Football Association Chairman Lord Triesman revealed on Tuesday that English clubs currently owe an estimated £3billion. This was followed by UEFA general secretary David Taylor’s threat of exclusion from European club football for clubs who are currently in the red. With the global ‘credit crunch’ causing banks to fall, many fear football clubs could be the next to fall, with a huge amount of money and debts in the world’s biggest game.
Ironically, this threat of exclusion comes from the organisation which initially prompted the overspending that is currently occurring. UEFA, upon their rebranding of the European Cup as the Champions League, formed the elitist cartel, as one commentator put it. The increase in money which followed this move forced clubs to act if they wanted to remain at the top of the game. This meant many clubs acted outside of their natural means and overspent. This risk could backfire, as Leeds United learnt - the side now plays in the third tier of English football.
The need to stay in the Champions League forced clubs to spend huge amounts on players, who were deemed to be of the required value and quality. The increase in debt in terms of player wages meant even more relied on reaching the Champions League, with the television money and merit payments key to the club keeping its status in the upper tier of football. Some clubs such as Arsenal decided that a new stadium would be the way to keep successfully competing with the other big names in Europe. Naturally, the club will have large debts after receiving loans to fund the building of the new stadium and other projects, such as renovating the famous Highbury site into an apartment complex.
Yet these appear manageable. But if the game continues to go into the world where football clubs are the playthings of billionaire owners, such a strategy won’t be enough to keep these clubs at the top of the game. Chelsea went for the billionaire investor and is now not run as a business. Their expenditure is greatly outside of their natural means, with the club not working as a business but a machine which sucks the money out of Roman Abramovich’s very large pocket. The plan to break even by 2010 seems far-fetched even for their ambitious standards. The debts accrued by the side are to be repaid to Abramovich with no interest or time scale on the repayment.
UEFA have created a cycle which will one day lead to financial collapse. With the richest men in the world buying up clubs as if they are sweets to make them European champions in a time period as short as three years, we could one day have all 20 sides in the Premier League owned by a benefactor of some sort. These men see football as a business and not a sport. Someone has to finish last. The likelihood is if an owner sees his side in the lower parts of the league table, after having written all those cheques to improve the side, there will see that as making a loss on their investment.
This leads to an owner abandoning his toy, which is now bloated, full of players being paid wages that cannot be sustained by the natural resources. And then we would have another Leeds. Finally the instigators of the current football economic climate are attempting to distance themselves from being labeled the root of the problem, but now as the solution. And thus we come to the warnings of exclusion or perhaps points deductions. Maybe rather than creating this monster and now discouraging it, football associations should follow the example of Football Associations such as Germany and Switzerland.
In these countries, stronger requirements are put on clubs in terms of bank guarantees and having no negative equity. This stops clubs being in the red, but the regulations have seen these leagues fall away from those which are known as the elite. The lack of risky investment means sides have less odds of breaking into the big leagues. Sides such as Bayern Munich fell away, unable to compete with other sides for the best players, despite their historic standing and huge fan base. In France, Lyon has monopolized Ligue 1, but cannot break through in Europe, mainly due to the no-debt requirement. The absence of money in their national league will be positive in the long run but the demand for success is present.
If the game continues in this manner, the outside effect of the global recession will hit football hard. The money (and debt) filled English Premier League could feel the greatest force of the ‘credit crunch’. London side West Ham, owned by Icelandic owner Bjorgolfur Gudmundsson is a major shareholder in Landsbanki, a bank which went into receivership on Tuesday. This a huge issue, with several of these billionaires having a large amount of their money tied up in other investments - investments, which could be the downfall of many of these clubs. After all not every owner has the wealth of the Abu Dhabi Group.
If such restrictions are placed globally, it could lead to wage caps, with a smaller reliance on outside influences. Though there is much impracticality in such a solution, if a compromise could be reached, the world’ biggest sport could be saved from an ugly ending. UEFA created the problem, now they must fix it.
Philippe Auclair recently claimed in an interview with Gooner Talk that UEFA president gives him ‘the mental equivalent of a nappy rash’. The music producer-turned-football journalist voiced an opinion as to what most think. The outspoken Frenchman he referred to has an altruistic view of the world’s biggest sport and has the power to make his vision come true. But are his ideals totally driven by this pure vision or is there a monetary reason behind the dream? Will he ‘kill’ football as he accuses others of doing so?