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The following video transcript is generated automatically by a computer algorithm that learns and gets better on a daily basis. Please accept our apologies if some content below doesn’t make sense:

Something else which cropped up this week, which has on the surface, very sort of like little to do with entrepreneurship. But was a huge, huge news story, particularly in Europe and particularly Barcelona, where you are. So Leone messy. They arguably the greatest footballer on the planet, has said that he wants to leave Barcelona Football Club, which is where he’s been for for 15 years, something ridiculous like that as he’s been a one one time guy. And this has opened up a massive can of worms, not only because of from a football perspective, you know, large clubs are extremely interested in having mercy on their books, taking away from Barcelona, but also the amount of money and the way the economics are working behind some of this. So your your man in Barcelona. What’s what’s going on here?

Yeah. I would without diving too too deep into it and going more to the economics. So so funds. So they cut the argument that they loved him, but they, they feel the club has given messy everything so that they join him when he was I think 13. Now he’s 33. So yeah. 20 years maybe playing not to be shown less but still. So they they gave him all like, oh, OK. And he gets a salary of like one hundred million per year. Something ridiculous. So I think he’s one of the top three most paid sports personalities in the war. Something like that. Well, not because on top of his salary, he earns from like merchandising or like Adidas. At least that’s Instagram posts, VOD. So what they say is, look, it’s unfair that after all, these aren’t earning like hundred million per year on all these fortune. You built us status. You just send us a fax saying you want to leave without compensation for the club. So what would this serve? Something. Just go negotiate something with the boss.

And I’d just exit through there. You know, that’s a great. And just give something back. You know, that’s there. The spirit moving away from that.

Just trying to understand why, you know, footballers are getting paid so much or where it can go, actually. So who is who can actually book him? So realistically, it will mostly be like PSG in France or Munsie.

So the interesting case for months, city probably does something that could add more value from their business or into pressure point of view on how sports business work. Some generics. So S.T., for instance, Mesic US. Thirty three years old. So usually football players, they they can’t compete at European high standard level. So at this age, maximum thirty five maybe. I mean he’s arguably, as he said, the best in the world, the best ever. So, so broadly he, he can get, you know, some more years. But what can Citi offer him. Interestingly it’s like a five year contract, maybe because he can do he can play a top levelling in there, one in England and the European Champions League level. But let’s say two years there. But then he can move to them franchise that the city sports franchise in New York. So so they can do a five year plan, too, in Europe, three in the U.S. earning probably a similar salary, maybe more, because he will be a huge boost for the MLS and U.N. is for from a business point of view. We were talking before the podcast. We’ll let you elaborate more on that. But, yeah, there in Europe, it’s more of a bottom up basis. Smaller world clubs make their money. And I’m from clubs. I can do the most.

The ultimate beneficial, you know, not not owners of the business, but the ones who profit the most. Let’s say are the players, not shareholders, not the owners, the players. It’s well known that still, you know, you can you can meet the clubs to make money from selling players, from merchandising and from TV rights. You have all these, you know, our ops or Middle East or Russians, Chinese as well. Or Asians. And some some U.S. businessmen as well, buying clubs in Europe. But many times these fraud is for lack of prestige or just for fun because there are billionaires and they don’t make money out of it. But city structure, something interesting. And they are selling these to like they want to raise awareness of football as well of European football in China. So they got they they are playing the long term. And also by having all these uniques franchises in different regions, they can cross-sell. They can actually add a lot of value.

And they have different business models because in the U.S. itself, being like independent Globsyn, like in Europe, where each club makes their own money and they have some, you know, where the associations lie with our or other country level as well. They are they’re more like political organisations in the US that the league controls all their marketplace. And then it’s like awards, franchises for private donors to exploit them. And actually, although. So if you see. Make it validate this point. So football or so soccer players like Messy are one of their most paid sport scientist in the world, but they’re most valued. Clubs or sports franchises in the world are in the U.S.. So NFL or baseball? NBA. Yes. So there they are, more like four or five billion, which is not comparable to European clubs. So recently, I mean, in Kobe, they body bit less by the latest buy out. I think it was a US business. He bought Roma in Italy for 100 hundred million. Something like that. I don’t know if he bought a hundred percent by controlling equity. So a Cellcom parallel.

So, I mean, Roma is not one of the most valued club scene in Europe, but still makes a point on how different business models work and how you should look at when entering any business or if you want to enter in the sports business, who is actually making money out of all that? Is it the player? Maybe this is you don’t need to be the owner of the business. Maybe it’s better for you to do a consultancy or, you know, or to go on commission based on sales. So you get a cut of the sales previous to the costs.

So maybe that’s better for you. So what do you think on down the sports franchises, which is more aligned in general on this?

