WEEKEND COLUMNISTS “The debt comes from players’ salaries. Nothing else. It doesn’t come from soccer balls,” Francisco Roca, who runs the Spanish league, told the men who run football.
We all have fantasies about discovering the roomful of people who control everything. In football, that is the International Football Arena. The conference’s yearly meeting in Zurich looks like the headquarters of a global conspiracy. Agents, club bosses and lobbyists gather in Swiss suburbia to chart the future of the football business. Earlier this month, sports economists gathered in a dingy Parisian office block. The two gatherings brought one stark realisation: hardly any football clubs will ever make profits. Football is abandoning the fantasy that it is a business.
The game’s losses pre-dated the recession. Egon Franck, economics professor at Zurich university, said in Paris: “In the top-flight leagues there is a financial crisis but it has nothing to do with the financial crisis. It’s an inbuilt, permanent financial crisis.” Premier League clubs owed a combined £3bn ($4.9bn, €3.3bn) even before recession hit. Spanish clubs owe perhaps €4bn. Each country has its own sorry tally.
“We must be sustainable,” clubs say, parroting the new global cliché. In fact they are fantastically sustainable. Mr Roca noted Spanish clubs were always going bankrupt, but added that they never disappeared. It is similar in England, where dozens of professional clubs have entered insolvency proceedings since 1992 yet only Aldershot folded, and then returned under practically the same name. Football clubs survive even when they go bust. You cannot get more sustainable than that.
Clubs are immortal chiefly because creditors dare not pull the plug. The clubs’ brands are strong enough to cow banks and taxmen. And so clubs can incur debts without fear.
The recession simply clarified how hopeless the football business is. It suddenly became obvious that most clubs would never make profits. Of course, few even aspired to profits: any euro they could borrow they immediately blew on players to satisfy their media, fans and personal fantasies. Football is an arms race, not a business.
Debt is fine if you can repay it from future profits. However, few football clubs have future profits. Much of football’s debt will never be repaid. So it will be written off.
Large chunks will be nationalised. In many countries football lives off state support. The prime example is Argentina, whose government last month bailed out the clubs by “buying” football’s television rights for almost triple their previous price. In Italy and England, governments have quietly accepted that many clubs will never pay their back taxes. Even Dutch city councils bail out profligate clubs. Taxpayers are therefore funding footballers’ Porsches. Thankfully, saving football is cheap. This is a piddling industry. Total European professional football revenues for the 2007-08 season were €14.6bn, a quarter of Tesco’s.
As for the banks that lent to football, they will take not a haircut but a number-one shave. That is their punishment for having imagined this was a business. It is remarkable that Britain’s Co-operative Bank handed over millions to Sheffield Wednesday.
Clubs’ debts have been forgiven in certain countries before. The clubs soon run up debts again, having learnt that they cannot go bust. But next time, at least the debts will not be fed by fantasies of future profits.
Only two financing models now remain. The first works for about six clubs, chiefly Manchester United and Barcelona: Have such a big global brand that you can generate money to pay great players. The second and rising model is the sugar daddy. Find an Arab sheikh to buy your club as a toy.
All this means the end of football as a pretend business. The executives in Zurich are finally realising that they do not run Shell or even Lehman. At best, their clubs will one day be like local museums: community institutions whose sole financial ambition is solvency.
