The Telegraph
Since 1st March, 1999
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European clubs to downsize

London: The finances of European soccer leagues have suffered a harsh reality check this season as the collapse in television rights and the transfer market slowdown took their toll.

But clubs have begun taking measures to put their balance sheets back on a sound footing, taking a stand against excessive wages and fees, while the game’s popularity shows no sign of waning. Rupert Lowe, chairman of English top-flight club Southampton, said there would be no quick fix to the game’s financial problems, however.

“The currently parlous state of the football industry should help to correct its historical excesses but it will take time,” Lowe said after his club reported six-month losses of £3.8 million earlier this year.

Many Premier League clubs reported bigger losses and rising debt despite the riches coming in from their lucrative Sky television deal, as wages continued to eat up excessive proportions of turnover, while player sales were few and far between.

“The days of profligate spending are now over and subsequently we must tighten our belts and introduce a regime of prudent budgetary control from the top to the bottom,” said Mohammed Al Fayed, chairman of English Premier League club Fulham, last month.

“Transfer fees, player salaries and stadium development will all be scrutinised — make no mistake, football is in danger of going broke if it continues to pay itself more than it earns.”

The collapse of television firm Kirchmedia in Germany last year pushed Bundesliga debts up to a total 599 million euros across the top two divisions and clubs can expect to have to cut costs by 20 percent next season.

The total capital of all Ligue 1 clubs was 143 million euros in 2002, compared to 84 million a year before, but overall debts were estimated at 46 million euros, while latest figures from the Portuguese premier league show a loss of 57 million euros in 2001-2.

Valentim Loureiro, chairman of the Portuguese league, said it was time for a more realistic approach to running the game. “It’s time we all realised that the situation is difficult and we have to live within our means. I can guarantee that in Portuguese football today, with no more than two or three exceptions, we all have our trousers down,” he said.

Portugal’s secretary of state for sport, Herminio Loureiro, said: “We can’t live in a dream world. No business project is sustainable when personnel costs absorb 75 per cent of revenues.”

The success of clubs such as Real Madrid, Valencia and Deportivo La Coruna in the Champions League in recent seasons has not shielded Spain from the recession that has hit European soccer. The January transfer window saw not a single player bought, with clubs preferring an assortment of loan deals, exchanges or the hiring of out-of-contract professionals in order to bring in new recruits.

Italian soccer has responded well to the difficulties that engulfed it last year, when Serie A side Fiorentina went bankrupt, leading clubs faced sanctions unless they sorted out their finances and the season was delayed until television deals were completed.

Since then belts have been tightened and moves have been made to pay players at more realistic levels, with more performance-related wages and loyalty payments at the end of contracts.

One Serie A player said recently: “The kind of deals that players are signing now are very different to the ones that were being offered a few years ago.”

AC Milan captain Paolo Maldini last month agreed a 30 per cent pay-cut in a new contract to stay at the Serie A Club until June 2005. “I’ve agreed to a take a pay cut. I agreed to the club’s request because it is going through a particular period,” he said.

The two Serie B Genoa clubs, Sampdoria and Genoa, who have been in crisis for years, have recently found buyers who are ready to invest in them.

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