Tuesday, November 16, 2010

Why Ajax Are No Longer Dutch Masters

For football fans of a certain age, the name Ajax resonates with history, bringing back memories of the early 70s when the famous club from Amsterdam won the European Cup three years in a row, displaying a brand of “total football” that also inspired the Dutch national team in its dazzling run to two World Cup finals.

Guided by the prodigious talents of the legendary Johan Cruyff and ably supported by the likes of Ruud Krol, Johan Neeskens and Arie Haan, Ajax established themselves as one of the foremost clubs in European football with the distinctive white shirts with the vertical red band down the front becoming the epitome of “cool”. It wasn’t just the fact that they won so much, but the striking manner of their victories, as they exhibited a unique blend of individual creativity and progressive tactics.

Although Ajax have never quite regained those dizzy heights, Louis van Gaal’s young side, featuring the precocious skills of Clarence Seedorf, Edgar Davids, Patrick Kluivert, Marc Overmars and the de Boer twins, did reach the European Cup final two years in succession in the mid-90s, winning the trophy in 1995 by beating Milan 1-0 with a late goal from Kluivert.

In fact, Ajax are the most successful Dutch football club of all time, not just in the various domestic competitions, but also in Europe. They have won the Eredivisie (the national league) a record 29 times and the Dutch cup 18 times, while they are one of only three clubs (Barcelona and Juventus are the others) to have won all three European trophies: the European Cup (now the Champions League) on four occasions, and the UEFA Cup and Cup Winners’ Cup once each. In short, this is a team with impeccable pedigree.

"The one and only"

However, that was then, this is now and Ajax’s star has been on the wane for many years. The cold, hard facts are that they have only won the Eredivisie twice in the last 12 years, the most recent occasion being way back in the 2003/04 season, while PSV Eindhoven have won the league seven times in the same period. Before this year, the last time that Ajax qualified for the Champions League group stage was 2005/06, when they reached the last 16. Their best performance in Europe in the last decade came when they reached the quarter finals in 2002/03.

This decline has not just hurt the club’s professional pride, but has also damaged them financially, as they have been running a Champions League budget without actually managing to qualify for the competition. Like all Dutch clubs, Ajax suffer from very low television money and a high wage bill, so their operating strategy is based on two uncertain factors: (a) playing in the lucrative Champions League; and (b) making money from player sales.

That is why it was so important that the club qualified for this year’s Champions League, which they managed to achieve with hard-fought victories over PAOK Salonika and Dynamo Kiev, an impressive feat, given that their preparations were disrupted by the late return of key players who participated in the latter stage of the World Cup in South Africa.

That said, Ajax’s financial performance is even more dependent on the extent to which they are able to make profitable transfers, which traditionally has been a significant revenue stream. In the six years up to 2008, the club generated a net surplus of €76 million in the transfer market, but there has been a dramatic change recently, so that the last two years’ activities have resulted in a net spend of €6 million. They have actually reduced their spending, but the striking difference is that Ajax have stopped selling their best players, retaining them in the hope that this will give the team a better chance of honours.

From a financial perspective, this is a gamble, as there is no guarantee of success, but it may partly be in response to strong criticism in the Amsterdam press after prolific striker Klaas-Jan Huntelaar was sold to Real Madrid in the January 2009 transfer window, when the club was lambasted as being little more than a “trading company”.

In a way, the change in policy is understandable, if you consider the team that Ajax could field from players that they have sold in the last few years, including Wesley Sneijder, Rafael van der Vaart, Zlatan Ibrahimovic, Ryan Babel, Nigel de Jong, Thomas Vermaelen, Steven Pienaar, Christian Chivu and Maxwell. That’s an amazing list of talent, but necessity is the mother of invention and, as we shall see later, these sales were essential for the club’s financial well-being.

On the other hand, Ajax’s forays into the transfer market for new players have not always worked out so well. In truth, they have bought some spectacular flops, such as Dennis Rommedahl, Kenneth Perez, Albert Luque and Kennedy, so much so that an internal management report published in 2008 said that the club had not bought a single player in the previous five years that had improved the team.

"The running man"

While the club may not be particularly good at buying players, it does have a worldwide reputation for developing them. As an example, 19 of the players who participated in the 2010 World Cup spent time at the club’s training complex De Toekomst, while the “special one” himself, Jose Mourinho, ascribed Wesley Sneijder’s qualities to the fact that he was coached in Amsterdam, “Ajax players have excellent technical skills, thanks to the club’s youth programme.”

Ajax’s golden years were based on a highly successful youth policy, which has been a crucial part of the club’s wider strategy, namely developing young players, progressing them through the club structure into the first team, and then transferring them for large fees that help sustain the club’s finances. This production line has produced countless internationals over the years, but the key point is that as one great player was sold, another one would step up to replace him, so when the sublime Marco van Basten was sold to Milan in 1987, Dennis Bergkamp was ready to fill his boots – and importantly the team kept winning.

"We've got Dennis Bergkamp"

However, it’s fair to say that Ajax’s youth system is not shining quite as brightly as it did before, partly due to the influence of the 1995 Bosman ruling, which allowed professional players in the European Union to move freely to another club at the end of their contract and removed the restrictions on the numbers of foreigners that a team could field. This judgment hit Ajax especially hard with the majority of the team that was victorious in the 1995 European Cup leaving for small fees or no money at all, e.g. Kluivert, Davids, Reiziger and Bogarde went to Milan for the grand total of €2 million.

