A phrase I use (too much) when talking about football investment is “buy the vineyards not the wine”. A fully developed Premier League level footballer will cost £25m + £100k a week in wages. A 5 year total cost of £50m. The single player purchase, in this tortured metaphor, is “buying the wine”.  Buying the vineyard means looking at how you can build capacity to have an ever lasting supply of wine, keeping the best for your own use, and selling the excess. And the crazy thing about football economics is a vineyard with a great history of grape production can often cost less than a single bottle of wine. Yes, you may have to be patient and wait for the grapes to grow, and the wine to mature, and to employ some winemakers, but you can be pretty sure you will end up with some good wine soon enough.  A great example of this would be Toulouse, a club traded for £20m, with the 8th most productive youth system in France (the world’s best talent producing country) with Sangaré, Koné, Diakité, Amian, already established in the first team and the likes of Antiste, and other French youth internationals, coming through.  How can a club with perhaps £50m of value on the playing asset side of the club, a thriving youth system, a stadium, and a training ground be worth less than a single average Premier League footballer? There are of course extra costs, complexity, and risks that come with owning a club. There are ownership rules to navigate, and if you are buying a football club as an already incredibly wealthy individual you are probably looking to have fun. Buying and enjoying wine is fun, growing grapes less so. What this does is leave a gap in the market for smart investors. If vineyards that produce great wine are undervalued then how do you find out which ones just had a great vintage and which have the perfect “terrior” (growing conditions -to really stretch the wine theme), to continually produce talent. Where talent meets opportunity To understand this we have to consider the question where does talent come from? Is talent a God given gift, coded into each child’s DNA at point of conception? Or is it deliberate practice, earned through sweat and application? Or is it cultural in that the child from the USA dreams of playing quarterback whilst the Indian child dreams of scoring a century for their country on the cricket pitch? Probably all three. Wayne Gretzky is a great example, the most dominant player in the history of his sport. He had unbelievable natural talent for the sport AND had a hockey rink in the back garden where he played for hours AND had a hockey obsessed family and lived in a hockey obsessed culture. I have no doubt there are children born every day with similar levels of “genetic potential” for ice hockey brilliance but they are probably hitting baseballs, kicking footballs, serving tennis balls, or most likely just struggling to survive the day in most of the world. One of the most interesting things I’ve recently heard was someone from Right to Dream, the owners of Nordsjaelland FC in Denmark, who run a football academy in Ghana. They were asked how they went about selecting players to join their academy and told a story of how they ran their first trial in a neighbourhood of Accra. The coaches assessing the players had worked in Europe and had a good idea of the ability a player needed to show to be accepted to join a football academy in the UK. The talent was abundant, they had to turn down many players who they would have liked to have taken on, and who if they lived in the UK would be attending professional academies.  Now if they had been looking from a previous productivity point of view would they have gone there? There was no great history of consistent production. Sure talent had emerged, the likes of Abedi Pelé and Tony Yeboah found a way. They were world class talents and as they say “talent always finds a way”.  But does it?  How many potential Abedi Pelé (or Mohammed Kudos) level players are out there with no opportunity? Ghana has all of the three building blocks for success. Demographically it is great, a young population, there is also a football culture, that means children have the opportunity for hours of practice and get to learn from each other. But until the likes of Right to Dream came along the passion for football had no opportunity to lead to a professional career. If you have to earn an income to survive from a very young age then a small chance of athletic success has to be sacrificed. Having a great quality free education with accommodation and food provided allows this talent to develop. Footballing culture And is this relevant to the UK or European football market? Surely everyone there with talent is picked up and has a chance to fully develop?  Let us imagine a scenario where you have 2 possible areas to invest in. Each has a population of 1.5m people. Demographically both areas are similar in terms of  population age profile. One has very big competition for talent from existing rival clubs. The other has almost no real competition for talent.    You’d pick the area with no competition wouldn’t you? The problem is the two areas were Merseyside and Kent. https://en.wikipedia.org/wiki/Category:Footballers_from_Liverpool https://en.wikipedia.org/wiki/Category:Footballers_from_Kent There are more footballers from Liverpool whose surname starts with the letter B than have been produced by Kent in total. Why should that be? Kent has plenty of football pitches, amateur teams, a professional club or two. Why are they so bad at producing footballing talent? And why is Merseyside (Liverpool and surrounding areas) so good? Obviously in Everton FC they have one of the founding clubs of the football league, with storied players and sides over 130 years of … Continue reading Buying the Vineyards – Player development in multi-club networks.