That quiet day spent by the lakeside in Geneva sowed the seeds of considerable future unhappiness. No, it isn’t the first line of my debut novel. It was UEFA this week releasing the numbers from their annual audit of the state of financial play amongst the fifty odd nations which make up its membership. Europe’s governing body was also using the time to explain how they will enforce the new ‘financial fair play’ rules (FFP) when they come fully into effect in just over two years time.
The audit numbers are sobering enough, though few will be surprised, especially here in England, to discover massive debt at the heart of the game. Amongst the top league clubs in Europe (some 665 of them), the net losses in 2010 equalled £1.3 billion – up more than a third on the previous year. Over half of all the clubs were in the red and a third of the total were spending 120% of their entire income. Total debt has reached over £7 billion.
When it comes to the highest revenue-raising clubs in Europe (those with an income of over £45 million a year; mostly in the west of course), three quarters of them were in that group, spending twelve quid for every ten they earned. Mr. Micawber would be going insane. UEFA ain’t too happy about it either. And who can blame them?
The individual Leagues themselves are deeply in debt too. Of the top twenty Leagues in Europe, just two of them broke even. And it doesn’t stop there. UEFA says that as you descend the football pyramid in any given nation, the likelihood of insolvencies and bankruptcies increase even more.
And yet more money is pouring into football every year. The UEFA audit for 2010 also revealed that the industry as a whole grew by 6.6%; that’s an extra £700 million more in revenue than the previous year. It clearly doesn’t hang around. In that famous phrase, ‘the prune juice effect’, the money goes out faster than it comes in – and there’s no prize for guessing where it goes. It makes fairly ordinary left-backs in middle ranking clubs into millionaires.
Like so much about the so-called ‘business’ of football, it just doesn’t make any sense in the ordinary world of commerce. Here we are, on the banks of Lake Geneva, at the heart of a Europe whose economy is rapidly going to hell in a handcart; whose richer nations are grateful if they can squeeze a growth rate of half a percent, and, while Brussels burns (as it were), football is fiddling around squandering additional revenues while basking in the kind of growth rates that only the BRIC countries enjoy.
You certainly can’t blame UEFA for having a go at sobering up the mad emperors of football before the whole place burns down. How long can it go on like this? Won’t even football have to touch reality at some point?
Whether the FFP regulations will do the trick – and shrink spending (principally on players’ wages) to the point where eventually clubs have to more or less break even is another matter. And I’m not so sure how ‘fair’ it really is either.
The problem is that the eminently sensible ‘break even’ aim – enforced by significant sanctions – locks everything into the current status quo of clubs. If you can only spend what you earn (though UEFA will exclude clubs’ investments in infrastructure; academies and such), then only those with the greatest turnovers now will be able to afford the best players… for ever.
Of course, you might argue, ‘twas ever thus’; the big clubs who make the most money have almost always been at the top of the pecking order. What’s new? But in football, at least until now, a ‘miracle’ could always happen to overturn the ‘natural order’. A boyhood fan who became a billionaire could buy his club and pump enough dosh in to challenge the greatest (as at Blackburn Rovers).
A strange, incredibly rich foreigner could buy your club for reasons unknown, and then fall in love with it; lavishing huge amounts of money on the team to great success, and writing off all the debt by swapping it for equity in the club (as at Chelsea).
A distant kingdom with royalty of unimaginable wealth picks your club out of the football ditch it’s been trapped in for generations, and pumps half a billion quid into the team to raise your club to heights never previously witnessed. And they, too, write off all the debt into shares (as at Man City).
It’s the dream of millions of unrequited fans around the world. But we’ve got to wake up before it becomes a nightmare.
THIS WEEK’S ARTICLES:
KEIR RADNEDGE: A FRESH APPRAISAL
GERRY COX: NO FIX REQUIRED
Dr Rogan Taylor is the Director of the Football Industry Group at the University of Liverpool. He is also a writer and broadcaster, with five football books and numerous radio and TV contributions. He has acted as a special adviser to The FA, The Premier League and Premier League Clubs.
The views of our regular columnists are independent, and as such do not represent those of Leaders in Football.