The main problem with Bosman for a club like Ajax is that it makes them doubt the wisdom of investing in youth, as young players can simply leave the club for nothing at the end of their contract. The alternative is to offer the player a longer contract on higher wages, so that if another team comes in for him, it has to pay a reasonable transfer fee, but the quid pro quo of this approach is that it increases the club’s cost base. Even this does not always work, as some players will refuse to extend their contract, accepting a lower salary for a couple of years in order to go to a bigger club for free at the end of their current deal.

In response to the damage caused by Bosman, Ajax decided to go public in 1998 (they are still the only Dutch club listed on a stock exchange), which raised €113 million. However, in a strange way, this only made matters worse, as this sudden influx of funds tempted the club to try to buy instant success via ready-made players from elsewhere, instead of following their tried-and-trusted in-house development strategy, and most of the funds have now been frittered away.

"Houston, we have a problem"

Possibly the worst example of this came during Marco van Basten’s unhappy managerial reign in 2008, when “San Marco” spent an enormous amount of money for no discernible success. Although idolised by Ajax fans for his performances as a player, his brief stay as manager was an altogether different story. Even though he had never before been in charge of recruitment, the board foolishly decided to give him carte blanche in the transfer market and he proceeded to make a series of disastrous buys that served only to eat into the club’s limited financial reserves.

He almost doubled the previous Dutch transfer record when he splashed out €16 million on Serbian striker Miralem Sulejmani, who is the very definition of the term “one season wonder”. Indeed, Ajax tried to loan him to West Ham this summer, but the move collapsed when he failed to secure a work permit. Other big money purchases that failed to set the pulse racing included Argentinian forward Dario Cvitanic, who cost €7 million, but was loaned to Mexican side Pachuca just over a year later; and midfielder Ismail Aissati, who was bought for €4 million, but has also been loaned out (to Vitesse).

In fact, few of van Basten’s hapless acquisitions ended up playing many times for Ajax. All they did was help to wreck the club’s balance sheet. Let’s take another look at the Sulejmani transfer, which cost about 25% of the club’s annual turnover. To put that into context, it would be like Manchester United spending £70 million on a new player. As Sir Alex would no doubt say, that doesn’t exactly represent good value.

The importance of player trading to Ajax is immediately apparent when you look at the club’s profit and loss account over the years. In essence, the club has only been profitable when it has sold its most important assets, namely its best players. The last time the club made a profit (€8 million) was in 2008, when the figures were boosted by €48 million profit on player sales (mainly Sneijder, Babel and Heitinga). Similarly, a small profit of €3 million in 2005 was reported on the back of €16 million profit from player sales (mainly Ibrahimovic and van der Vaart).

What is of concern is that large profits on player trading no longer appear to be enough to cover the operating shortfall, so €29m from player sales in 2009 could not prevent a €3 million loss that year. This is because in the last five years revenue growth has virtually stalled, while costs have grown by nearly a third, most of which occurred in 2008 with a €20 million (26%) jump.

This means that there is a significant deficit at the operating level of €33 million. Even if we exclude the non-cash player amortisation, as some analysts do, the club still made an operating loss of €13 million. In fact, the last time that the club reported a cash operating profit was in 2006.

Equally worrying is that the 2010 post-tax loss of €23 million represents a steep increase over the previous year’s loss of €3 million, and would have been even worse without a €4 million tax credit. This once again highlights the value of player sales, as there were hardly any made last year. In relative terms, a €23 million loss on revenue of €69 million is hideous. To demonstrate how scary that is, if we were to apply the same proportion to Real Madrid, that would imply a loss of €114 million for Los Merengues.

Ajax’s biggest challenge comes from their low revenue. In the 15 years since Deloittes started their annual Money League, based on football clubs’ revenue, Ajax have only featured once and that was many years ago. In fairness, the Money League is only likely to see any representatives from outside the Big Five European leagues (England, Spain, Germany, Italy and France) in exceptional circumstances, as there is such a notable difference in revenue, e.g. Real Madrid, Barcelona and Manchester United generate over five times as much revenue as Ajax. That may be a spurious comparison, but what really emphasises Ajax’s problem is the comparison with the Premier League, when you have to go down to teams like Stoke City to find a comparable level of income.

Nevertheless, Ajax’s revenue of €69 million is still the highest in the Netherlands - €17 million more than PSV Eindhoven’s €52 million. The problem, of course, is that revenue growth is restricted by the relatively small Dutch market (population 16 million), which is a drop in the ocean compared to their larger neighbours, e.g. Germany (population 82 million).

Despite these limitations, Ajax targeted revenue growth of “5 to 6% per annum” in their 2006 annual report. Clearly, this has not been achieved. In fact, the 2010 revenue is actually €5 million lower than 2006, mainly due to the lack of Champions League revenue. This can be seen in the above graph, which also visibly demonstrates yet again how the results are influenced by profit on player sales, especially in 2008.

