Wednesday, October 25, 2006

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Sports protectionism in Russia

It would seem that Russian President Vladimir Putin's hostility to certain forms of foreign investment extends to.... soccer. RIA Novosti explains:

The Russian president said Wednesday he was concerned over the large number of foreign nationals playing for Russia's soccer clubs.

Vladimir Putin, speaking at his annual televised question-and-answer session, said: "There are too many of them. We need to restrict their number, because when it comes to composing the national team, we do not have enough players."

Russian national soccer has achieved little success in recent years, in spite of reforms. The national team performed poorly at Euro-2004 in Portugal, and failed to qualify for this summer's World Cup in Germany.

Earlier the President of the Russian Football Union, Vitaly Mutko, said that the clubs in the Russian Premier League would not be allowed more than five foreign players by 2010, compared to the current limit of eight per club.

Mutko also said that as of next year, clubs will have to pay $30,000 to the union for each foreign player....

Soccer is not the only sport in Russia that has a large number of foreign players. Vyacheslav Fetisov, the head of the Russian Federal Agency for Physical Culture and Sport, highlighted the problem in December last year, saying that foreign nationals playing for Russian teams take $250 million in salary and compensation out of the country annually.

He said the excessive number of foreigners in Russian teams is hindering the development of sports in the country, and that the issue should be primarily addressed to regions and teams that pay large sums to foreign players, rather than financing their sports infrastructures.

Now it should be noted that MajorLeague Soccer also has caps on the number of foreign players allowed per team -- though those rules were liberalized recently.

As a general principle, however, this kind of policy strikes me as absurd. Imagine, for a second, imposing caps on the number of Dominican baseball players allowed into Major League Baseball, for example. The best way to have quality American ballplayers is to have them face the toughest competition imaginable. UPDATE: here's a report to back up this assertion.

Question to readers: is there an infant industry logic to protectionism in sports?

posted by Dan on 10.25.06 at 08:39 AM


Spain is another country that limits the number of foreign players on each soccer team though these days the cap only extends to non-EU players. This is especially stupid since Spain is a logical place for talented spanish speaking Latin American players to end up.

However, Spain allows these non-EU players to obtain a Spanish passport after "residing" in the country for 5 years giving them dual citizenship. This is pretty useless though since by then the good players are firmly entrench in their own national teams.

Regardless, it's escaped no one's attention that the Spanish national team consistently underperform in international competition. I think that this is a direct result of this policy.

posted by: Sergio on 10.25.06 at 08:39 AM [permalink]

The import of foreign players doesn´t actually harm the competitiveness of the professional players, but inhibits the development of native talent. It is much cheaper to buy a star than to develop several hundred young players.

Just a remainder, one of the italian players that won last world cup is actually from Argentina.

posted by: Daniel Bender on 10.25.06 at 08:39 AM [permalink]

Quotas on foeign players has always been a part of soccer leagues. It was a very important restriction on European soccer (where limits were 3 foreign players per team) until the mid-90s, when a European Court of Justice ruling struck down intra-EU quotas. There still are quotas on non-EU players in many (most?) leagues.

There is nothing unusual about the Russian league's quota system at all.

posted by: A.S. on 10.25.06 at 08:39 AM [permalink]

A bit of the history of quotas on foreign players can be found in this intersting World Bank study that relates to Dan's questions:

The absence of free labor mobility in soccer was always an issue of the demand side. That is, there was never any Brazil-based impediment for a Brazilian player to go play in Italy. 9The problem was that the number of foreign players in the largest soccer countries, that is the richest countries in our model where the financial demand for a given skill level is the greatest (Spain, Italy, Germany, England), was subject to a quota. Normally only up to two or three foreign players were allowed to play in a club. Thus, for example, the most powerful European clubs (AC Milan, Inter or Real Madrid) could use only two non-Italian or non-Spanish players in their games. The rules were particularly restrictive for national championship where they remained in effect until the mid-1980’s. For the European club championship (Cup of Champions) the rules began to be relaxed a bit earlier: for example, clubs were allowed to field three instead of two “foreigners.” The quotas thus played a role of limiting the demand for players and impeding (or preventing) free circulation of labor.

