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More the latter. Where sport (particularly football) is concerned the national psyche is over-sentimental and predicated around not failing. It harks back either to a win so long ago it may as well have been a different sport, or losing but A: being hard done by (hand of God, Lampard’s disallowed goal, etc.) or B: in some horrendously painful way (missed penalties from poorly trained players who shouldn’t be taking penalties).
Our successes, 1966 aside, are trivial things like the 5-1 win over Germany. Rather than view football in an objective fashion the tabloid press fixate on these failures to the extent that young footballers grow up with them hanging over them. It’s clearly not just this, the FA are a bit of a joke and we have also made many, many shit managerial appointments, but I think it plays a part. Southgate has done a pretty good job and the last World Cup showed plenty of signs of improvement. It feels like parts of the media are starting to cast a more objective eye over the national team’s performances but English football still seems way behind Rugby and Cricket for how it’s run at a national level. IMHO, you know...
You're suggesting the national mood affects the ability of players to kick a ball? Or the power structures around the game are affected by the nationalism? I'd go with the latter, but I'm not sure how that would allow the focus to remain on "beating our rivals" rather than "winning shit".