Football: Recession hits football clubs, high debts threaten future
The recession of the last few years has affected the entire world. It got so bad that it even started to affect football clubs and not just small clubs. The major clubs of the best leagues started to feel the pinch. With Barcelona recently being unable to pay wages and having to take out a loan to do so. It does not look good for the football world at the moment.
People might have thought that football clubs around the world were above any sort of financial problems because football is such a popular game and they raise so much money in ticket sales and TV revenue deals. But it seems as if the world's biggest clubs are facing serious cash flow problems and they have severely inflated debts. Apparently, football clubs are in a catch-22 situation because in order to better their performance on the pitch they have to fill their squad with talented players from around the world. These players cost money and in paying the huge salaries of these players to try to fill stadiums and get TV revenue for their matches the clubs incur huge debts.
The latest club to suffer financial problems is FC Barcelona of La Liga. The club has failed to pay its players their wages for June and is looking to take a loan out from a bank to do so. On the other hand the club is looking to sign Spanish international Cesc Fabregas for a huge amount of money. The club seems to be surviving somehow because they have recently sold a few players one of them being Yaya Toure for a reported sum of 24 million Euros. It is interesting to see how the club is operating even though they are trying to get a loan to pay their players their monthly wages, they are selling other players to try and secure Fabregas. It does not make the best financial sense, but they probably have a plan.
It seems other Spanish clubs are in the same boat as Barcelona has dire financial problems and large debts. One theory is supported by the fact that in all other football leagues in Europe from the Premier League to Germany's Bundesliga, all of the teams share the TV revenue deals. This is not what happens in La Liga, the Spanish clubs have to individually negotiate their deals from TV networks and it turns out that the big clubs get a lot more money from their deals than the smaller ones. The debts in La Liga have soared in recent years going as high as 2 billion Euros. The entire system needs an overhaul or the services of a really good financial manager.
It is not only La Liga and Barcelona that are facing financial difficulties. It has spread to other clubs and leagues as well. The Dutch club, Ajax, is facing financial difficulties and has reportedly been talking about selling one of its main stars, Luis Suarez. It seems the club had sold players worth 100 million Euros but has incurred expenses of 140 million. The English club, Portsmouth, is also facing financial trouble at the moment. The club's manager has been unable to purchase any new players because of restrictions placed on it by other teams for non payment of previous transfers. Even though the club is set to receive TV revenue that will help it slightly, it is still facing an uphill struggle with its financial situation.
The world of football clubs is in need of some serious help from somewhere. If the banks can step in and bail them out then they may survive but if not we will probably see a few of them go under. It is just a matter of time before we see more clubs ending up the same way. They need to get their houses in order and streamline their teams and expenses in order to bring their expenditure in line with their revenue. That is one way out of the red. Football clubs need to work out just how much new talent they can afford and who they can sell. If they can do that they may survive, for the sake of their fans, for many years to come.
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