September 1st, 2011
10:54 AM GMT
As the final day of the summer transfer market came to a frantic close late Wednesday, European football’s aristocracy again demonstrated its apparent immunity to the economic gloom affecting everyone else.
The continent’s wealthiest leagues, in England, Spain, Italy and Germany, spent almost $1.8 billion on acquiring new talent.
The English Premier League led the way, parting with $665 million. The most expensive deal being Sergio Aguero’s $62-million move to Manchester City from Atletico Madrid.
But by far the most eye-catching deal of the summer involved a club from the most unlikely of places: the Republic of Dagestan.
Anzhi Makhachkala, who play in Russia’s top league, persuaded Internazionale striker Samuel Eto’o to swap Milan for the Caucasus by reportedly making him the game’s top earner.
Bank-rolled by billionaire investor and politician Suleiman Kerimov, the club has also invested heavily in Brazilian legend Roberto Carlos, Chelsea winger Yuri Zhirkov and PSV Eindhoven midfielder Balazs Dzsudzsak.
But this close-season largesse comes against a backdrop of new financial “fair play” regulations imposed by UEFA, European football’s governing body. From 2012-13, all member clubs must break even over a three-year period or they will not be permitted to play in European club competitions. Basically they’ve been told to spend within their means.
No problem for the cash-rich clubs of the top four leagues right?
Wrong. Despite wealthy benefactors and lucrative broadcasting deals, many of the biggest clubs in world football have balance sheets that would terrify accountants in businesses in any other industry.
According to company accounts, Chelsea owner Roman Abramovich has effectively underwritten more than $1.1 billion in loans to the club since taking control in 2003. Without the Russian’s continued investment this debt would be impossible to pay off.
Last season, an audit into the finances of European champions Barcelona revealed that the Spanish club had debts of almost $600 million.
Yet these clubs continue to import superstar players with superstar transfer fees.
Meanwhile, most other clubs in Europe are left to sift through the sport’s bargain basement, looking for out of contract players and loan deals. Some of these clubs are huge – such as Scotland’s Rangers and Celtic – but the lower profile of their league limits the income potential from broadcasting rights and sponsorship.
However, the silver lining is that clubs in this situation are increasingly running their businesses prudently, investing in homegrown talent that won’t break the bank.
While it’s not a formula for winning trophies in the short term, it is more likely to ensure the long-term future of a club.
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