debt in europe

[persiangodfather]

big clubs always talk about being in debt.. but i just dont get it.. before i thaught it was becuz burlusconi was such a cheap bastard and wanted all him money for his hookers instead of for the club.. but i just read a repot on goal saying man u in in 700 milion debt.. barcelona 500 million debt.. and madrid somewhere in the middle.. not to mention the debt of liverpool.. silvio burlusconi constantly reminds fans that milan is around 100-200 million in debt.. so how is that possible?

with all the ticket revenue.. and monies from winning CL trophies and domestic leagues plus sponsonship.. how are they in debt

not to mention man u sold ronaldo for 90 mil and milan sold kaka for 65 mil..

[Demis-11]

i can understand that clubs can be in debt but upwards of 700m euro is crazy, it must be interest from bank loans or something

[Haf3z]

big clubs always talk about being in debt.. but i just dont get it.. before i thaught it was becuz burlusconi was such a cheap bastard and wanted all him money for his hookers instead of for the club.. but i just read a repot on goal saying man u in in 700 milion debt.. barcelona 500 million debt.. and madrid somewhere in the middle.. not to mention the debt of liverpool.. silvio burlusconi constantly reminds fans that milan is around 100-200 million in debt.. so how is that possible?

with all the ticket revenue.. and monies from winning CL trophies and domestic leagues plus sponsonship.. how are they in debt

not to mention man u sold ronaldo for 90 mil and milan sold kaka for 65 mil..

[persiangodfather]

so its the bankers? dammit .. do the owners of clubs have intent to actually pay the debt off or do they just keep operatin on credit? and if it remains like this wont the clubs eventually go bankrupt?

[Haf3z]

It's a combination of things. It's not all because of banks and owners of clubs.

What we are seeing is a sweep up by the UEFA, FIFA and some national Football Federations. The reason why the Financial Fair Play is being implemented is because UEFA (and the old G14 clubs) want to prevent clubs like Manchester City to buy their way to success. These rules and regulations have existed in Germany for a long time though. Clubs in Germany must hand in sound balance sheets to the German Football Federation each year in order to qualify to play in the Bundesliga. In the Premier League the requirements on owners is according to the rules that they shall be "fit and proper". It's a huge difference

Clubs like Real Madrid, Bayern Munich, Manchester United or Arsenal all have the ability to create and increase their revenues because their marketing strategies as well as their non-football related incomes are higher than other clubs in the world. Arsenal does for instance not win any titles, but the club is doing very well financially (when it comes to solidity and revenues) despite building a new stadium. But Manchester City is still not anywhere near those revenues.

Anyway, the Italian clubs have all been poor to create these streams if revenue, like match day income, sponsorship deals and merchandising. Let me state some examples:

"My" club Inter's main shirt sponsors are Pirelli and Nike. Nike came in to the picture when Inter signed Ronaldo from Barcelona back in 1997/1998, as they were sponsoring Ronaldo at that time. Pirelli has been there for many years, as the club has had very strong Inter sympathies through history. Therefore, the current deal is not really tailored with benchmarking standards of other sponsorship deals around the world. Pirelli's contribution to Inter is a fraction of what Aon pays per annum to be seen on Manchester United's shirts. Pirelli is a major shareholder in Inter, and their directors were running around with the players and with Mourinho after the Champions League victory in Madrid in May. Milan's sponsorship deal is worth more than Inter's and one reason is because Milan, like Real Madrid and Man Utd for instance, change their sponsors more frequently (to the highest bidder).

The club with the highest non-football related income in Italy is Juventus. Juventus has traditionally had more fans than any other club in Italy. However, one of their main problems is that they don't own and play in their own stadium (yet) like Arsenal and Man Utd. The same goes for AC Milan/Inter, AS Rome/Lazio etc. A lot is lost there. The infrastructure in Italy is not anywhere near the infrastructure in Germany and England. There are two high class football stadiums in Italy (without running tracks etc.). One is in Milan, the other one in Genoa.

So in order to prevent big clubs with rich owners (and high debts) to dominate the Champions League for instance, the Financial Fair Play is being implemented. Furthermore it is used as a tool to create more fair and homogeneous leagues and competitions that are more unpredictable.

[Persiantiger]

It doesn't surprise me that Man U is in debt but for all of the US bashers here, when the USA sleeps so does the rest of the world. When the US economy is booming it helps out with world trade.

[tashakor]

Banks
Investors
Taxes
Insurance
Operational expense
Capital expenditure
Financing expense

etc

[persiangodfather]

Banks
Investors
Taxes
Insurance
Operational expense
Capital expenditure
Financing expense

etc

but you would think that the clubs revenue.. plus if they win trophies.. should pay all those expenses off

[EKBATAN]

great thread! Hafez thanks for the break down, its good to know. Although Juventus is building their own stadium finally and it'll be ready next year i think so finally they'll be able to play in their own stadium. But its unfortunate cuz of the city they're in. turin is apparently has nothing, the citys biggest business is fabrics and most juve fans arent from turin, they are spread around italy so i think it'll be hard for them to sell out. but italian football needs to start matching up with the other top leagues, thats why they've been doing so bad lately, that and the bad economy along with the scandal of 2006, this has all ruined italian football big time.

[EKBATAN]

great thread! Hafez thanks for the break down, its good to know. Although Juventus is building their own stadium finally and it'll be ready next year i think so finally they'll be able to play in their own stadium. But its unfortunate cuz of the city they're in. turin is apparently has nothing, the citys biggest business is fabrics and most juve fans arent from turin, they are spread around italy so i think it'll be hard for them to sell out. but italian football needs to start matching up with the other top leagues, thats why they've been doing so bad lately, that and the bad economy along with the scandal of 2006, this has all ruined italian football big time.

[roy]

[Haf3z]

All clubs make bad signings. And with Fergie's track record, he gets a pass for signing Djemba-Djemba, Veron (who was a world class midfielder when he was signed) and Saha. Look at all the times he has sold players "at the right time" (Jaap Stam, Roy Keane, Becks etc.).