CNN ... on us and European club's finances ... partly to be ignored

[der Berliner 3,251]

There's been an article posted by one Chris Murphy of CNN today which neatly forages to all sorts of history, assumptiuons, hearsay, and facts. What is interesting is the note on other countries, usually forgotten when we speak of the current financial troubles of our club. "We" includes the Scottish press, of course. I'll post a bit of that article here, since at the bottom the discredited journalist (for whatever reason) has been picked to make a few comments about the events.

 

From riches to rags: Why Rangers' financial meltdown should worry Europe

 

By Chris Murphy, CNN

March 14, 2012 -- Updated 1238 GMT (2038 HKT)

 

(CNN) -- Once labeled the richest football club in Britain, Scottish champions Glasgow Rangers are now on the brink of extinction.

 

The club that boasts a record 54 league titles and 60 domestic cups since being formed in 1872 has sunk to the lowest ebb of its illustrious 140-year history.

 

Already in administration and with a potential tax bill of $118 million, the genuine prospect exists that Rangers -- one half of the Old Firm rivalry with Glasgow neighbors Celtic -- could be about to fold, inflicting irreversible damage on the Scottish Premier League.

 

So if a football club with as proud a history as Rangers can come so close to the precipice, how likely is it that the disease of financial mismanagement will claim other high-profile scalps across Europe?

 

Football's rising costs

 

According to football finance expert Simon Chadwick, many clubs on the continent are similarly stretched as they grapple with soaring wages and transfer fees -- and a failure to make the most from their assets.

 

Chadwick, a professor of Sport Business Strategy at the UK's University of Coventry, says the next five years could be critical in shaping the long-term future of football in Europe, as cash-rich clubs in Russia, China and the Middle East compete for the globe's best players.

 

"There are two common elements to what is happening in Europe," he told CNN. "The first one is revenue generation. A lot of clubs simply don't have a notion of the ways in which they could alternatively generate revenue other than tickets sales.

 

"The other element is cost control, and obviously that relates to player transfer fees and wage costs. If there was moderation in the industry generally, if salary costs and transfer fees could be moderated in some way, that would ease clubs' financial problems.

 

"Increasingly you've got clubs in China, in Russia and in some parts of the Middle East that are paying huge transfer fees and huge wages. In many ways it's very difficult for clubs to control their costs because many of the mechanisms are outside their control."

 

Driven by debt

 

Chadwick's assessment of the general health of Europe's clubs is bleak, with teams in Italy, Spain, Belgium, Holland, Portugal and even Germany -- the one league held up as a beacon of financial integrity -- struggling.

 

Even two of the biggest clubs on the continent, Spanish duo Barcelona and Real Madrid, who drive huge wealth and success, are operating on a huge debt base.

 

"Whilst Barca and Real are massive revenue-generating entities, their costs are very high," Chadwick said. "The most obvious elements are transfer fees and salaries. As a consequence of that, if you look at the two of the biggest three club debtors in the world they are Barcelona and Real Madrid.

 

"Outside Barcelona and Real there is no conception of the need to manage their organizations better, to manage their businesses better or commercialize in any way. In terms of revenue generation and cost control, a lot of Spanish clubs are operating in the dark ages."

 

The German Bundesliga is renowned as being a model competition, where the football fan is king. Supporters retain a majority stake in their club, tickets prices are affordable, wealth is distributed far more equally than in other leagues and wages are kept under control.

 

Chasing Champions League cash

 

But Chadwick points to the example of Schalke, a club that finished in the top three in Germany four times in the past seven years but is now grappling with the debts incurred through building a new stadium. The Royal Blues are desperately hoping that qualification this year for Europe's top club competition, the Champions League, will prove a timely boon to their bank balance.

 

"Schalke is in a very precarious financial position but many people say German football is a role model for financial propriety and good management -- it's not. There are problems all over Europe," Chadwick said.

 

He sees Dutch outfit Feyenoord, regarded as one of the Netherlands' big three sides alongside PSV Eindhoven and Ajax, as a club facing a typical, modern-day predicament.

 

"Feyenoord are in a much more precarious position than PSV and Ajax for the simple reason that they are not qualifying for Europe and yet they are still very ambitious," Chadwick said.

 

"The big challenge for Feyenoord is to go for Champions League football and get it really soon, otherwise their business model is not sustainable. Then they will have to develop a business model that is consistent with being a solvent member of the Eredivisie, but basically mid-table plodders."

 

A global power shift?

 

With European football at a crossroads, UEFA's new Financial Fair Play (FFP) initiative could prove a masterstroke of timing. The rules, which aim to force clubs to live within their means, come into force next year.

 

"FFP could be the moderating force in the labor market but one of the big issues is that the football labor market is no longer dominated by the Europeans, it is now a global labor market," Chadwick said.

 

"When you've got the likes of (former Chelsea striker) Nicolas Anelka on a reported $268,000 a week in China and Samuel Eto'o on reported $553,000 a week in Russia, this is fueling the inflationary spiral.

 

"As we see in any market, resources flow to where the returns are greatest. I think we're potentially on the cusp of a real shift in global power in football simply because clubs elsewhere in the world can afford to pay for the likes of Anelka and Eto'o."

 

Scottish giants in jeopardy

 

Should European clubs need any reminder as to what despair can emerge from chasing success on the field, they need only look at Rangers.

 

The Glasgow team's slide into administration relates to an unpaid tax bill of $14 million, incurred after businessman Craig Whyte bought the club in June 2010, but they are also being pursued by the UK government, which says an astonishing $118 million is owed in back taxes.

 

A tribunal is due to rule on the case this month, and if Rangers lose, they could be wiped off the map forever. (AND CUT!)

 

A neat doomsday reminder to finish, ere Spiers' babble starts. Had to be done, hadn't it? Then again, every single article in the press needs to have this sort of strike-terror-into-the-supporters'-hearts - line somewhere. Compulsary, you would think.