Europe's top soccer clubs report $1.6B in losses
NYON, Switzerland (AP) — Europe's top soccer clubs collectively lost more than $2 billion in 2010 and their debt keeps rising ahead of plans to sanction clubs for overspending, according to UEFA research published Wednesday.
Financial accounts from about 665 clubs revealed 56 percent lost money in the 2010 financial year, and their total debt was $10.9 billion.
UEFA general secretary Gianni Infantino said it was "a last wake-up call" with clubs subject to UEFA's financial fair play monitoring since July 2011. Clubs that overspend in an initial two-year monitoring period can be excluded from UEFA competitions starting in the 2014-15 season.
We must end this negative spiral and gamble for success," Infantino said at the briefing.
UEFA's top lawyer said it invested "huge" political capital with European institutions to create the fair-play scheme, and that the governing body would not hesitate to enforce the plan's toughest penalty of barring noncompliant clubs from the lucrative Champions League.
"The system is not going to have much credibility if a club ... in serious breach of rules is not sanctioned in an effective way," legal director Alasdair Bell said.
Amid a debt crisis in European economies, Bell said it was "part of the zeitgeist" to promote financial stability.
UEFA's study showed clubs' combined annual loss rose 36 percent, around $520 million, on 2009 figures.
This was despite rising revenues totaling $16.6 billion for top-tier European clubs, an increased income of 6.6 percent. UEFA's research showed that richer and more successful clubs were more likely to spend and lose money.
Of more than 200 clubs playing in UEFA's Champions League and Europa League competitions two years ago, 65 percent spent more than they earned.
Three out of every four clubs earning more than $65 million annually also recorded a loss.
"Clubs tend to spend more in order to obtain a competitive advantage," said Andrea Traverso, the head of UEFA's financial fair play project.
The losses can be blamed largely on overspending on salaries, staff costs and transfers, as the overall revenue for European top-tier clubs has soared by 42 percent between 2006 and 2010.
Germany's Bundesliga announced Wednesday that 36 clubs in two divisions shared record turnover of $2.89 billion last season.
The 18 top-tier clubs earned a combined $68 million in profits, after agreeing to cost-cutting measures in August 2010, which have reduced overall debt to $769 million, the league's chief executive Christian Seifert said.
UEFA's research showed that the top five leagues — England, France, Germany, Italy and Spain — has two-thirds of the wealth.
Financial fair play (FFP) rules allow clubs to make a total loss of $6.5 million in the first assessment period, or up to $58 million if a wealthy owner makes a one-off donation to wipe out losses. UEFA will phase in tighter monitoring rules in future years.
UEFA acknowledged that 13 clubs, including several from England, would have failed its break-even tests on their 2010 accounts. The clubs were not identified.
UEFA said 31 clubs, including four this season, have been refused entry to its two main club competitions since financial licensing was introduced in 2004.
However, clubs barred this season were from the small-market leagues of Ireland, Kazakhstan, Lithuania and Romania.
Skepticism has grown over UEFA's willingness to take on big-spending clubs such as Premier League leader Manchester City, whose owners from Abu Dhabi funded a then $318 million loss for 2010-11, the final season before FFP took effect.
"I expect that, at the last moment, (big clubs) will respect the rules," Inter Milan chief executive Ernesto Paolillo said. "I can't imagine they would not."
French league leader Paris Saint-Germain spent $107 million on players last offseason after being bought by Qatari owners.
UEFA's project was backed by Jean-Michel Aulas, the president of Lyon whose standing in France is threatened by PSG's revival.
Aulas described a "dichotomy" between clubs spending "easy money and money for investment."
"Tomorrow's paradigm (for clubs) must be built on building stadiums and building youth academies — tangible assets that can benefit football in general," Aulas said.