Looking at Ajax’s revenue mix, what really hits you in the face is the extremely low television revenue of €7 million, which is feeble compared to the major leagues. If we compare that with the clubs that earn most from broadcasting income in those leagues, we can see that it’s less than 5% of Real Madrid’s TV revenue, but it’s also miles behind the others. Although many top clubs are over-reliant on TV revenue, I’m sure that this is a problem that Ajax would like to have, as only 10% of their revenue is sourced from broadcasting. While other countries’ TV revenue has powered ahead, the Dutch league has been left behind. You might almost say that “video killed the Eredivisie star.”

Of course, part of this shortfall is due to Europe, as Ajax only received €1.7 million from the Europa League, while the others all earned at least €20 million from the Champions League. People don’t often appreciate the huge disparity between the two European competitions from a financial viewpoint, but it’s very clear here. As Ajax have only qualified for the Champions League twice in the last six years (back in 2004/05 and 2005/06), they have received a relative pittance from their European adventures: just €22 million in all that time. That compares to the €16 million and €26 million that the last two Dutch Champions League representatives (AZ Alkmaar and PSV Eindhoven) received in a single season.

One reason why Champions League revenue is so important is the pitiful amount of money received from the domestic TV deal, which works out at around €5 million for Ajax. Although the Eredivisie has the seventh highest TV rights deal in Europe at €300 million for the three years 2008/09 to 2010/11, this is a long way behind the largest leagues, as media values are low in such a small country. At €100 million a season, it compares very unfavourably to others: England €1.2 billion, Italy €900 million, France €700 million, Germany €400 million, Spain €500 million and Turkey €250 million. Again to put this into context, Portsmouth finished rock bottom of last season’s Premier League, but still received around €35 million, which is seven times higher than Ajax, the runners-up in the Dutch league - and the Premier League TV money will increase this season.

At least Ajax can still count on great support with average attendances of over 48,000, including 42,000 season tickets, which means that Ajax have the 13th highest crowds in Europe, according to a recent survey by the German newspaper Bild. That produced gate receipts last season of €30 million, comprising season tickets €10 million, corporate boxes and seats €9 million, domestic gate receipts €6 million and Europa League gate receipts €4 million. This is not at the same levels as clubs like Manchester United and Arsenal (both well over €100 million), but it is higher than nine clubs in the Money League top 20, which is very impressive. In fact, it represents 44% of the club’s total revenue, which is only behind one club, Arsenal.

"The spectacular Amsterdam ArenA"

Of course, this reliance on gate receipts is a double-edged sword, as there is a risk that a continued lack of success would lead to lower crowds. Having said that, attendances have actually increased by 2,000 in the last five years, so the Ajax fans have demonstrated strong loyalty, though it would be foolish to take this for granted, as crowds have declined at both Milan and Celtic, two teams whose magnificent history is also not reflected in current day performance.

Ajax are lucky enough to play in a modern stadium, the Amsterdam ArenA, whose 52,000 capacity is much higher than the homely old De Meer ground that could only accommodate 29,500 spectators, though some would argue that this move to the outskirts of the town in 1996 has led to a loss of the club’s identity. In addition, the new pitch has been awful and not conducive to attractive football, due to the retractable roof not letting in enough sunlight. It had to be changed every few weeks (much like Wembley), though the problems have been much less since an artificial lighting system was installed in 2009.

Ajax only rent the ArenA, paying just under €10 million a year for the privilege, though they do own 13% of the company (worth €5 million, having impaired the valuation by €4 million in 2006). On the other hand, they only had to provide €20 million of the funds to build the stadium, which they raised by selling the De Meer land to the city for housing development, leaving the vast majority of the money to come from the state, the local council, sponsors and individual shareholders.

Commercial revenue is at a record high at €32 million, made up of €25 million sponsorship and €7 million merchandising, which represents 46% of the club’s total revenue, a proportion only surpassed by German clubs, which are masters of the marketing game.

In 2008, Ajax signed a seven-year shirt sponsorship deal with AEGON, an insurance company, that is worth up to €12 million a season (guaranteed €10 million plus €2 million based on performance), which represents a significant increase on the €7 million previously paid by ABN AMRO. This stands up very well compared to the top sponsorship deals in the big leagues: only €8 million less than Real Madrid, the same as Milan and more than Lyon (and Champions League winners Inter, whose deal with Pirelli is worth only €9 million).

Merchandising revenue has also never been higher, though a survey by leading German sports market research company, PR Marketing, suggested that Ajax (“a big club in a small league”) could only sell 100,000 shirts a season. That might not seem too bad, until you consider that the likes of Manchester United and Real Madrid have annual sales of 1.2-1.5 million.

Clearly, commercial income is an area where Ajax would hope to grow revenue, but this will largely depend on future sporting success. Even though the club’s brand is still strong globally, it mainly owes its reputation to its past. As marketing expert Frank van den Wall Bake explained, “international credit for the Ajax brand has just about run out, so it is important for the club to do well at international level in the next couple of years.”

Despite the lack of revenue growth, Ajax have adopted a “balls out” approach to their costs, especially wages which have grown by over 50% in the last five years to €49 million. This includes €33 million for players, €8 million for coaching and medical staff and €4 million for bonus payments. Wages increased by an amazing €6 million in the last 12 months alone, due to investment in the squad, contract increases and changes in the coaching staff. Headcount has also risen for the last 2 years from 197 to 237, largely through more youth players and support staff on the commercial and admin side.

