BB4404 Economics For Business and Some Trade Partnerships

Answer:

Report 1 from Sky sports

Title: AC Milan takeover complete after Chinese investors buy Serie A club

Channel: Sky Sports

Reporter: Tommaso Fiore

Time: 13th April 2017 

Report 2 from the Guardian 

Title: Brexit Britain is suddenly debating trade – but it's the wrong talking point

Newspaper: The Guardian

Reporter: Larry Elliott

Time: Sunday 19 March 2017

Summary of report 1

The story is about the takeover of AC Milan football club by Chinese investors Sino Groupe Sports. The speculation about the sale of the club has been rife and on this day, the two parties signed papers to agree on the sale of the club. The sale of AC Milan meant the end of Silvio Berlusconi’s reign at the club after over 31 years. Representatives from both parties were meeting to finalize on the signing of the papers that would ensure the club ownership would transfer to the Chinese investors. The deal to sell the club was worth 630 Million Euros spanning several months before the deal was eventually agreed on.

Summary of report 2

The article is about the effects that the Brexit decision to leave the European Union will have to trade between Great Britain and Europe. The decision means that the European Union will have to renegotiate trade within two years because it is no longer a part of the EU. The discussions on the trade agreements will have to follow ion the framework of importation and exportation. Furthermore, any negotiations will have to follow on several procedures such as customs, passport controls and requirements and different regulations i.e. safety standards, health concerns and environmental management.

Analysis of report 1

The takeovers of football clubs are common in the world today because of many reasons. Some of the reasons that may make a club to be purchased or sold include poor finances, poor management resulting in poor results and losses accrued by the club through relegation. In addition, takeovers can take place because the owners of the club want to venture into another business altogether. In the case of AC Milan, it is not clear why the club was sold but speculation suggests that it might be due to the poor results that have been achieved by the club over the last few years before the golden years. During the 31-year reign of Silvio Berlusconi as the President of the club, the club was trophy-laden by winning a total of 29 trophies (Fiore, 2017). Of the twenty-nine trophies, five were the prestigious Champions League trophies. However, the past 10 years have proven fruitless for the club as they have failed to win any major club competition. This has made the club make losses as well as making the fans become disappointed with the club. This has resulted in low turnouts of fans to the stadium, therefore, generating lower ticket sales. The lower turnout’s men that the club cannot compete with the elite clubs in the transfer market as well as attract top players into the club. 

AC Milan players celebrating after scoring a goal. Source 

The sale of the club to the Chinese investors means that the club can return to the glory days if they invest financially in the club (Fiore, 2017). It will make the fans to start loving their club again and this will improve the overall morale of the team leading to better results. Any club that has better results and an opportunity to play in the Champions league will attract the various sponsors that are ready to invest in the team because they will be assured of a win-win situation. Furthermore, the sale of the club at 630 Million Euros is seen as low because of the things the club has achieved over the years. However, the price can be as a result of the bad results and financial position that the club is in currently. If the owners invest in the club and take the right decisions in the management of the club, then AC Milan is assured of soaring to greater heights both in the domestic league and the continental competitions. This will result in more fans rallying behind their club for better results. 

Currently, the companies in Britain are able to trade with the other members of the European Union with tariff free and quota free basis. However, due to the decision to leave the EU, some trade partnerships between countries in the EU and Britain will start imposing taxes and tariffs. For example, Brussels can decide to seek for a tariff of 5% on all vehicles that it exports to Britain. However, the UK can also negotiate to impose tariffs on the cars that it exports such as BMW. This will make the citizens of the two countries, and other countries suffer (Elliott, 2017). Another critical issue after the Brexit decision is whether trade agreements between the UK and Other European countries will be with specific countries; on a country to country basis. This will require a lot of work in negotiating any deal with all the other remaining 27 countries.

The sectors of the government that need new trade deals have to be determined for the UK government to enter into trade deals with the other countries. The bilateral trade deals that are required to sustain the UK will require a high number of experts that are not currently in the government. It will be difficult especially as there is a short time to deal with all the negotiations. Furthermore, the financial services industry will be affected by the Brexit decision. The financial and professional services industry contributes to approximately 12% of the GDP in the UK. The deal means that it will lose the EU passports that require the financial services sector offer advice out of the UK (Elliott, 2017). In addition, trade between the UK and the United States will be affected especially the controversial TTIP deal between the US and the EU  

The UK negotiators will face many bodies in negotiating for the trade deals such as the European Council, the individual European member states, and the European commission. However, it will be difficult for the UK to pull off all the trade deals within two years. If a deal would not have been accepted by the UK, the EU, and the individual countries after two years, then the status quo will remain. There will be free movement of goods, capital and people between the UK and other European countries to the annoyance of those that voted to leave the EU.  

In conclusion, the sale of football clubs happens due to various reasons. This was the case for AC Milan football club that was sold due to poor results and poor management. The Sino-Groupe Sports, the new owners of AC Milan have a chance of transforming the club into a football powerhouse if they make the right decisions regarding the management of the club. However, for this to happen, everybody who loves the club should get behind the new owners to ensure that they help the players and the management in bringing better results to the club. 

The decision of the people of the United Kingdom to leave the EU might have made some people happy especially those that voted for it. However, it can have various implications on the economy of the UK as well as trade with other EU countries. The negotiations of trade deals have to be renegotiated within two years, and this will prove difficult to achieve. If it will not be achieved, then some people that voted to leave the EU would not be pleased as the status quo will be maintained. 

Reference list

Elliott, L. (2017). Brexit Britain is suddenly debating trade – but it's the wrong talking point | Larry Elliott. [online] the Guardian. Available at: https://www.theguardian.com/business/economics-blog/2017/mar/19/brexit-britain-talking-trade-deal-eu-wrong-talking-point [Accessed 18 Apr. 2017].

Fiore, T. (2017). AC Milan takeover complete after Chinese investors buy Serie A club. [online] Sky Sports. Available at: https://www.skysports.com/football/news/11863/10835510/ac-milan-takeover-complete-after-chinese-investors-buy-serie-a-club [Accessed 24 Apr. 2017].