Immigration Lessons from English Soccer
by MICHAEL MORITZ
Reprinted from Wall Street Journal, April 4, 2011:
Here in Silicon Valley, immigrants and first-generation Americans provide the drive and hunger for almost every company worth its salt. But these days protectionism and xenophobia are choking off the supply of H1-B visas for the best and brightest foreigners. Sadly, we no longer lay out the welcome mat for people with names like Grove, Brin, Yang, Bechtolsheim, Huang, Nguyen, Omidyar and Wadhwani.
Some say that the effect of immigrants on Silicon Valley is exaggerated and that venture capitalists should provide more opportunities for homegrown Californians. But the state’s xenophobes and protectionists need only take a look at the recent history of the English Premier League to see the staggering and transformative effect that immigrants can have on a market.
Twenty years ago, English professional soccer was in a shambles. Most of the stadiums had just a few seats. Stabbings and fights on the terraces were part of the entertainment. In 1989, 96 people were trampled to death during one tragic game. Almost all the players in the league had been born in England—many within sight of the stadiums in which they played. Clubs in Italy, Spain, Brazil and Argentina provided a more scintillating version of the sport. Revenues from television coverage were small. In less than two decades all that has changed, and today the best soccer in the world is played in England. The reason: immigrants.
The English Premier League is a testament to what happens when immigration barriers are broken down and a market attracts the most talented people from around the world.
In 1992, the year of its formation, there were only 11 soccer players in the English Premier League who had not been born in the United Kingdom or Ireland. Now that number is more than 250—in a league where the total number of players in the overall starting lineup is 220. In 1999, Chelsea became the first team to field a Premier League starting lineup composed entirely of foreign-born players.
The main reason behind this dramatic change was a labor ruling in 1995 by the European Court of Justice. The court ruled that arcane rules restricting the free movement of soccer players were in breach of the law of the European Union. When the rules were lifted, the English Premier League was flooded with the best players in the world.
The economic result of the influx of talented immigrants has been profound. Today the soccer on view in the English Premier League is far and away the most attractive in the world. The domestic market has expanded—hooliganism is in decline, and women and children flock to stadiums on Saturdays. Meanwhile, the export market is more lucrative than ever. More than half a billion people in some 200 countries follow the exploits of Chelsea, Manchester United, Aston Villa, Blackpool and Tottenham Hotspur. A preseason tour of Asia has become de rigueur for the best clubs.
The league has also drawn foreign capital with club owners from the United States, India, Russia and the Middle East. Only three sports leagues—the NFL, MLB and NBA—top the English Premier League in revenues. But these leagues, it should be noted, compete in a domestic market six-times larger than England’s.
In 1986, a two-year TV agreement for the top flight of English soccer was sold for 6.3 million pounds, the equivalent of about $10 million today. In 2007, a set of three-year rights was sold for 1.7 billion pounds, or $2.7 billion. It’s little wonder that last year the English Premier League won the Queen’s award for enterprise in international trade.
Players like Chelsea’s Didier Drogba (Ivory Coast), Arsenal’s Cesc Fabregas (Spain), and Manchester United’s Nemanja Vidic (Serbia) may not possess the technical chops to start technology companies in Silicon Valley. But they answered the same clarion call that rang out to the founders and families that once spawned Intel, eBay, Google, Nvidia, Yahoo and hundreds of other companies formed between San Jose and San Francisco. These soccer players are living proof that the best people score the most goals.
Turning away talent—wherever it’s from—only weakens the market and brings down everyone’s game.
Mr. Moritz is a member of Sequoia Capital.