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SBD Global/August 27, 2012/Finance

European Football Becoming A World Of Financial Recklessness

European football teams, such as ManU, are being scrutinized for overspending.
ManU's decision to go public on the N.Y. Stock Exchange is another reminder that the financial foundation of European football remains "in desperate need of repair," according to Kevin Baxter of the L.A. TIMES. The problem is the cost of players. And while ManU and club Owner Malcolm Glazer "have exacerbated" the problem, it is not limited to a single team, owner, league or country. UEFA found that more than half the 655 European clubs it surveyed in '10 had lost a combined $10.9B, "mostly from overspending on players." In Spain, where La Liga opened a new season last weekend, Barcelona and Real Madrid have passed the N.Y. Yankees as "the best-paying teams in pro sports" with average player salaries topping $7.8M a year. A University of Barcelona study in '10 found the combined debt load carried by the 20 teams in La Liga was $4.8B, with 85% of total operating revenue going to payroll. In Italy, pro football also remains "buried under a mountain of debt." Yet it is the EPL that remains "the poster child for financial recklessness" in football. Although the EPL is the richest football league in the world, its team owners are "still spending well beyond their means." Just 2% of the top-division clubs in Europe play in the EPL, but those teams accounted for 56% of the top clubs' debt on the continent. Financial discipline "remains a foreign concept." Just days after turning to Wall Street to help pay off its debt, ManU created more by spending $38M to acquire Dutch striker Robin van Persie from Arsenal. And it is "not even the freest-spending Premier League club" in its own hometown. In '11, Man City's payroll was $185M, which helped Man City Owner and Abu Dhabi billionaire Sheikh Mansour, to run up a club debt of $307M. The long-debated regulation, known as Financial Fair Play, "may already be having an effect." FIFA said that in the first six months of '12 player transfers were down 9%, while transfer fees had fallen 34%, "compared with the same period last year" (L.A. TIMES, 8/25).
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Finance, Europe, United Kingdom

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