Soccer’s New Goal: Kick The Spending Habit
To end lavish spending, European soccer's governing body UEFA has devised new regulations to force clubs to pay out no more than they earn.
August 13, 2011 9:36 by p.deleon
TV, STADIUMS AND COMMUNITY
At the moment, television rights are the biggest source of income for most top clubs. That’s especially true in Spain where Europe’s two richest clubs, Real Madrid and Barcelona, are able to sell their broadcasting rights individually, in contrast to England’s Premier League and most other European leagues, where rights are sold collectively and revenues shared out. Both Barcelona and Real Madrid make around 150 million euros a year from television — well above the 60 million pounds English Premier League champions Manchester United earned last season.
Financial Fair Play is meant to push clubs to look at other ways to expand their revenue streams. The new rules will not count any spending on infrastructure improvements, for instance. That should encourage owners to copy clubs like Germany’s Bayern Munich, which moved to its state-of-the-art, 69,000-seat Allianz Arena in 2005, and is now the fourth richest club in Europe with revenues of 323 million euros in 2010.
Bayern Munich earn 67 million euros a year in matchday revenues. Compare that with Italy’s AC Milan and Inter Milan, which share the 85,000 seat San Siro stadium — constructed in 1925 and in desperate need of renovation — and bring in revenue of about half that.
In fact, Europe’s top clubs could do worse than follow the example of their German rivals, most of whom make money. The German soccer federation requires its clubs to have a community-based ownership structure — fans control 50 percent of shares plus one — to avoid the financial instability and overspending the sometimes comes with rich owners.
“We did not need to do anything to prepare for these rules because we already meet the criteria by 150 percent,” said Hans-Joachim Watzke, chief executive of current Bundesliga champions Borussia Dortmund. “We have been having positive results and reducing our debt for years and do not have any outside money flowing in.”
Clubs might also do more to develop their brands globally. Chelsea Chief Executive Ron Gourlay told Reuters the club wanted to make more money overseas, because increasing revenue at home would be tough.
“The opportunity we have is very much through our sponsors. That’s where we expand the brand in America and the marketplace in Asia.