This has brought the wages to turnover ratio to 70%, up from only 49% just four years ago, which is much higher than the 60% guideline issued by the KNVB (Dutch football association). Although in absolute terms, the wage bill is not that high, it’s evidently not sustainable without Champions League football. Individual salaries are not excessive by the standards of other leagues (Maarten Stekelenburg is the top earner at Ajax with €1.75 million a year), but the total wage bill is still too much for the club’s revenue to comfortably bear. This is a common problem in Dutch football, as admitted by Frank Rutten, chief executive of the Eredivisie, “Clubs are pushing each other to madness over salaries. It’s idiocy.”

Little wonder that Ajax have promised in their latest annual report to take a critical look at their costs, including “reducing the number of players under contract”. There is little doubt that there is some dead wood to clear from the payroll, but it has proved difficult to do this, as other clubs would not meet their high wages, though a few have left this summer (including Rommedahl, Kennedy, Pantelic and Gabri), so next year’s salaries should be lower.

"Vertonghen - going the same way as Vermaelen?"

The trend in player amortisation, namely the annual cost of writing down the cost of buying new players, also reflects the modified approach to the transfer market. In the three years between 2005 and 2007, it fell from €16 million to €13 million. However, in 2008 it leapt to €23 million and has now settled at around €20 million. This is still considerably lower than those sides that have spent really big in the transfer market, such as Manchester City €83 million, Barcelona €71 million, Real Madrid €64 million and Chelsea €57 million, but again it’s too high for a club with Ajax’s limited resources.

Normally, when a club reports losses year after year and does not have a wealthy benefactor to bale it out, debt levels increase and earlier this year few were surprised when there were widespread reports that the club was facing major liquidity problems. However, this was denied by Ajax finance director Jeroen Slop, who backed up his confidence by stating that the club did not need to sell players and “could afford to reject a €15 million offer for Luis Suarez.”

The accounts would seem to bear him out, as the club did not in fact have to extend borrowing facilities with the bank. Moreover, total liabilities have reduced from €64 million to €57 million, though cash balances have also fallen from €19 million to €8 million. Indeed, the liabilities figure is a little misleading, as most of this is just incurred in the normal course of doing business: accruals & deferred income €26 million, other creditors €8 million, provisions €8 million, trade creditors €7 million and tax & social security €3 million. The only bank debt that I can identify comes to under €5 million.

"El Hamdaoui flying to the Champions League"

However, that does not mean that the balance sheet is particularly robust, as the losses have instead been charged to reserves, which are now down to €39 million from the highs of €110 million in 1999. Clearly, this cannot go on for ever, so if the club does not start making profits, it will have to raise funds somewhere: going back to the market for new capital, taking on debt or bringing a new investor onboard.

Of course, it’s not only Ajax that is struggling financially in Holland. Everywhere you look, clubs are in trouble. Founder member of the Dutch league, HFC Haarlem went bankrupt last season and BV Veendam narrowly avoided the same fate. The winners of the 2009 Eredivisie, AZ Alkmaar, have been run by administrators ever since the owner’s bank was declared bankrupt, while PSV Eindhoven’s 2010 loss is almost as high as that reported by Ajax after a couple of seasons out of the Champions League. Feyenoord are also in a terrible state, not just because they were recently thrashed 10-0 by PSV, but more significantly they are one of the 13 professional clubs that have been classified as being “in serious financial difficulty” by the KNVB.

It is clear that Dutch football as a whole is enduring a structural crisis with the Eredivisie reporting a combined loss for its clubs of €31 million in 2008/09 and warning that the deficit will be even higher in 2009/10. As Henk Kesler, the KNVB president, commented with commendable understatement, “The association is aware that the situation is not exactly rosy.”

"The Night of the Hunter"

The KNVB has belatedly tried to put its house in order and in April a working party published a report with 20 recommendations, the most important of which is a pledge by clubs that they have enough cash to reach the end of the season. For the first time, the KNVB has also implemented a licencing system that punishes financial irregularities with a points deduction. Furthermore, clubs under supervision like Feyenoord have three years to get their finances in order or face losing their licence.

In order to improve matters, UEFA President Michel Platini suggested a merger between the Dutch and Belgian leagues, but most fans have given this idea a frosty reception. In any case, although such a move would increase the market size and presumably lead to more money from the sale of TV rights, it is unlikely that this would boost revenue enough to challenge the larger leagues, so this may well be a non-starter.

Ajax had already undergone their own internal soul searching in 2008, when they published the Coronel Report (named after chairman Uri Coronel), which reviewed the many years of mismanagement since the club’s flotation. Grandly entitled, “Ajax – the road to victory”, the report was extremely critical, concluding that the club’s management structure was seriously flawed, leading to lack of clarity and perennial power struggles between the coach and technical director.

The report also suggested that the appointment as coach of former Ajax players with little experience was doomed to failure, citing the examples of Jan Wouters and Danny Blind, though that did not prevent the club from repeating the mistake when they recruited van Basten.