And yeah, I think the emphasis is there’s a different emphasis in different sports and they is is due to like historically where they came from, right. So for football as an association, football, soccer, the way that started was there were lots of amateur teams got together and started playing and then they started organising playing matches against each other and from out of that sort of league started evolving. And so so ownership has always been at the club level, as in. So people, you know, clubs are owned like there’s also the tradition as well, particularly more on the European continent than in the U.K. of there are a whole bunch of clubs which are social clubs, which are effectively owned by families, or there’s a large membership for shareholder owners that Barcelona is one of them, where you have 40000 owners and the whole system is run like on a very sort of democratic basis by electing a president and doing all this kind of stuff. And so the ownership model is very much around the club. And then the leagues are organised by geographic region and the leagues are essentially just agreements between large groups of clubs to say, okay, we’re we’re willing and happy to participate in this group enterprise together. But the league is just at the agreement and the organisation of the clubs. And you can the assets of the clubs can include things like the stadium, but the main assets of the clubs of the players. And so you can buy and sell players contracts between different clubs. And you also have to pay. So you have to pay to get out the player. But you also have to pay the player salary when they come. And. There was a way I used to work is like if you had a contract. If a player was under contract, then they couldn’t, you know, until they were out of contract. They couldn’t they couldn’t force a sale. So, for example, it’d be like if I’m playing for Manchester United and I’m halfway through a three year contract, I say I want to I wanna go elsewhere. They’re like, when I’m sorry, we’ve got you for three years at the end of three years, you’re out contract and go wherever you want. But unless we agree to this hour, we can’t do that. And then there was a Belgian player called Jan Bozman who went to the European courts to because this is against like contract law, in essence, you know, general employment contract law, who got an agreement to say the Bozman ruling, which basically said, no, you can’t do that. That’s you know, that’s indentured slavery, in essence. Even those extremely well-paid indentured slavery. And, you know, you’re you’re free. Freedom of movement. Freedom of contract. And so then what happened was, is that at any point a player could say some other club, as long as they came to an agreement like a price or whatever. Then the players could transfer between clubs and that was across multiple different leagues. There’s lots of different leagues everywhere else. And so essentially what happened there was there means that. Any and all money that comes into football in general. So, yeah, as you said, TV money and ticketing, sales and merchandise. All of this kind of stuff that goes in everything will funnel a lot towards the player because the player is the sort of unit of value in the unit movement. And so all the power essentially resides with the players. And so the best players can will go where they are going to be paid the best. And so that means you get in in European football league, you get extremely large clubs who always win all the competitions, have all the best players and whatever, because, you know, again, it’s like that inertia thing of like the winners keep winning and so they get more money and so they can afford the better players. And then it just keeps on going. Keeps me going. Keeps on going. And so and so all of those clubs are willing to pay the best players, the most money that they possibly can in order to be able to win things, because that means more money for them, which means they can buy more players. Again, the circle goes round, round, around. So all the money over time agrees to the players in that which, you know, is this is a good thing. I suppose, you know that they’re the ones who are ultimately providing the entertainment and you know the spectacle. So why not in the US? It’s different because the court tends to be different is because all the main sporting bodies, the league is the commercial organisation. So, for example, with the NFL, you know, the NFL is a business. It is created a league. And as you said it, it divvies up franchises amongst individual owners. And then it can do things like set wage caps and salaries and the amount of money it can set, how the rules for how players are moving around different areas to ensure. So they’ve got the draught system. So players come up through colleges. And then the worst performing teams of previous years get the first pick of the best players from the new lock crop that are coming through, which means that you it tends towards fairness amongst the franchises because, you know, a team, which is it means that no one team can really dominate for a long period of time because the better players from the new crop of players are going to the worst performing teams of previous years. And so you get a much more so fluid and a much more fair and inverted commas. You know, winning can be shared out amongst a lot more people. And the money tends to accrue to the league and the owners of the individual franchises. And so it is very much a owning a club or a franchise in the US sport. A model is far more lucrative for the owners than it is owning a club in association football, because that’s where the money lies. And you do you even find. You know, American owners of American team franchises have actually come in and started to buy European soccer club, so, you know, the owners of Liverpool Football Club are American, the owners of Manchester United are American. And there’s plenty of other examples. But from an entrepreneurial point of view or from a sort of like a small business point of view, I think the interesting thing to note is not necessarily the specifics of, you know, how this sport works or whatever, but just the how the macro economics of the industry in which you are entering. Like, where is the money going? Where where’s the arrow pointing? Where does money tend to flow towards? Because it’s very tempting to think like I would like to own much United Football Club. I support Match United. I would like to end flowerpots. It wouldn’t make me a it wouldn’t make me a huge amount of money relative to other things I could do with the same amount money, it cost me a lot money to buy the club. I could make far better investments than buying a football club. You know, if I were if I could pay money to become a brilliant player, then that’s what I should probably do, because that’s where the money’s going to accreted. Right. You know, liano messy. I think it’s a 730 million euro sort of transfer fee. They’re talking about him. Plus, he’s going to be paid like hundreds of millions in terms of salary. So, you know, he’s he’s gonna make out gangbusters no matter what happens here. But as an entrepreneur, it pays to keep an eye on how does the industry work? I’m entering like where? What’s the flow of money? Where is it going from? And to like and how do you insert yourself into that flow of money to the best. So take advantage of how the macro economics of that industry works. And I think that’s the point here. Absolutely.

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