Monday, August 19, 2013

Arsenal About to Pay the Price for Their Miserliness

Today, Arsenal had a 12 million pound for Newcastle midfielder Yohan Cabaye rejected as "derisory" (see here). No doubt, Cabaye's value has skyrocketed since Newcastle bought him for 4.3 million pounds just two years ago thanks to his performances on the pitch. But Newcastle, like all other clubs, know that Arsenal are in crisis, need players, and have lots of cash on hand to spend. There is every reason to expect that selling clubs will extract maximum rents from a highly motivated buyer. If Wenger thought he could pick up some bargains before the close of the transfer window, he will be proved sorely mistaken. Having passed on Jovetic, Higuain and others earlier this summer apparently because the price grew too high, Wenger will end up paying even more for lesser talents.

For a guy with a Master's degree in Economics, Wenger is surprisingly ignorant of the ways in which markets actually function. Or, perhaps he believes in his supreme arrogance, and all evidence to the contrary notwithstanding, that he can beat the market.

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