"Stekelenburg - a safe pair of hands"

Another example of lack of managerial focus came with the decision to invest substantial funds into a series of foreign affiliates in countries like South Africa, Belgium and the USA. These have not exactly been a great success (Ajax America filed for bankruptcy), so these activities have now been scaled back, leaving only a 51% investment in Ajax Cape Town.

So what does the future hold for Ajax?

We have seen how vital qualification to the Champions League is to the club’s finances. Indeed, last year’s annual report forecast that participation in the 2010/11 tournament would improve profit by “at least €10 million”, but it could be even higher if they somehow manage to progress past the group stage. As coach Martin Jol enthused, “This is so important for Ajax and for Dutch football” – though, to be fair, he may not have been thinking about the balance sheet.

The problem is that they need to achieve this year after year, but they are no longer the dominant force in Dutch football, as the Eredivisie has become very competitive with the rise of “provincial” teams, as shown by three different winners in the last three seasons (Twente Enschede, AZ Alkmaar and PSV). In other words, qualification cannot be taken as read, even though the Netherlands do have two places available (one of which has to go through two qualifying rounds).

"Martin Jol - time to get serious"

If Ajax do not consistently reach the Champions League, then the only other option is to sell players. The club has hinted at this in the annual report, “transfers may lead to a positive net result in 2010/11,” but this will become a virtual certainty if Ajax are eliminated at the group stage. This handily concludes just before the January transfer window, when players like Uruguayan striker Luis Suarez, goalkeeper Marten Stekelenburg and defenders Jan Vertonghen and Gregory van der Wiel will inevitably once again be the subject of intense speculation.

The problem is that it is unlikely that players will command significant transfer fees in the future, owing to the double whammy of the economic recession and the impact of the UEFA Financial Fair Play Regulations. The first means that clubs do not have much money to spend, while the second requires clubs to balance their books, meaning that costly purchases (with the associated player amortisation) are to be avoided. Only this week we saw an example of this with Barcelona agreeing a deal for PSV’s Ibrahim Afellay for a low fee of around €3 million, when his price had been quoted as high as €10 million.

No, the only real solution for Ajax is to get back to their roots and once again focus on youth development. This has always been a cornerstone of the Ajax ethos, but they have dropped the ball in recent years. As the latest annual report stated, “The academy is good, but could be better.” This strategy requires investment and the club has set aside a budget of €5 million with the objective of having half of the first team squad developed at Ajax.

"Christian Eriksen - the future boy"

If this policy works, it will obviously reduce the number of players that have to be bought from outside the club, so it can make sense both from a technical and financial perspective. However, other Dutch clubs have also embraced this approach, so Ajax will have to raise their game in order to attract the best youngsters.

There is a new air of realism around Ajax’s ambitions these days. Five years ago, the club’s annual report proclaimed, “the ultimate ambition of Ajax is to win the Champions League”, but this now seems hopelessly optimistic considering their low budget and the financial gap to the major football leagues, which they have described as “unbridgeable”. That is why last summer Martin Jol considered moving away from a club that has won the European Cup four times to Fulham, a mid-table English club with a far less illustrious history.

The sad truth is that money talks, so Ajax will need to manage their limited resources better than the leading clubs in Europe to have any chance of success. They might have all the Dutch courage in the world, but will this be enough?


  1. Good stuff as always - pedant alert: the population of the Netherlands isn't 6 million, but more like 18 million IIRC.

  2. Agree with drastic need to change population of Netherlands.

    Also Kenneth Perez was not a flop, a great player not really known outside Denmark and Netherlands. Real flops include Oleguer from Barcelona, Bruno Silva, Rob Wielert and Albert Luque. Agree with other expensive flops.

    Anyway, great article as usual!

  3. Thanks, guys, especially for alerting me to typo on population figure - now corrected.

  4. Thanks for this article. There are many question marks. One thing will definitely help - that is the success on the pitch. Of course there are the reasons you spoke about that are a great obstacle in achieving the success, but I can't believe there was no way to win the Ere Division in 7 years time.

    And by the end of this year the guys you mentioned will surely leave. They are as ripe as ever to do so. Once again weakened squad, once again big shame for a glorious club.

  5. Great post as usual. It made me think about an article I read in Swedish football magazine "Offside" a couple of years ago, about the financial "miracle" of FC Köbenhavn. Flemming Östergaard, president of FCK, bragged about having surpassed Ajax financially.

    Is there any possibility that you'll write an article about FCK? They have taken over Rosenborg's place as number one in Scandinavia - and the success, according to Östergaard at least, is the result of a solid economy and a focus on the business aspects of a football club.

    Best regards

  6. To my mind, Ajax shares look a good buy at the moment. The downside for Ajax of failing to dominate the league has a significant upside for the strength of the league as a whole: as other clubs have benefited from the CL revenues, the money has been spread around.

    The Dutch TV revenues can increase by enough at this stage - through having a stronger, more competitive, more watchable league - to boost Ajax's revenues significantly, and now they look to be qualifying every season, that's a win-win.

  7. TSR:

    Many thanks for what is always a detailed, coherent and entertaining analysis of the business of football. I have been a quiet admirer of your work for some time and just wanted to convey my appreciation for clarifying parts of the beautiful game that are typically unavailable without a subscription. (Hopefully, that comment will not influence your operating model.)

