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Main Content
The Debt of Football: Will It Lead to the Death of Football?
On the night of 15 May 2010, Real Mallorca, the surprise package of Spain’s La Liga season, were just seconds away from finishing their campaign in fourth position behind Barcelona, Real Madrid and Valencia.
Having won their final home game of the season, the players and staff gathered on the pitch to watch the final seconds of Sevilla’s match in Almeria. With the Andalusians drawing 2-2 away to Almeria and needing to win to overhaul Mallorca for a Champions League berth, Rodri scored the most dramatic of goals with the last kick of the game.
Mallorca’s improbable dream of qualifying for Europe’s premier club football competition had been crushed in the cruellest of manners. The very next week Mallorca applied to go into voluntary administration having failed to find a buyer to ease their debt of 85 million euro.
While it is too simplistic a conclusion to draw that failing to qualify for the Champions League caused the club to take this step, there is no doubt that the income assured by participating in the continent’s biggest competition would certainly have provided a welcome boost to Mallorca’s finances. The point is that this scenario represents the direction of football in Europe’s biggest domestic leagues. In too many cases success on the pitch is now imperative to offset the huge costs and debts incurred by the club in the pursuit of success on the pitch. It is a vicious circle.
According to a study by University of Barcelona professor Jose Maria Gay, the combined debt of the 20 La Liga clubs stood, at the end of the 2008/2009 season, at a massive 3.526 billion Euro.
In Spain, top-tier clubs do not enjoy a level playing field when it comes to revenue for televised matches. Whereas in England, France and Germany there is one deal made with the league and the income shared evenly among all clubs, in Spain each club negotiates its own deal with TV stations. This results in Barcelona and Real Madrid, the world’s two richest clubs in terms of revenue, taking up to half the available TV money while the teams looking to break their stranglehold on the La Liga title (Sevilla, Valencia and Atletico Madrid) earn at most, 30 million euro a year from their deals. Cash-strapped clubs struggling for survival have even asked the socialist Spanish government to intervene but Secretary of State for Sport Jaime Lissavetzky articulated that the clubs much resolve this issue together, without intervention: “It is important to have this concept of solidarity…if that can be achieved with agreement between all clubs so much the better”.
It is not only in Spain that clubs are suffering financially. Even in the last few years of economic downturn, the English Premier League has continued to pay vast sums of money in transfer fees and salaries. Clubs like Chelsea and Manchester City have seen wealthy individuals take over and inject huge sums of money into their club to ensure success. Manchester United, one of the most marketable and popular football clubs in the world, has been saddled with debt since being taken over by the Glazers.
Can this phenomenon be stopped before more and more clubs are forced into administration and cease to exist for reasons that have nothing to do with football results? UEFA (European football’s governing body) have recently approved rule changes to dramatically end the uneconomical economics of European club football. The new rules propose that clubs will not be able to spend more money than they generate through revenue, while cash injections from wealthy owners will be severely restricted. UEFA general secretary Gianni Infantino explained that the new rules will be phased in over the next three years with their primary aim being to create a level financial playing field and thereby assist the estimated 50% of European clubs that are operating at a loss.
So in the future, world record-breaking transfer fees such as the £80 million transfer of Cristiano Ronaldo from Manchester United to Real Madrid may still be possible, but only if the buying club’s income is sufficient to cover the spending of such vast sums.