you won't because there's such a thing as a public conception of ownership of these assets, even if you formally own them. There are limits to how far you can push this market logic on the social institutions without provoking a reaction. Karl Polanyi, the Hungarian sociologist and historian from the 1940s, wrote that the big fuck-ups of the 19th century and 20th century were attempts to shove markets down people's throats to the point where they revolted.

In a sense, what you're seeing here is a classic Polanyian reaction. So I think it's heartening in that it shows there are limits to how much you can commodify these social goods even if they are nominally private assets. It's heartening in another way in that they're gonna have to have a reckoning with these balance sheets. If you're not Sheikh Mansour and you're not Roman Abramovich, how are you going to fund Paul Pogba's ridiculous salary? And it's just not clear that you are going to, so there may need to be a restructuring, which would be great because the model is there. Look at how the Germans do this. They invest heavily in talent. They invest heavily in youth, they buy, but they buy judiciously. They don't pay ludicrous salaries. And the funds own 51 percent of the companies. It's a perfect model, right? Because they've got cooperative ownership between the people who are the kind of social owners. And then you've got the titular owners who do the investment, and there's a balance of those interests. 

There's three business models left. There's that business model, which is the Bayern Munich one and the Dortmund one. you can have the Manchester United one, where you're just basically hoping and praying the TV revenues pick back up because you've got to pay back all these loans, which is unsustainable. And then you've got the Real Madrid or Barcelona one where basically the Spanish state or Catalonia bails you out because someone is just making more and more ludicrous promises to become the president. And then you spend a kajillion dollars on players. And then you kind of hope for the best, and that's just nonsense. I'm quite hopeful that this shakes that out. Will it be a tough time for football? Well, if it stops Paul Pogba from getting half-a-million a week ...

I think we're going to have to disagree on the Paul Pogba situation, but that's OK. To make the same point, you could look at David De Gea, who’s on similar wages and is now United’s backup keeper. So he’s not even playing at all.

The keeper falling from favor is always a good one.

If you told me three weeks ago that English clubs may adopt the 50+1 model, I would've just laughed in your face. But now it doesn’t seem like a complete fantasy. Do you think there is any chance it could happen?

It's the lack of other options. You're either praying for an Abramovich and there's not enough of them around. You're praying for ever increasing TV revenue, which isn't going to happen, or you try a stunt like the Super League, which we know hasn't worked. So the only time, the only way you can do this is to downsize, de-lever, and then change the ownership structure. It just makes sense. Now, just because something makes sense doesn't mean it will happen. I will give you as evidence: the existence of the Republican party. Everything they do is wrong, and they keep doing it. So, you can have bad policies continue, but businesses need a sustainable business model and they just don't have one.

There’s this guy “Swiss Ramble”, and he breaks down the financial statements of various clubs on Twitter, and it’s great because, to me, football finances are completely opaque.

They’re opaque for a reason.

Of course. But he showed that all of these clubs have lost a lot of money over the past year. So, is this just a particular problem with these teams who have over-leveraged themselves. You haven’t heard the other Premier League clubs talking about football being on the brink of disaster; they seem to be just biding their time until things return to something closer to normal. Or am I reading that wrong?

No, no, I think that's right. Take Everton as an example. They're always hoping to get into the top four, and they never quite get there. They're building a new stadium, they're heavy on capital investment, and there are more or less sustainable ways of doing that. One of the ways that Arsenal slipped down the league; it wasn't that Arsene Wenger was out of touch. It's that he wasn't able to spend silly money because they were actually using the financing to make the Emirates stadium something other than a dead weight on their balance sheet. They were paying for their stuff. If Everton's gonna pay for their stuff, they're not going to be able to get the players they want. But it's a question of expectation calibration, right? Ultimately there are only four Champions League spots. Is that your business model? If it is, it's absolutely crazy because you're all competing for a vanishingly small number of sports.

There are problems on the bottom end, too. You see this with the big parachute payments for relegation. Teams win the Championship and come up and they spend 50- to 60- or with Fulham, 100-million, strengthening their squad. And then you go straight back down, well, they're real losses, right? There are stresses at both ends. If you're able to do Brighton or Aston Villa and you're able to consolidate your position, then they’ve clearly got a model that works for them. The problem is either the end, when you got Champions league, win-or-bust, bet-it-all-on-black madness, and at the bottom, if you're Sheffield United, there's going to be a huge problem for them coming back.

There’s this great book, The Club, by Jonathan Clegg and Joshua Robinson, about the history of the Premier League. And one of the arguments they make is that the league was so successful because it distributed TV revenue way more equitably than other leagues, so the award for staying in the league was so much greater than it was everywhere else, where the big clubs gobbled up most of the revenue. The financial incentive made every game matter. There’s sort of a perverse connection there between profit and instability.

That makes perfect sense to me. It's a bit like financial markets. You see an asset as rising in value and you want to get in on it early. So you get in, and it turns out it's limited supply. So what happens is the price spikes. The price spike then sends everybody into a frenzy that they need to buy it because it's the next best thing. And then it goes up and up and up until somebody figures out that the income stream supporting this valuation can't possibly be true. Everyone then goes, "Holy shit". And then basically the asset value reverts to me. It goes on all the time. Basically, we're treating these clubs as financial assets in that story, and that makes a great deal of sense to me.

The cynical take is that these clubs are just gonna come back in some other form, asking for more, but this was such a massive public failure. Maybe it actually pushes change in the other direction. Where would you put your bet?

I'd put my bet on the following. If this was 1985 and this was going on, you wouldn't have governments saying, "If you try and do this, we'll make it illegal". You'd have governments saying things like, "Well, it's the market and it's a private corporation. And if the owners want to do that then we have to respect this division of ownership control, and you know, this is the efficient thing to do''. We'd be talking in that type of language. Instead, now what we're hearing is essentially: If you want to do this stuff, we will tax the living crap out of you. And that's basically social regulation. So if you're in that world, rather than the world 1985, they can try again, but it's not going to be any more successful. And eventually they're going to have to realize that they need a sustainable model. And as we've said, there's three: find an Abramovich, hope that the TV revenue increases ad infinitum, which it's not gonna do, or basically downsize and make your balance sheet sustainable. Maybe the 51-percent rule is the ultimate bit of hope on my side, rather than experience. But as we've been talking about, the stress at both ends of the table is just unsustainable. It's what's made the league successful in a macro sense, but in a micro sense, it's destroying these clubs from the inside out.