The following article, written by Square1 Consulting’s Sports Director Paul McGoohan, features in The Debate section of August’s edition of Sport Business International.
“What steps need to be taken to ensure the financial stability of Europe’s top flight football clubs and to reduce the revenue gap between the leading teams and the rest?”
A lot of work has been undertaken by UEFA with regards to financial stability and ‘fair play’ over the past 18 months. A combination of the global economy and a political gap for somebody to take a lead has allowed for Michel Platini and Co to deliver their new Club Licensing Regulations. In my opinion the outline shape of this document is the best compromise for the diverse football landscape faced across Europe.
For the long term benefit of the game as well as for investors entering the industry, there needs to be regulations as to the how the great amounts of money generated by football in Europe is spent. For too long the attitude of owners, executives, agents and players has been short-term. UEFA’s insistence on a ‘break-even’ criteria is the right way to go. I don’t believe that anybody in football wants to stop the notion of a team travelling up the divisions and achieving success, but the new regulations force the money men within the game to take a longer term view.
Cash flow remains a problem across Europe. Whether it’s Barcelona or a number of clubs in the Football League, football at club level does not have a great record of building up cash reserves to be drawn upon in times of financial difficulty. FIFA and UEFA generate large profits and so maybe the future focus could be on how football better redistributes revenues across its component parts.
As for the issue of revenue gaps between teams, again I do not see a problem with one club being much bigger than another. If a club is well run both on and off the field then it should not be penalised for its success. Similarly well run ‘smaller’ clubs will continue to survive. The key is for executives to play to their club’s strengths and if they wish to grow, do so over a longer term basis by investing in the two most important things at a club, namely its players and fans.