Is The Soccer Market Bubble Ready To Burst?

Neymar in Paris on Aug. 4
Neymar in Paris on Aug. 4
David Barroux


PARIS — Can a leather ball turn into a bubble? After the extravagant sums of money spent by French soccer team Paris Saint-German to sign Brazilian star Neymar Jr, as well as other splurges by British, Spanish and Italian teams this summer, there's no avoiding the question: Has soccer become a speculative bubble?

The figures involved can make your head spin. For the first time, top-tier teams in Europe's five biggest leagues have spent more than 5 billion euros ($6 billion) on players. The sum is colossal, and it has more than doubled in just five years. Such inflation, in the business world, is often the sign of a bubble.

When demand exceeds the offer, prices tend to go up. This is true for tulips, stocks, real estate, and soccer players. And if, on top of it, the market is being animated by buyers with deep pockets willing to spend more and more, the rise can quickly begin to look like an inflationary spiral. This is, perhaps, what is happening to soccer.

The inflation of TV rights ... might make soccer fans reject the sport.

The arrival of billionaires and countries ready to invest hundreds of millions of dollars to force their team's way into the soccer elite has led to a kind of one-upmanship that resembles an arms race. They must spend more and more to try and reduce the gap with established giants.

But beyond the hunger displayed by new investors from the Arab world, Russia and China, the price of soccer players is soaring first and foremost because the sport is attracting more money from an increasing number of broadcasters and telecom carriers looking for TV rights for the games. If billionaires continue to invest, and if the prices of broadcasting rights continue to go up, the appropriate term will be "catching up".

Like U.S. sports, which bring in huge turnovers, European soccer would thus be on the path to becoming a big show worth billions. But there could be glitches. Established big names could try and throw more wrenches in the gears of soccer's new rulers so as to slow down their rise. For instance, they could use financial fair play rules that are aimed at preserving the established order. Wealthy investors could realize that European soccer is far less profitable than American football and grow weary of splashing out.

But more importantly, in the long run, the inflation of TV rights, which are scattered over too many subscription-based broadcasters, might make soccer fans reject the sport. It would have become too expensive and therefore inaccessible to them. The skyrocketing prices for rights could therefore, one day, fall again.

Unlike other bubbles, the consequences of one bursting here wouldn't necessarily be catastrophic. It would affect billionaires, but not small savers. More importantly, soccer would still be able to captivate its audience, even if it was a few hundred million dollars short.

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In Argentina, A Visit To World's Highest Solar Energy Park

With loans and solar panels from China, the massive solar park has been opened a year and is already powering the surrounding areas. Now the Chinese supplier is pushing for an expansion.

960,000 solar panels have been installed at the Cauchari park

Silvia Naishtat

CAUCHARI — Driving across the border with Chile into the northwest Argentine department of Susques, you may spot what looks like a black mass in the distance. Arriving at a 4,000-meter altitude in the municipality of Cauchari, what comes into view instead is an assembly of 960,000 solar panels. It is the world's highest photovoltaic (PV) park, which is also the second biggest solar energy facility in Latin America, after Mexico's Aguascalientes plant.

Spread over 800 hectares in an arid landscape, the Cauchari park has been operating for a year, and has so far turned sunshine into 315 megawatts of electricity, enough to power the local provincial capital of Jujuy through the national grid.

It has also generated some $50 million for the province, which Governor Gerardo Morales has allocated to building 239 schools.

Abundant sunshine, low temperatures

The physicist Martín Albornoz says Cauchari, which means "link to the sun," is exposed to the best solar radiation anywhere. The area has 260 days of sunshine, with no smog and relatively low temperatures, which helps keep the panels in optimal conditions.

Its construction began with a loan of more than $331 million from China's Eximbank, which allowed the purchase of panels made in Shanghai. They arrived in Buenos Aires in 2,500 containers and were later trucked a considerable distance to the site in Cauchari . This was a titanic project that required 1,200 builders and 10-ton cranes, but will save some 780,000 tons of CO2 emissions a year.

It is now run by 60 technicians. Its panels, with a 25-year guarantee, follow the sun's path and are cleaned twice a year. The plant is expected to have a service life of 40 years. Its choice of location was based on power lines traced in the 1990s to export power to Chile, now fed by the park.

Chinese engineers working in an office at the Cauchari park


Chinese want to expand

The plant belongs to the public-sector firm Jemse (Jujuy Energía y Minería), created in 2011 by the province's then governor Eduardo Fellner. Jemse's president, Felipe Albornoz, says that once Chinese credits are repaid in 20 years, Cauchari will earn the province $600 million.

The Argentine Energy ministry must now decide on the park's proposed expansion. The Chinese would pay in $200 million, which will help install 400,000 additional panels and generate enough power for the entire province of Jujuy.

The park's CEO, Guillermo Hoerth, observes that state policies are key to turning Jujuy into a green province. "We must change the production model. The world is rapidly cutting fossil fuel emissions. This is a great opportunity," Hoerth says.

The province's energy chief, Mario Pizarro, says in turn that Susques and three other provincial districts are already self-sufficient with clean energy, and three other districts would soon follow.

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