Europe’s major professional clubs continue to rack up staggering losses. Figures released by European football’s governing body revealed that clubs lost more than €1.6 billion in 2010.
UEFA’s Benchmarking Report disclosed that 56% of clubs posted losses in the 2009-10 financial year, and their total debt was €8.4 billion. Annual losses rose by 36% (to €1.6bn).
One can look at a different statistic from the same year, which shows that revenue shot up by 6.6% (€12bn to €12.8bn), and think that the world of football economics is doing enough to raise income. However, the fact is that the income cannot catch up with operating costs.
UEFA’s suits think that the main problem is the rise in operating costs, derived from high wages. However, the problem might just be that the European football simply does not make enough money.
In the U.S, the National Football League’s income is more than €7 billion per year, while Major League Baseball’s income is more than €5 billion. This means that 62 professional sports teams in the United States make more money than 734 clubs from all across Europe, and that’s the despite the fact that football is a lot more popular around the world than baseball or American football.
One of the reasons America sports are more profitable than European football is the broadcasting rights for sports that have become so expensive in the US, in part, because ratings for just about everything else on TV have diminished. The proliferation of network channels has meant that each program attracts smaller and smaller audiences. Yet somehow, European football is missing out on it and keeps bleeding cash.
Sporting events draw big numbers, and advertisers pay a premium to reach those viewers — mostly men ages 18 to 34. In the USA, Sports has even proved to be resilient to technological advances roiling the rest of the TV industry. With more than one-third of American households equipped with digital video recorders, viewers are not watching nearly as much live TV (or commercials), but they are still tuning in to the big games.
“It’s DVR-proof, it delivers consistently high ratings and it provides value to advertisers” said ESPN Executive Vice President John Wildhack to the L.A Times. He doesn’t see the cost of sports programming coming down any time soon. “The value of sports”, he said “to both advertisers and distributors — will continue to be very high.”
So how come European football has been left behind? It’s probably because there is something wrong with the financial model or sporting format of European football. It’s not making enough money. UEFA should then try to change it.
With that said, here is a 5 point plan that will make European football more attractive and profitable:
1. Change the Champions League
In the NFL, the richest sports league in the world, every team plays only 16 regular season games. However, less is more. Change the Champions League to a more compact format and teams in it will make more money. Here is a suggested format.
2. Make a clear distinction between the professional and amateurs
If Germany(population: 81,702,329) need only two professional leagues, there is no need for a small nation like Israel (population: 7,624,600) to have 3 professional leagues. The professional leagues need to be the very limited elite in each country. Solidarity payments should go to the grass-roots level clubs.
3. Smaller leagues
Remember the motto: Less is more. A professional league with 16 teams instead of 20 will give a little more meaning to every game, thus making it more attractive to viewers, sponsors and TV companies.
4. Export expertise
Football is a global sport, but most of the information about it is in Europe. European football can sell this information in many ways: Exporting coaches and players is great, but collaborations between top European clubs and clubs from the rest of the world can do wonders for the game.
Another thing that the NFL does is have one regular season game played in Wembley Stadium every season. Having cup games and league games played in Asia, the U.S, Africa or even South America should be considered. It will raise an amazing amount of money, and increase the popularity of these leagues in new markets.
5. Invest in infrastructure
Jean-Michel Aulas, President of Lyon, said it loud and clear. “There is a difference between easy money and money for investment. Tomorrow’s paradigm must be built on building stadiums and youth academies – tangible assets that can benefit football in general”.
UEFA should force private investors to be smart with their money. The investment in infrastructure usually pays off.