The Treasury may obsess over inflation, but the real price bubble is happening in Qatar. UK trade negotiators have demanded an investigation into Fifa's World Cup ticket pricing, accusing football's governing body of 'price gouging' that would make a London estate agent blush.
Let's be clear about what we are dealing with here. This is not a matter of supply and demand finding an equilibrium in a free market. This is a monopoly supplier exploiting its position to extract maximum rents from consumers. And the UK government, usually so keen on deregulation and market forces, has suddenly discovered a taste for intervention when the victims are football fans.
The numbers are staggering. A ticket for the final is reportedly trading at over £7,000 on the secondary market. That is a yield that would make a distressed debt fund manager weep with envy. But here is where the hypocrisy comes in. The very same government that lectures us about fiscal responsibility and the need to balance the books is now willing to throw its weight behind a Fifa investigation. Why? Because football is a populist issue. It is the sport of the people, and the people are angry.
Yet the economic logic is straightforward. Fifa sets the ticket prices. The World Cup is a prestige event with inelastic demand. If the price is too high, the market will clear at a lower price. But the government is concerned about fairness. Fairness is a word that does not appear in the lexicon of efficient markets. It is a political construct.
The real story here is not about football. It is about the creeping expansion of government intervention into areas once deemed off-limits. If the state can investigate Fifa on pricing grounds, what next? Will we see a parliamentary inquiry into the price of Premier League season tickets? Or a cap on the cost of a pint at the stadium?
Of course, the government will argue that Fifa is a monopolist and that the market is not competitive. But this is the same government that has spent the last decade promoting free trade and attacking monopolies in the digital sector. The inconsistency is glaring.
Let's examine the capital flows. The World Cup generates billions of pounds in revenue for Fifa. That money flows into Switzerland, to the pockets of administrators and sponsors. Meanwhile, UK fans are left out of pocket. The government is sending a signal that it will defend the consumer, but at what cost to the taxpayer?
An investigation will require resources. It will require time. And it will likely achieve nothing. Fifa is a notoriously opaque organisation. It has weathered far bigger scandals than a few thousand pricey tickets.
The real losers are the fans. They will pay higher prices regardless of the investigation. The secondary market will still thrive. The only difference is that the government has managed to distract them with a show of concern while doing nothing to address the underlying issue: the lack of affordable tickets.
Inflation in the economy is running hot. Gilt yields are rising. And the government is wasting time on a Fifa probe. This is a misallocation of capital resources, both financial and political. The bottom line is this: the government should focus on the fundamentals of the economy, not on the price of a football ticket.
If they want to tackle 'gouging', maybe they should start with the energy companies or the housing market. But that would be politically inconvenient. So instead, we get a circus of moral outrage over a football match.
This is what happens when politicians run out of serious things to do. They pick a fight with Fifa. The market will not care. The fans will still pay. And the government will move on to the next populist cause.
For now, I recommend shorting any hope of meaningful reform. The ticketing market, like the bond market, tends to correct itself. But don't expect the government to understand that.
Alastair Thorne, Chief Financial Editor.
