The Elephant In European Soccer’s Room

ESPN’s soccer correspondent, Leander Schaerlaeckens, wrote an extremely interesting article this past week detailing the coming financial crisis in soccer that has plagued regular industries already.  But in soccer, outside interests, be they political or from things such as sponsors, can not only gloss over the financial cracks in a club but can prolong the terrible business decisions & wasteful spending made by clubs.

For years, clubs such as Real Madrid, Barcelona, Juventus, AC Milan,etc. have paid vast sums of money in the transfer market in a player arms’ race.  Often this affect not only has driven up transfer values to ridiculously exorbitant levels for top class players as the big clubs have tried to outdo each other in their financial peacock displays but it has generally also served to drive up transfer values for even average players as clubs that don’t have the financial clout (or the secret political or municipal backing as Schaerlaeckens lays out in his article) of clubs like Real or Barca, often have to spend money on overvalued players just to appease fans and give the illusion that they’re competing by spending money.  An example of this is the £12 million Fulham paid Everton for Andy Johnson in 2008.  Johnson, while being a decent player, was in my opinion vastly overpaid for.  I quipped to a friend at the time, “if Andy Johnson is worth £12 million then I’m worth about £3 million.”

In the last two decades clubs all over Europe have been relegated, merged with other clubs or worse, gone bankrupt, because of these irresponsible spending habits but now we’re seeing these worrying signs at clubs like Real, Barca, Manchester United, Liverpool, etc.  This will soon make this issue very interesting as no one cares, except those particular clubs’ supporters, when a lower division club like Aldershot FC goes bankrupt in 1992 & is re-spawned as Aldershot Town at an even lower level, but do we really think people in positions of power and influence, either in a particular countries’ FAs or political realms, going to let a Real or a Man U go bankrupt and be re-spawned in a fifth or sixth division club setup?  Peg me as cynical but I highly doubt it.

You would think clubs would learn the lessons of Leeds United who went from Champions’ League semifinal appearance to England’s third level in a space of five years as over-spending in the transfer market and salary budgets lead Leeds to the brink of bankruptcy.  When the results don’t match a club’s spending, it’s only a matter of time before the bottom falls out like what happened to Leeds.  But often, when clubs can continue to win trophies and league championships, like Man U, Chelsea, Real, Barca and Milan have done, it’s usually a case of “the ends justifies the means” from club directors and owners.  Only recently have ardent Manchester United supporters begun large and vocal protests at Old Trafford games have people tried to signal warning bells to their clubs’ potential financial crises.

Leeds is by no means the only example but just one of the bigger ones.  Fiorentina in Italy went bankrupt in 2002, got re-spawned as AC Fiorentina e Florentia Violain Serie C2 (Italy’s 4th Division) promptly won the division and got promoted to Serie C1 only to controversially be “double promoted” to Serie B in Italy’s bizarre Caso Catania.  During these bizarre years, Fiorentina bought back the right to re-name itself Fiorentina as if nothing save for a normal regulation had happened.

However, clubs have gone on spending and with clubs such as Chelsea and Manchester City having huge cash injections from “the sugar daddy effect,”(Roman Abramovich at Chelsea &  first, Thaksin Shinawatra & then Sheik Mansour bin Zahed at Manchester City, respectively) and transfer spending has absolutely skyrocketed in the last decade with only recently many clubs trying to rein in their spending.  Or in the case of Real and Barca, they get sweetheart loan deals from banks which are often believed to be preferentially given when businesses in other industries can’t hope to get such deals.

I highly suggest taking the time to read Schaerlaeckens’ article because it is very telling how, just like seemingly happens in everyday life, many clubs and people get sweetheart deals and better “justice” depending on their financial and political clout and/or image branding as a big, glamour club.