    As for Ajax, definitely a sad point in the club's history and I hope they do succeed in returning to a small semblance of their past glory. I wonder whether the economics of the game simply caught up with them. As more clubs fall under the control of well-funded entities, it becomes even more challenging to pursue effective scouting on a global basis. Though the club does have a rich vein of local talent available.

    Wondering whether you have ever considered writing a piece defining the basic concepts behind Soccernomics and debating its pros and cons. Think it could provide a base for some healthy debate here. All the best and please keep up the good work.

  8. Hi Swiss Ramble,
    Top stuff as always. Any chance of doing something similar on PSG if you ever get a chance?? Would love to see that on my club.
    Keep up the great work

  9. Just for comparison's sake, how much more money would Ajax have if they played in the Bundesliga? Would it be possible for a team to quit its national league and move to another league, because if there was 1 team that could do that it would be Ajax. They could compete in the Budesliga talent wise, they would get an influx of cash allowing them to hold young players for a couple more years, they would add another talented team to the league, and I think more importantly for the Bundesliga more and more talented Dutch players would go to a German team after leaving the Dutch leagues. Today young Dutch players go to Spain, England, Italy, and Germany about equally but if Ajax plays in the Bundesliga I'm sure the proportions would change towards Germany. Players like Robben, Sneijder, Huntelaar, Kuyt, Babel, and RVP could all be in the Bundesliga. Isn't that enticing enough for the Bundesliga to want them in? And for opening the door to talent Ajax would get a cut of the Germany TV budget and commercial connections.

    Also, would a joint Netherlands/French league make sense? Ligue 1 seems to be suffering from a talent standpoint compared to the past, due to former colonies not sending all their players to France anymore, and the Netherlands has lots of talent. It seems like a perfect match to revive a dying (IMHO) Ligue 1. Besides Lyon getting smacked down by Bayern last year in the semi-finals when was the last time a French team made it that far? In 08-09 only Lyon made it into the knockout round and they lost right away to Barcelona (understandable). In 07-08 Lyon again was the only team into the knockout states and they lost right away to eventual winner Man U (wow 3 straight losses to the eventual winner 07-08 to Man U, 08-09 to Barcelona and 09-10 to Bayern). 06-07 Lille and Lyon both lost right away to Roma and Man U respectively. 05-06 Lyon again was the only team to make it and they lost in the quater-finals to AC Milan. 04-05 Lyon and Monaco both made the knockout phase but Monaco and then Lyon both lost to PSV in back-to-back rounds. Looking back, not since 03-04 has a French team done anything special in the UEFA Champions league when Monaco made it to the finals against Porto. If I went back through for the German, English, Italian and Spanish teams I know the track record would be much better considering every country has had at least 1 team win it all since 03-04. In fact, since Porto-Monaco the World Cup match has always been between a team from England, Italy, Spain or Germany. 04-05 was an English team over an Italian team, 05-06 was a Spanish team over an English team, 06-07 was an Italian team over an English team, 07-08 was all England, 08-09 was a Spanish team over and English team and 09-10 was a German team over an Italian team.

  10. First of all, thank you for writing on a non-big 5 team. I just asked last article and voila. You're amazing.

    I know this will never happen but a joint Netherlands, Belgium, Denmark, Noway, Sweden, Finland & Luxembourg league set up like the EPL with tiers would be an amazing league. The total population watching that league would be about 53 Million (16.6M + 10.8M + 5.5M + 9.4M + 4.9M + 5.4 M +.5M), which is only 8M less than Italy's population. Additionally you would be joining up the 10th, 12th, 13th, 26th, 28th, 30th and 51th best leagues according to UEFA, which I would guess would equate about to the same quality as Serie A.

    That league wouldn't be overly expensive to travel if you did extended road trips (so a team in Belgium would play 4 games away in Scandinavia and then come home for 4 straight games) and can you imagine the competition level? I know that sounds sort of weird (compared to the EPL where it seems you get 1 home then 1 away) but in the U.S. teams do extended road trips and home streaks. My Detroit Red Wings play in the Western Conference (despite being in the Eastern timezone) and we often have 4-5 game road trips and once a year we have a long, long road trip of anywhere between 7 and 10 away games without 1 home game. It's just what you have to do with a bigger map.

    Just this year 9 teams from these countries played in a UEFA Champions match (Ajax, Twente & Copenhagen into Group stages, Rosenborg and Anderlecht into the playoff round, AIK, HJK and Gent into the 3rd qualifying round, and Jeunesse Esch into the 2nd qualifying round) and 30 teams in the Europa League. Of the 30 teams that made into Europa 8 made into group stage (Utrecht, PSV, Odense, Anderlecht, AZ, Club Brugge, Gent and Rosenborg) 6 made into play-off round (Feyenoord, Genk, Elfsborg, Brondby, AIK, and HJK) 9 made into the 3rd qualifying round (MYPA, Nordsjaelland, Inter Turku, Cercle Brugge, Molde, Randers, Goteborg, Aalesund and Kalmar) and just 7 teams didn't makt it past the 2nd qualifying round. Now lower Europe league wins aren't necessarily impressive but considering that of the 30 teams in these leagues that qualified 26.67% made into group, 46.67% made into group or play-offs and 76.67% made into the group, play-offs or 3rd qualifying round is impressive. These countries have talent but are held back by their population size and weak teams in their leagues. A superleague could have amazing talent.

