This analyst is a fan of American football as well (Go Pats!) but this piece is on real football.
Turkey’s declining success in football can be mapped to economics. Turkey’s growth is largely based on one factor: foreign financing. As long as there is foreign financing, Turkish people are ready to consume, which drives up growth as well as debt. Most consumption goods are imported while exports remain at dismal levels due to Turkey’s lack of competitiveness, causing a current account deficit.
Football and economics: similar models
Except for the past two years, three teams (Galatasaray, Fenerbahce and Besiktas) have won the Turkish championship back-to-back for three decades. These teams import almost all their best players from abroad, and export one or two good players every year. They have little revenue from exporting players, but incur serious expenses for importing players.
These teams usually attract debt to bring in world-class players and make money from TV royalties, apparel and ticket sales (domestic demand) as opposed to exporting players (foreign demand, and hence competitiveness). The same three teams keep winning the domestic championship which keeps fans relatively happy…happy enough to attend games, watch them on TV and buy shirts.
It is also a retirement destination for footballing has-beens. Players such as Guti and Roberto Carlos have come to Turkey at the end of their careers to make some money before retirement. Unlike in their youth, they have little drive to succeed.
Turkish fans like to say ‘so and so’ plays for their team. They like to wear a famous player’s jersey with their team’s colours, and flock to the games. This helps pay for expensive star players, and most of the time this is enough for teams’ profits: when there is profit, who needs international success?
What about the economy? Put simply, domestic demand grows when there is enough liquidity abroad to boost credits. Local companies, which have enough domestic demand, do not need to fight for exports in order to grow: this makes them complacent and uncompetitive.
In this regard, Turkey’s big-three football teams may be said to represent the average Turkish company.
Despite the declining success of these three, some smaller teams are on the ascendant, with smaller Anatolian teams now having won the championship for two years in a row. This may largely be due to economic growth shifting from Istanbul to Eastern Turkey.
It is no surprise to us that BursaSpor which won the championship two years ago (becoming the first Anatolian city to win it in the past 27 years) is an industrial city that runs a trade surplus. Similarly, last year’s champions, TrabzonSpor, are based in another city with a large trade surplus, while Istanbul is responsible for 60% of Turkey’s total trade deficit.
Without an increase in competitiveness Turkey is trapped with manic depressive success, both in terms of the economy and on the pitch. GDP growth could reach 8% this year, on our estimates, but if and when global liquidity dries up, it will eventually decline – just as the Turkish national team can manage to be third in the world one year and fail to qualify for the World Cup the next.
Higher competitiveness could, in our view, cement Turkey’s place in the export markets, as well as on the world footballing stage.
