Investing in football no longer pays

Anyone who buys a big football club knows that it is investment will result in heavy losses. If isolated cases are excluded, the losses are certain, it is no coincidence that clubs often resort to the accounting trick of capital gains (the overestimation of the commercial value of football players) to “fictitiously” increase revenues. The only advantage could be obtained with the resale of the club, if its asset value has increased in the meantime.

The purchase of a club is therefore not justified to obtain direct economic benefits, but becomes a sort of bargaining chip to obtain other benefits. Which? For example, earn the favors of the community and the political class. Then there is the possibility of participating in major international politics such as the assignment of venues for world and European championships. Also not to be underestimated is the possibility of participating in the business of building the new stadiums which all clubs support, as if it were the panacea for all the problems of professional football (hopefully these choices will be carefully evaluated in terms of environmental impact).

Let’s remember what enormous image credit it acquired Silvio Berlusconi with Milan. Roman Abramovich climbs Chelsea in 2003 and wins five national titles, after a fast that lasted fifty years, and as many Europeans. “It is said” (Source: Andrea Goldstein, The Power of the Ball, 2022, Il Mulino) “that he bought Chelsea to please Putin, eager to improve the image of his Russia in the eyes of Western public opinion” (if stopped at football, we would all have earned).

The Premier League it is the richest championship in Europe and this attracts the attention of the wealthy of the world, such as the Arabs of the Gulf: City, an “unknown” team from Manchester, following its purchase in 2008 by a sheikh, immediately conquered the first championship and after another four, against only one from United. The Paris Saint German it is the richest club, but encounters difficulties in the Champions League, confirming that you don’t win only with money.

The “foreigners”. A Chinese company has bought Inter (as a sort of passport for the “silk road”). Now American funds are all the rage (in Spain and Germany the phenomenon is less widespread, thanks to specific forms of guarantee on the property).

The goal for those who engage in football adventure is to achieve the heights of successotherwise you risk objections from the public-fans (it’s not always enough to blame the coach). And trophies are won by spending more than others to have the performance of top athletes. The problem is that costs are skyrocketing while revenues begin to stagnate. Revenues are represented by receipts from stadiums, sponsorships and mainly by television rights. Rights that are paid by televisions and platforms based on what they get from subscribers and advertising revenues. The problem is that these sources are staying draining.

Viewers of matches on television decrease in line with the decrease in television audiences. The match offer covers all days of the week and this alienates the public: quantity always detracts from quality. Many refer to only see the highlights! Subscribers are decreasing and advertising is also decreasing. Moreover, advertising is going through a particular phase, in which an important and “rich” slice of advertising is moving away from TV, in particular that concerning branded products, who often prefer to use other tools such as influencers. It should also be considered that what will become the number one influencer, i Chatbot.

The two main sources of funding for the football system, pay subscriptions and television advertising, they don’t grow therefore at a sustained pace as in the past and this is the cause of the crisis as the costs on the other hand do not slow down.

How to troubleshoot? On the part of the football managers, the focus is on three directions: the construction of new stadiums, the increase in the number of matches with the increase of the teams participating in the various tournaments and with the birth of new tournaments (as the “Super-League” would have been), the (sacrosanct) fight against piracy (another problem is the difficulty of streaming given the deficit situation of our network, which the Pnrr, if implemented, should solve). If we exclude the question of piracythe other two do not seem to represent the definitive solution to the problems.

There is one fact that must be underlined: never, in any statement by the football leaders, not even during the pandemic, has the word been heard “costs”, no one has ever argued that costs must be reduced and that costs must be increased the productivity of the football company. It is correct that new ways to increase revenues are sought, but it would be equally correct to acknowledge that a “football product” is economically worth less and that it needs profound restructuring.

A first step would be to give football clubs a full corporate identity. We should create an autonomous authority at European level which monitors compliance by the clubs with financial constraints (financial fair play, the salary-cup). The system would improve and there would be real competition even on the pitch.

Finally, there is another question. The arrival of an investment fund he is often greeted with joy by the fans, who hope that the club can recover. But the interests of one and the other do not always coincide. It would therefore be necessary to provide for forms of guarantee that protect the community of fans.