It's often forgotten how recently the transformation of London happened. When I returned to the city from Boston ten years ago, I was shocked. Tired people in grey clothes waited on packed platforms for 1950s' Tube trains. Coffee was an exotic drink that barely existed, like ambrosia. Having a meal outside was forbidden. The city centre was uninhabited, and closed at 11pm anyway. There was a sense of permanent decline.

And the football clubs were terrible. It would be too cruel here to mention Tottenham, while only a few sports historians still remembered that there was a professional club in Fulham. Chelsea then consisted, as a friend of mine described it, of “eight bad players, two old players (Mark Hughes and Ruud Gullit) and a nutter”.

Arsenal, as the club's fan-memoirist Nick Hornby had recently written, was not a team anyone watched for fun. The crowd spent matches appealing en masse for offside, and shouting at its own defenders, “Get rid of it!” Nobody then imagined that this weekend Arsenal would be facing Manchester United as perhaps the world's most thrilling football team. For the first time ever, London is now the footballing capital of England.

English professional football had started out as a northern game like rugby league. The champions in the Victorian era came from industrial towns like Preston, Sheffield or Sunderland, then still among the richest places on earth. Later the league title migrated to larger northern cities. Only in 1931 did a southern club - Arsenal - first win it. Even after that, though, the prize generally went north.

Then, in the 1990s, London transformed. A few months after my return, trains began running to Paris and Brussels. London became a European city, detached from the rest of Britain. Today it offers a Technicolour vista of raucous young people from all over the world dressed in weird youth-culture outfits chucking cash at each other. The Tube trains are no longer antique curios. The place smells of money.

“The country is being split in half,” diagnoses Daniel Dorling, a geography professor at Sheffield University. In the provinces outside London, Dorling sees “city islands that appear to be slowly sinking demographically, socially and economically. The UK is looking more and more like a city-state.”

London's transformation gave it footballing dominance. Over the last decade, while the city became fully international, so did the market in footballers. The best ones can now work wherever they want. Many of them - like many investment bankers and actors - choose London. They favour Hampstead, Fulham and Chelsea Harbour.

There is in London all that life can afford a footballer. When the MORI polling agency asked people to name the ten best things about the city, the thing most often cited was “shopping” - and no tribe of humans, not even footballers' wives, is as shopaholic as footballers.

Black and foreign players also like living in a city where 95 per cent of inhabitants agree with the statement, “It is a good thing that Britain is a multicultural society.” Arsenal's French forward, Thierry Henry, says: “I love this open, cosmopolitan city. Whatever your race, you never feel people's gaze on you.” In a virtuous cycle, foreigners attract foreigners. Tottenham's manager, the Frenchman Jacques Santini, wanted to come to London because his son Sebastien already lived there - a classic example of chain migration.

Equally to the point, a footballer can earn a living in London. The capital's clubs are coining it. Firstly, their customers can afford to pay the highest ticket prices in global football. Arsenal charge 800 pounds for their cheapest season ticket, more than four times what fans pay in Barcelona, and about 12 times the price at the European champions Porto. So many Londoners are happy to fork this out that Arsenal are building a bigger stadium.

No other European city has as many investors. When the wealthiest man in Britain, Roman Abramovich, decided to buy a football club, it was inevitable that he would end up owning Chelsea rather than, say, Blackburn. After all, Abramovich lives on Eaton Square. Similarly, Muhammed Al Fayed who lives on Park Lane, bought Fulham. Even Queens Park Rangers, a strictly neighbourhood club, has investors from Italy and Monaco. Outside London, only Manchester United and Liverpool attract foreign money.

Arsenal and Chelsea finished last season first and second in the Premiership. Never before had London teams occupied the top two places in English football. Now the clubs are vying to become the first London winner of the Champions League. When that happens, the city will control every sector of British life.

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