Thursday, 9th October 2008
Too Little Too Late
Amongst the various interests I have, following international news remains one of my favourites. Unfortunately only bad news comes out of the various channels. Currently the worst news is in the financial market. I would have thought that sport would not to be affected, but it seems I am wrong.
I must admit that I never reflected on the relationship between excessive spending in top flight football around Europe and the potential risks of a financial collapse, until I came across a story on an international news site. In a nutshell ,English FA chairman Lord Triesman was quoted as saying that English football has amassed debts of around £3 billion at all levels of the game and a top club could fold in the current financial climate.
I believe that this case is not unique and exclusive to the UK. However this story provides food for thought.
Sepp Blatter, when addressing the Members of the European Parliament outlined the need for greater controls over who is permitted to invest in the game. I believe that this warning came a bit too late and that trying to control things now is a case of remedial action as no preventive stances were taken.
Coming back to the story in the UK, a third of the overall debt - £950m – is owed by England's top four clubs - Manchester United, Liverpool, Chelsea and Arsenal - and that on average the wage bills are climbing by 12 percent a year.
The FA chairman stressed that the ownership of clubs was no longer as transparent as it should be, with owners moving the debt on through the financial markets."The owners break the debt up as a matter of policy into small packages. They mix it with other debts; some of it fine some of it toxic, and sell it on."
This is no news for those who follow Italian football. Parma and Lazio suffered a similar fate due to the debt mix when the Tanzi’s and Cragnotti’s owned the clubs and made them part of their business empire. When Parmalat and Cirio went into liquidation, the teams suffered.
English football has managed to attract a lot of investment over the years. As Sepp Blatter said "English football is attractive to investors - it is a phenomenon of the era. The economic power of football is immense." However he called EU lawmakers to work with world football's governing body to draw up plans that would make it tougher for unscrupulous money men to make their profits and run.
I am afraid this is too little and too late. One hopes that we’ll be still able to enjoy the game.
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Comments
There are very few clubs in the world who record a profit in the end of the year.
There is always an "investor" to save the club from being "dissolved".
I think these investors are the people who help football carry on and "stay alive".
Take Malta for example if a club has a good "investor",his return is trophies.
History has proven that on our football crazy island no "inevestor" has ever gained from his investment towards the club,he just pumps the money in and hopes the club win a trophy.
Cannot see how a club or investor can possible make profits when the costs for the running of the clubs and paying for the players wages has reached a "ridicilous" level in Europe.
This is not a current problem but has been an ongoing problem for quite a number of years.
just wanted to comment on the quote David Taylor Said on the 'Debt-Laden' clubs he said :-
"Uefa general secretary David Taylor has warned that football clubs with heavy debts could be excluded from future European competitions."
if this happens he could just ban all the top clubs in europe because it cannot be that only in england there is a debt that high for sure
You contradict yourself because you start by outlining the problem of debt and financial irresponsibility and then you go onto say that people shouldnt be allowed to return a profit from football and then leave...theres nothing wrong with making a profit as it suggests success off the pitch and therefore stability on the pitch!
Thanks for your comments. I think the comparison you're doing here is really good. I believe that the 'commercialisation' of football kicked off after what was perceived as a great success of the commercialisation of F1. As you're saying it' s IRONIC that both Mr Blatter and Mr Mosely are appealing for more sensible spending.
Jes
In spite that the Central Banks would be pumping billions of dollars into commercial banks, it seems that there is still trust lacking so the effect may take even months to be felt, until the banks decide to circulate that money by giving loans.
In Formula 1, the teams are being urged to cut costs. In fact, according to BBC: "Mosley, president of the sport's world governing body, the FIA, said F1 must reduce costs by 2010 to stay "credible" amid a global financial crisis.".
I do find this ironic, as it follows various (successful) attempts to take F1 to distant, exotic countries - increasing the costs for the teams. And now, financial crisis and all - and the teams have to revise their budgets. Some have annual budgets that compare to those of small island states!
Participants have been reduced to 20 cars, and 'small' teams can hardly be called so. The same as in soccer - unless you're ready to raise millions upon millions, you risk extinction.
Where's the fun gone?