Tag Archive | economics

Mind the Gap

Map of UK distorted to show population density.

Map of UK distorted to show population density.

I’ve found the recent debates over Scottish devolution interesting as I think it demonstrates something more fundamental than the need for Scottish independence. There is too much focus on the success of London as a global city to the detriment of the the rest of the country, and we should consider continuing political reforms to rebalance this.

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Coffee in Paris

Next time there’s an offer on Eurostar perhaps… Phillip describes having to choose between scathing looks from Parisians when asking for a coffee to go, or scathing looks from Parisians when he patronises a chain coffee house. The economics of coffee featured in Tim Harford’s book “The Undercover Economist“, which I read recently. A real eye opener and very accessible!

He uses the price of a cup of coffee to illustrate some significant economic, psychological and marketing principles. E.g. whereas in London you have the option of a premium coffee (at a price of your choosing) from a high street chain, there are also ample opportunities for finding a cheaper coffee close by, if you’re prepared to spend a few minutes searching or know where to look.

This illustrates David Ricardo’s Law of Rent, amongst other economic principles. Basically the rent is higher on the high street as the “land” is more productive, i.e. there are more people passing and more opportunities for sales. But because the rent is high, the price of coffee is high. On the other hand, people rushing down the high street are less price sensitive and therefore more willing to pay the higher price. Off the high street (the marginal “land”) the customers are more likely to be regulars, and more price sensitive. Therefore your coffee will be cheaper.

What seems strange about Phillip’s experience is that culturally the Parisians seem to be passionate about “cafe culture”, that they’re willing to forgo the additional profit that customers like Phillip would bring. I guess the loss of prestige (and therefore regular custom) is just not acceptable at the moment, but I would have thought it’ll happen one day, driven by the two extremities.

There are other revelations and illustrations (if you’re not involved in marketing or economics) that make the book great fun. See also Freakonomics and the Freakonomics blog.

(this is also my first go at a trackback, hope it works!)

Ebbsfleet update

I’ve been remiss in keeping up with reporting the MyFC/Ebbsfleet story, but to be honest, as mentioned on Fan Power, there hasn’t been much to report on. The press have either got bored of the story or been slightly more positive of the concept. The website functionality continues to develop, and Due Diligence continues with MyFC and Ebsbfleet, though it seems reasonably certain that this will go ahead.

I would have liked MyFC to be actively looking at other clubs, but this would be a distraction for those involved in the negotiations, and having visited the ground a couple of weeks ago, I can understand why they Ebbsfleet are such a good choice.

The ground is small, the pitch is tiny (but immaculate) and feels almost like five-a-side, especially when you are very close to the action. The people were friendly, so I’d encourage members to get down there or to away games if possible. The terraces are in need of upgrading – even a lick of paint on the roof of the stands would make a bit of difference, and the toilets near the main entrance are in real need. In short, it could have easily been 1947.

Stonebridge Road, Plough StandOne of the first things I heard when walking on to the terrace at Ebbsfleet was “So where’s these 20,000 fans then?”. I must admit, I was disappointed that there weren’t more, but some have calculated that the expected crowd should have been about 830 – the bar takings were certainly higher than normal!

The more pertinent question is, where were they last week? Why are the locals attending Gillingham or Charlton or supporting other teams rather than Ebbsfleet?

I can understand how a club gets into this kind of position. Over the decades, as football has become more expensive and dominated by big clubs, it’s become harder for the lower league teams to remain competitive. 1055 was probably a reasonable attendance in 1947, and isn’t bad at that level in 2007. The problem is that this doesn’t bring enough money to pay professional wages, and keep the facilities up to date.

This brings about a spiral of decline, especially with increased geographic mobility and better transport links. Whereas 50 years ago most people would never move away from their home town, this has become much more prevalent. People that move in may already have ties to their home local club, or more than likely to a big club. So unless the club can remain attractive and competitive, the spiral will continue. Occasionally a wealthy businessman props up the finances and if the locals respond, the spiral can be reversed, but this is infrequent and unsustainable.

There also needs to be more financial support from the FA – there is so much money at the top but it’s not trickling down enough to sustain lower league clubs. Even further up the league from Ebbsfleet, there seems to be a constant crisis of debt and receivership for many clubs. In recent weeks Coventry City, FA Cup winners only 20 years ago, have been facing administration after debt problems.

There’s some great ideas at Ebbsfleet: the PDF flyer for the next match that can be printed out and placed in shop windows, the Ladies and Youth teams. There’s just not been enough people to keep things going, and enough cash to keep things up to date.

MyFootball club can bring an injection of cash to sort out the debt issues, player contracts and maintenance, but also brings the skills and time of 24,000 members. Ebbsfleet can harness this pool of talent in a way that no club has ever been able to. These aren’t just 24,000 web geeks, these are people with knowledge, skills and experience. There are lawyers, accountants, IT technicians, builders, graphic designers, architects, plumbers and more. Some may actively give their time, others just advice on club issues that fall into their area of expertise. The challenge for MyFootballClub is to direct this expertise for the good of the club.

If we can get the club stable and growing, then when the Ebbsfleet Valley and Northfleet developments bring more people into the area, you’ll get 20,000 people attending every week, no worries.