ECA: Football clubs need safer balance sheets

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While football clubs have not been hit directly by the economic crisis, the time is right to take a closer look at clubs’ balance sheets and oblige them to respect a safe ratio between income and cost, argued a representatiive of the European Clubs Association in an interview with EURACTIV.

Ernesto Paolillo is a member of the executive board of the European Clubs Association (ECA) and a director at Italian football club Inter Milan. 

To read a shortened version of this interview, please click here

Since the European Clubs Association was established a year ago, how has cooperation between the former G14 group – which represented the biggest football clubs – and the other clubs been going? Have you managed to establish genuine dialogue? 

The way from the G14 has been a great success, because before, the 14 clubs were perceived as elite clubs thinking of only of their interests. Now, working together with the smaller and medium-sized clubs, they all have the impression that while the most important clubs are working in their own interest, they at the same time are working in the interest of football in general as well as in the interest of all the other clubs. 

And the wall that divided big clubs from small clubs has been broken, and now working together, we have found the way to go ahead to solve the problems of all clubs. And the small clubs have seen that even if the big clubs don’t have the same problems, they are in a position to help the smaller ones to solve their problems. 

So you feel that the interests of the former G14 are represented as well as they before? 

Exactly. The G14 was too small and too closed and is much better in an organisation like ECA. It is also much better because the G14 was too small to have the right dialogue with UEFA, and now the ECA, representing a large number of clubs, is in a position to be the right counterpart for UEFA. 

Have you managed to found a common position on the 6+5 rule? 

We are working in our working group composed of small, medium-sized and big clubs, and we are in a position to analyse each problem and to find the final position representing all the clubs. We then finalise the opinion with the ECA board, which has already accepted the position of the working group. 

Have you established a working relationship with the EU? 

Of course, because one of the most important problems with the EU is the problem of 6+5 rule regarding the number of foreign country players accepted. FiFA plans go against Europe’s law on freedom of workers to work in all countries as well as against the interest of the clubs. And we have to have good relationship with the Commission to make it understand the position of ECA in relation to that and to be able to defend the rights of players and the clubs. 

What other issue do you think will have to be dealt with the EU? 

For the competitiveness of football, we need harmonisation of fiscal treatment in all countries and this is a problem of the EU. We need the same fiscal treatment in all countries regarding the salaries of players. 

In Spain, for example, it is only 25%, whereas in all other countries, taxation is in relation to the level of taxation in the country. Thus for the same salary, a player earns more in Spain than in the UK, Italy or France, for example, and in this case the competitiveness of European clubs is not the same. 

Other EU-related issues include for example the rights of workers, because players are workers. 

How is the current economic crisis affecting the sports world and in particular football? 

This is a very important crisis and sport and the football industry will be touched by it. However, we are not touched immediately by the crisis, because we have long-term sponsoring contacts ranging between five and eight years. These long-term contacts are the only possibility to limit the damage of the crisis. 

But is this the case for both big and small clubs? Do small ones have as much sponsorship money as the big ones? 

You are right. This is less of a problem for bigger clubs and could be a bigger problem for small clubs. 

Anyway, small and big clubs usually have longer contracts than in any other industry, as small clubs also have sponsorship contracts for at least three years. 

How are football clubs and the ECA reacting to the crisis? 

There is only one way forward, to analyse the quantity and quality of costs and cut them. When there is a crisis, the most important thing is to immediately cut costs. And the most important cost in our industry is the cost of players, players’ salaries. This problem will affect all clubs. Other cost-cutting can be made on travel expenses, hotels and so on. 

Do you think financial crisis will affect the integrity of football, like match-fixing or other illegal behaviour? 

I hope not and don’t think so. The crisis can affect the structure of some clubs that have a lot of debts, but that’s about it. 

What do you think about recent calls for financial scrutiny of clubs’ accounts, and the suggestion that clubs that have too much debt could be excluded from major cups? 

It is the right time to analyse the balance sheets of clubs and introduce some kind of criteria, like a balance-ratio between income and cost just to establish which kind of ratio is safe for clubs and what kind of limits of respect for that ratio can be set. 

However, this cannot be a solution for just one country or club, but must be the solution for all the football industry in Europe in order to maintain the same competitiveness level and have the same safe balance sheet ratio. 

What do you think about introducing salary caps for players? 

Salary caps cannot easily be introduced. Because what is the right salary cap? I believe much more that we have to introduce a ratio that can be the level of salary being compatible with the level of income, or something like that. Because you cannot oblige all the clubs to have the same level of salaries for players. But you can oblige safe balance sheets in the clubs and the respect of a ratio between income and cost. 

If salary caps were introduced all over Europe, it would only be for the benefit of the football industry, because it would push clubs to increase income and cut costs. It could improve the balance sheet of clubs and cut the debts of some clubs, because they would need to follow these rules. 

I don’t think it would affect the level of quality of players, because if the caps were the same for all clubs in Europe, the level of the players will be the same. 

The only category affected by such gaps would be that of players, of course. 

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