    If I started a 20 team 1st tier league I'd have Ajax, AZ, FC Twente, and PSV from the Netherlands, Copenhagen, OB and Brondby from Denmark, Anderlecht, Gent, Club Brugge and Standard de Liege from Belgium, Rosenborg and Stabaek from Norway, AIk, Malmo and Goteborg from Sweden, HJK from Finland and F91 Dedelange and Jeunesse Esch from Luxembourg make up 19 of the the 20 teams. Then I'd have a playoff between every other team for the final spot but I'd expect it'd go to a team like Feyenoord or KuPs or Honka.

    Now while none of these teams are an Arsenal or Barcelona or Inter they are just as good as the secondary level teams in the Big 4 like Werder Bremen, Sampdoria, Aston Villa, Everton, Bayer, Borussia, Sevilla, Atletico Madri, Lazio and Napoli.

    If they don't do that, which they won't, they should seriously consider joining with Belgium. The population watching that league would jump to approximately 27 million, which would be about 1/2 of the UK.

  11. Fabulous, eminently readable as usual. Interested in the KB piece - I do think that the smaller countries of NW Europe really would benefit from a pan-national league (and I'd put Scotland in there too).

  12. Great read!
    It confirms all that I am thinking about my club (I am an Ajax fan).

    A couple of points that also contribute to the downfall of Ajax:
    1. ever since Louis van Gaal left there has been no stability on the coaching and/or technical director post. Since 1997 Ajax had 12 different coaches and something like 4 or 5 different TDs. That is definitely not conducive to run a club which strengths used to be their youth.
    2. after the generation of van der Vaart, Sneijder, de Jong, Stekelenburg, Heitinga, the youth academy hasn't come up with big talents anymore. van der Wiel might be the only exception but apart from that the famous youth academy has run dry. But this also has to do with my point #1.
    3. Ajax is being run by people without professional footballing background. There isn't anybody on the board that has this background and Johan Cruijff is trying to correct this.

    A conclusion I can take from your post is that the Eredivisie is too small for Ajax. Actually the Eredivisie is too small, period. Just look at the TV revenues. Hopefully Eredivisie Live can correct this, otherwise it will be a decline of Dutch football in general.

    More and more Dutch youngsters are leaving at a very early age (Tim Krul, Patrick van Aanholt, Jeffrey Bruma to name a few) and if this continues the vicious cycle will start and the Eredivisie and Dutch football will be left with nothing much.

    Oh and being pedantic, Affelay was sold for only 3 million because his contract runs out next summer. PSV can either cash in now or Affelay would have left for free next summer as he did not want to renew his contract.

  13. Ajax have tried a couple of times to join other leagues. The Atlantic League and the Phoenix league, I believe they were called. Basically leagues for 'big-fish-in-a-small-pond' clubs like Ajax, P$V, Rangers, Celtic, Porto, Copenhagen etc.

    I think UEFA deep-six'd both concepts, but a league like those is the only way that a Dutch club is going to be able to compete against the mega-rich clubs.

    The other thing Ajax must do is to keep johan Cruijff as far a possible away from the club. He's certifiable insane.

  14. great post as usual! I would love to know what the rift was between Cruyff and Van Basten in 2008. As you know, Cruyff was signed to Ajax as an official advisor/technical director/something and he wanted to restructure the club, especially apparently in terms of scouting and the way the team is built. Marca was against it and thought the ideas are too radical, probably this wasn't even Marco's idea but those at Ajax who were always scared of Cruyff's radicalism. Now Ajax are worse off than before and Marco is somewhere....which takes us to an important lesson in football: Cruyff is always right.

  15. Purple Cow, are you Mino Raoila in disguise??? Only if Ajax listens to Cruijff will they get better again...

    Mahdi, the rift between van Basten and Cruijff was about the youth system. After the Coronol Report, Cruijff (as an unofficial advisor) wanted to restructure the whole youth system by firing everybody and starting from scratch again. van Basten didn't agree saying that this is approach is too radical. Cruijff drove out of the Arena straight afterwards.

  16. Agreeing with others in that I'm seeing the only solution to the smaller countries is by creating pan national leagues. If these leagues are marketed well and set up by people with a good business acumen then in time they could definitely challenge ligue or Spain or Italy.

    For the Dutch they could have the pan national league mentioned above by a poster. Or they could look at a combined Germanic league being blended into the bundisliga and the Austrian league. There would be benefits for Germany in this as well.

    Or France and Belgium and Switzerland etc.

    Eastern Europe will have to do it, what is teh point of having tiny countries like the former balkan states each having their own league when there is so much talent. Those clubs could become powerful again. Not to mention a Russian Ukrainian league to challenge Western European Dominance.

  17. The stadium capacity of the Meer was only 20.000 due to a decision to decrease the capacity of the ground after the iron bar incident at the Austria Wien game in 1989.
    Anyway, very good article!

  18. Great article, don't mean to be picky but in AZ, the A stands for Alkmaar thus putting Alkmaar after AZ is superfluous. Seriously wonderful article though, even if you are being a tad harsh on 21 year old Miralem Sulejmani. Let's be fair, hindsight is a wonderful thing and he was tremendous that season.

