beyondbrics

Life often imitates art, and more prosaically in Turkey, football imitates the economy.

That’s the verdict of Renaissance Capital, who in an end-of-year sporting note, draws out the parallels between Turkey’s macroeconomic woes and its national game.

According to RenCap: “Turkey’s declining success in football can be mapped to economics”.

Its argument? That the country’s reliance on foreign financing for growth is also matched in the way its major football teams operate.

Top Turkish clubs such as Galatasaray, Fenerbahce and Besiktas “import almost all their best players from abroad, and export one or two good players every year” incurring high levels of debt to attract word-renowned stars in the process.

These famous clubs – the equivalent of ‘companies’ in the model– have eschewed competitiveness in the drive for profit, says RenCap. Buying expensive but old has-beens such as ex-Real Madrid stars Roberto Carlos and Guti is great for shirt-sales and merchandising, but doesn’t add much in terms of quality. The result – a bit like the fate of the average-sized Turkish company – is complacency and uncompetitiveness.

Galatasaray, Fenerbahce and Besiktas, who have dominated Turkish football for three decades, have failed to win the Turkish league or qualify for the UEFA Champions League for two consecutive seasons now.

RenCap draws some prescient comparisons, such as the fact that Turkey’s footballing potential, like its economic growth, is “shifting from Istanbul to Eastern Turkey”. Two of Turkey’s newest but more successful teams, BursaSpor and TrabzonSpor, both come from industrial Anatolia.

More speciously, it also notes that the towns they hail from run trade surpluses whilst the traditional big three clubs are all based in Istanbul – the source of 60 per cent of Turkey’s total trade deficit. A coincidence? Probably.

The comparison shouldn’t be taken entirely at face value. For all the superficial likenesses, the two models are hardly analogous.

The Turkish economy may stand out amongst many emerging markets given its heavy reliance on foreign capital, unorthodox monetary policy and widening current account deficit, but Turkish football teams are hardly the exception to the rule when it comes to other domestic leagues. There are countless clubs across Europe – big and small – that are run on almost entirely the same model of high indebtedness (Manchester United), and importing rather than exporting talented players (Russia’s Anzhi Makahachkala being a case in point) and not always to the detriment of competitiveness.

Turkey’s three established clubs are also far less exposed to foreign money as they all entirely fan-owned. Unlike Paris St. Germain, Chelsea, and Manchester City, they are not bankrolled by foreign billionaires.

And whereas the Turkish economy and its businesses are heavily exposed to a drying up in global liquidity, the outlook for most European football clubs seems far less bleak. Despite the financial crisis and looming global recession, wage bills, transfer fees, and advertising revenue for football clubs seem more and more detached from the real economy.

Turkish companies face far greater challenges than the country’s football clubs. “Without an increase in competitiveness Turkey is trapped with manic depressive success,” says RenCap, and the implication of the note is clear. A reliance on robust domestic demand is not enough. Break neck growth of  8 per cent of GDP may prove very short-lived if businesses remain globally uncompetitive and if Turkey fails to take a greater stake in world export markets.

Related Reading:
12 for 2012: Turkey’s tightrope, beyondbrics
Turkey’s central bank: in a bind, beyondbrics
Turkey: “unstoppable” for long? beyondbrics
Turkey’s unorthodox orthodoxy, beyondbrics
Special report: Turkey, FT