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European football is more popular than ever. Three out of four people in Europe's five largest countries say they are football fans. Stadium attendance is rising, as is TV viewership and revenue from merchandising. So why are so many teams on the financial precipice? There are lots of reasons, but most of them boil down to poor management, both at the teams and at the governing bodies that oversee the sport. In a way, that's good news. A lot of football's problems could be solved with a dose of Management 101. For example, Italian clubs, spoiled by lucrative television deals, generate only about half as much revenue on game days as their British counterparts. There's a lot of upside there that the Italian clubs could exploit by improving stadiums and outsourcing merchandising to pros such as Nike Inc. (NKE
), as Turin's Juventus is already doing. Another example: Germany's VfB Stuttgart, now run by former IBM (IBM
) Germany chief Erwin Staudt, boosted season-ticket sales by more than a third via a simple marketing ploy: It promised season- ticket holders first crack at tickets for postseason play, should VfB qualify. European clubs would do themselves a favor by hiring more managers with solid business experience.
The Union of European Football Assns., or UEFA, should also do more to spread its considerable wealth. For example, the clubs should get bigger payments when their players are on loan to national teams for international competitions such as the recent European championship in Portugal. And UEFA as well as the national associations should level the playing field financially. Teams should be required to operate on a rational financial basis. Wealthy owners should not be able to operate at huge losses while they monopolize the best players. Teams should be barred from spending more than 50% on players, a practice already followed by industry benchmark Manchester United.
The European Union also needs to get more involved. Among team executives in Germany and France, there is a widespread perception that Italian and Spanish teams benefit from tax breaks and hidden subsidies, which give them an unfair advantage in the international competition for top players. Given the total lack of transparency about team finances, it's impossible to say how pervasive such aid is. But the EU is probably the only institution in a position to police this kind of behavior, and it should do so more aggressively.
Football teams will probably never be hugely profitable. Their customers -- the fans -- want them to win, not make money. But more financial prudence is way overdue. Without it, things could get ugly for the beautiful game.