Money makes the ball go round
Posted on May 24, 2012
It’s ridiculous that the 20 Premier clubs generated £ 23bn of income and they still cannot make ends meet. Although nine made a profit, 11 made losses totalling £458m. Manchester City made the biggest ever loss in the history of football – £197m.
It’s got to stop before the bubble bursts and we are left with dozens of bankrupt clubs. Other countries have had warnings. Take Holland and its clubs. Dutch clubs have slipped from the top strata of European football, although Ajax Amsterdam still has huge cachet. A couple of years ago, Haarlem, the oldest club in the Netherlands, went out of business. At the time, Dutch clubs were making a combined loss of some EUR 90m.
In Holland, the Dutch FA (KNVB) operates a club licensing system that monitors regular financial checks. This system also includes KNVB supervision of clubs’ budgets and this has resulted in something of a turnaround, which should enable Dutch clubs to meet the UEFA Financial Fair Play regulations. Under these regulations, clubs must break even from 2013-14.
The Dutch FA’s system is aimed at ensuring teams do not go to the wall in mid-season and that there is greater transparency and geared to long-term solvency. Clubs have to report on their financial position three times a year. Haarlem, because of their bankruptcy, are not allowed to play professional football but operate at an amateur level at the moment.
The UEFA goal is to ensure clubs do not spend more than their turnover and do not rely on third party financial injections – a la Chelsea, Manchester City and a host of others.
But although UEFA’s objectives are clearly the way ahead, nobody can guarantee that financial fair play will be achieved. Creativity will come to the fore – the type of wealthy businessmen who act as benefactors to the big clubs are adept at finding loopholes.
In Germany, there are stark contrasts between the finances of Bundesliga clubs and England’s Premier outfits. Bayern Munich, who account for a quarter of Bundesliga spending, make a healthy profit every year. In 2010-11, Bayern’s commercial income was the highest in the world. And their season tickets are extraordinarily cheap – one fifth of holders pay just EUR 120 a year due to cross-subsidisation of the club’s base of corporate sponsors. Bayern, unlike most English clubs, welcome Financial Fair Play with open arms, and UEFA’s suits consider them to be a model club.
You can’t help feeling that in England, not enough is done to control the finances of football clubs and the Premier League is being played on a volcano of debt. It really is the zeitgeist.