The biggest turning point in this area came with the Bosman rule. Bosman was a Belgian player who played for FC Liege and who in 1995 sued his club and the Belgian soccer association, and later the European Soccer Association (UEFA) for preventing his transfer to a French club. He argued that the transfer rules and nationality clauses were not compatible with the Treaty of Rome and free movement of workers. The European court ruled against the right of the club (in this case, FC Liege) of asking for a transfer fee after the contract with the player had expired. 10 The court also ruled against the then existing practice of limiting the number of foreign players and treating players from other European Union countries as foreigners. As mentioned, Italian clubs treated its French or Dutch players differently from its Italian players—a thing which was not allowed in any other economic activity. The European court thus ruled that the difference of treatment of the nationals from other European Union countries was anti-constitutional. This opened the floodgates for a fully free movement of players within the European Union, and buried the two-foreign players rule. The limits on non-European nationals still remained, but were gradually raised to six or more in Italy, and were entirely lifted in England and Spain. Today, for example, London’s Chelsea at times fields as many as nine foreign players (out of 11), a thing absolutely out of the realm of the possible only a decade or so ago.

posted by: A.S. on 10.25.06 at 08:39 AM [permalink]

The comments so far are correct. Putin's concern is an old one and it always comes up when the national team does poorly. It was raised in England again this summer. And, few major teams have done as badly as Russia in recent years.

posted by: paul on 10.25.06 at 08:39 AM [permalink]

An interesting question. It's not entirely obvious to me that an infant industry argument for sports teams is absurd on its face.

If your ultimate goal is to do well in international tournaments, one has to account for the fact that international tournaments require that the national teams be composed of nationals of the country in question. In other words, you must domestically produce good players -- it's not useful to "consume" internationally-produced stars domestically. On the other hand, if your goal is to have a high-quality domestic club league for local consumption, then the usual arguements about protectionism would apply.

Though, I think that the last point is a good one. I don't know what the rules are about international soccer tournaments, but a national soccer team has about 20 members, right? So, you don't need to produce a lot of good players to make a good national team. It seems like as long as relatively minimal number of local guys get to play in the domestic league, it makes sense to expose them to the best competition possible.

posted by: Bill H on 10.25.06 at 08:39 AM [permalink]

Of course there is some nationalism involved, but there is a legitimate underlying concern about the development of new local talent. UEFA (which governs European soccer) is instituting rules requiring a certain number of players be produced from a team's own academy (meaning they most likely would be young local players).

posted by: Ricky Barnhart on 10.25.06 at 08:39 AM [permalink]

It's also worth noting that the countries that have the best reputations for developing young talent are often the ones that can't afford big name foreign players- like Argentina, Brazil, the Netherlands.

posted by: Ricky Barnhart on 10.25.06 at 08:39 AM [permalink]

Sorry to keep clogging the thread, but Bill H has nicely layed out the considerations faced by leagues and national teams. The trick is finding the balance between importing foreign talent that raises the quality of the league and also developing young domestic players so that the national team will be successful.

Yes, a World Cup team has only 23 players, but it requires a much larger player pool for a national team to be successful. It takes 2 years just to qualify for the World Cup and you lose players to injuries, poor form, etc. You also need competition for roster spots to motivate the players, plus you never know which players will turn out to be the real deal by the time the next tournament comes around.

Sometimes I think the focus shouldn't be on how many foreign players are in a league, but instead on how good the foreigners are. Bringing in a foreigner who is better than any domestic player may deny a local youngster a shot, but it also improves all the players on the team and teaches the young ones by example. However, a mediocre foreigner simply takes up a slot that could have been filled by a domestic player in the first place. As with many things, the concern should be quality, not quantity.

posted by: Ricky Barnhart on 10.25.06 at 08:39 AM [permalink]

The only team in the 2006 world cup to have all of its starting 11 playing in its home league was, wait for it, Italy. The Italian success was noticed elsewhere.

posted by: paul on 10.25.06 at 08:39 AM [permalink]

Didn't Saudi Arabia also have an all-home league squad?

posted by: reuben on 10.25.06 at 08:39 AM [permalink]

"The only team in the 2006 world cup to have all of its starting 11 playing in its home league was, wait for it, Italy. The Italian success was noticed elsewhere."

That's not exactly the point though paul. The Serie A is one of the best leagues in the world which attracts players from all over and does not restrict the number of non-EU players like Spain does. Italian players stay at home because they can still command big salaries while remaining in their own culture. Most the English players remain in England as well and they played terrible. Ditto for the Spanish.

posted by: Sergio on 10.25.06 at 08:39 AM [permalink]

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