  19. "..which takes us to an important lesson in football: Cruyff is always right."

    Except when he is wrong, which is about 90% of the time. Cruijff doesn't understand modern football. It's always the same with him, he comes back to Amsterdam with his suntan shouting his mouth off, then the first time anyone says 'boo' to him he throws his toys out the pram and storms off back to Sitges. That's why he has zero credibility with Ajax supporters these days.


    "Or they could look at a combined Germanic league being blended into the bundisliga and the Austrian league."

    I'm guessing you don't know Dutch people at all, do you? The Dutch would rather give up football all together than join a German league.

  20. Great article!

    Discussions about the pan-european league are redundant if the UEFA puts in financial fairplay and regulates the number of youth players in squads. The last years Ajax always sold their best players to clubs who were and still are in serious debt. Above all, with a fixed minimum of youth- or domestic players in the squad, it will be harder for the big clubs to buy every player that has played more than one decent game, because they have to lead up players themselves.

    As for Cruijff, the majority of Ajaxfans does support him. At least I'm one of them and last couple of matches songs about Cruijff are one of the most heard chants in the Arena.
    Maybe one should watch a documentary which was broadcasted by the BBC and presented by Lineker (forgot the name). Central thought in the documentary is that Spain have won the WC 2010 because of the Cruijff philosophy, which was first introduced in in 1988 in Barcelona and re-introduced by Rijkaard and Guardiola and later adopted by the Spain national XI. Of course, it's exactly the same philosophy that gave Ajax their still famous name back in the seventies. The only critique on Cruijff is that, although he knows what's best for the club, he doesn't want to reorganise the club himself but rather puts in charge younger people who share his philosophy. As for Barcelona, it worked out great...

  21. Purple Cow, do you mean the supporters who were chanting "Johan Cruijff, wie kent hem niet, Johan Cruijff, Johan Cruijff is een echte Ajacied" this weekend in the stadium???

    And Cruijff doesn't know anything about modern football? Arguably the current best team in the world, Barcelona, is moulded in his way and it started way back in 1974 when he moved there.

  22. Good article as ever, but there is at least one more team who won all three European Cups - Bayern München won the European Cup in 1974, 1975, 1976 (and the CL in 2001), the Cup Winner's Cup in 1967 and completed their collection with winning the UEFA Cup in 1996.

  23. anakzaman

    thanks for the info! Don't know the details of the report but no matter how radical Cruijff's ideas might be and how much he is supposedly out of touch with modern football and etc. for whatever reason his decisions always turn out right and whenever you listen to him, you end up on the winning side(see Barça and every decision he took/advice he gave there in the past 30 years).

  24. In an older article there was a comparsion between the Spanish and English League from the aspect of TV money earned by teams, how many times the Real Madrid gets more domestic TV money than the bottom Spanish team and the same for the Premier League.
    I don't remember the exact numbers, and I can't find the article.

    Can someone help me?

  25. I think RM gets approximately 16-17 times as much as the last team in the Primera, while CFC/MU gets twice as much as the last team in the PL.

  26. i think that the the English team who earns the most money gets less than twice as much that the bottom team. i think it was around 1,4x or something...

  27. I am not into blogging. However, someone passed me and a friend who is from Bolton your piece on Bolton. I am a Spurs fan but I have read the piece with interest. It is so clearly written. If you get the chance to spend what I assume must be lots of time, to do a similar critique of Spurs, I would be very happy to see it.

  28. Good, interesting article.

    The Ajax Cape Town set-up did bring Steven Pienaar to Ajax. One good player might justify an entire investment. (Can't find the amount he was sold to Dortmund for, but he was certainly a good player for us.)

    Overall, transfer policy has been disastrous lately. Apart from expensive flops such as Albert Luque en Sulejmani, especially the senseless hoarding of squad players is aggravating.

    A striker was needed, 5M € later El Hamdaoui was brought in, and doing great, as expected; a sensible purchase with a clear purpose. But then, for every sensible signing there are three pointless Atoubas.

    Signings like this season's Tainio, Mido and Ooijer only hinder youth players' progress. These youth players may well be potentially better, have much cheaper contracts and the supporters enjoy seeing them coming through (as does the transfer balance).

    Overweight make-weight Mido and PSV-reject Ooijer representing the club is just depressing. As is the fact Ajax are losing far too often recently to challenge or progress in any competition.

    To complete a crisis:
    1) There's a rift, with the management and board on one side and The One (and Only) and friends/allies on the other. And
    2) the manager and his assistant apparently can't stand each other. And
    3) Ajax had to fire a reserve player from the club, for pulling a gun on a teammate. And
    4) Captain Suarez got himself banned for 7 games, for biting an opponent. (And he's having an abysmal season overall).

    So, so far the players' reaction seems to consist of dropping points and random acts of violence. I hope better approaches will be found.

    On the other hand, Ajax could be in Feyenoord's situation, situated on an even higher plane of disaster.

    The club should be careful where it's heading if nothing changes though.

  29. Is there an update to this story? How are Ajax doing now 7 years later?

  30. They might win Europa league which will improve their budget for sure.


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