Is Football really profitable business.The question is looking really difficult to answer with the following news of huge debt in La Liga became public. The total debt of all the 20 clubs is around 3 billion pounds! Only FC Bacrelona and Real Madrid had operating profit. Football is more that a business.It is passion. The La Liga clubs total debt is around 3.6 Billion pounds so question naturally arises can't you run it in profit? Do you have to keep pumping money? is it not a self sustained business? Yes companies will not sponsor just like that. The question of visibility and publicity is always involved. This always drives the clubs to invest more expecting higher returns by performing well in the League and other competitions. This drives every club to invest high on big player signings. Without a financial regulations from UEFA or other governing bodies this trend will continue to rise in a vicious circle fashion. Portsmouth went into Administration due to high debts. Crystal Palace also went in administration and many more to follow. There are many warnings but no clubs bother . Without a governing body intervention on this issue with a concept of salary cap say a maximum of 50% of operating expenses (now it is 85%) in place this situation can go out of control. The other important ruling needs to be one time payment within a specified time frame of the transfer fee of the players - absolutely no credits allowed.
Clubs can otherwise need to run like Arsenal.The example they gave to the footballing world was very good.Since they planned to move to their new stadium they had debts to be cleared.They avoided signing big names even though they highly needed reinforcements in their squad to win titles but the vision was long term and they are back in market after reaching a break even condition. The new stadium also providing a source of revenue.
Financial prudence is what we call it. The expenditure has to be always less than income. That lays a strong foundation for the future. Or else you have to keep on pumping money in to the clubs. This is what is happening in many of the top clubs. The drawback of this system is freedom of the manager is curtailed. The signing and planning of the game is done by club owners. They fire the club managers and coaches for no reasons. This is not a good trend.
This same thing happens here in our country. This is regarding Vijay Mallia's KEB and McMB "The UB Group has announced a budget of Rs 7 crore each for both clubs this season." came in TOI 20/2/2010 "Indian football discovers paradox below poverty line" . What is the approach - they expect overnight result?! Win every game, every trophy! Ridiculous! You can't expect overnight results.The game improves as the systems improves and there is a huge inertia in the system to change. One of the main reasons for failure of FC Kochin is people like these expecting miracles. They pumped too much of money by inflating the players tag price and in the end the clubs can't pay the players their wages and the club dies. The rise and fall of FC Kochin is well documented and other clubs should not follow this. It is great to learn from other's mistakes but it is human nature this rarely happens! Financial prudence and passion may drive you on!
Clubs can otherwise need to run like Arsenal.The example they gave to the footballing world was very good.Since they planned to move to their new stadium they had debts to be cleared.They avoided signing big names even though they highly needed reinforcements in their squad to win titles but the vision was long term and they are back in market after reaching a break even condition. The new stadium also providing a source of revenue.
Financial prudence is what we call it. The expenditure has to be always less than income. That lays a strong foundation for the future. Or else you have to keep on pumping money in to the clubs. This is what is happening in many of the top clubs. The drawback of this system is freedom of the manager is curtailed. The signing and planning of the game is done by club owners. They fire the club managers and coaches for no reasons. This is not a good trend.
This same thing happens here in our country. This is regarding Vijay Mallia's KEB and McMB "The UB Group has announced a budget of Rs 7 crore each for both clubs this season." came in TOI 20/2/2010 "Indian football discovers paradox below poverty line" . What is the approach - they expect overnight result?! Win every game, every trophy! Ridiculous! You can't expect overnight results.The game improves as the systems improves and there is a huge inertia in the system to change. One of the main reasons for failure of FC Kochin is people like these expecting miracles. They pumped too much of money by inflating the players tag price and in the end the clubs can't pay the players their wages and the club dies. The rise and fall of FC Kochin is well documented and other clubs should not follow this. It is great to learn from other's mistakes but it is human nature this rarely happens! Financial prudence and passion may drive you on!
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