Italy hit with two month ultimatum to change ‘salvacalcio’ law

Following the Commission’s warning that the
‘save football’ law breaches EU accounting directives,
Italy has two months to come up with a satisfactory reply or
face the prospect of legal action at the ECJ.

The Commission has sent Italy a ‘reasoned
opinion’ requesting the government to change its
‘salvacalcio’ law on financial reporting by
professional sports clubs. In a press release, the
Commission says that “it believes that the [Italian]
legislation breaches EU accounting laws in that the
balance sheets of a number of sport clubs fail to provide
a true and fair view”.

The Commission says that effect of the February 2003
‘salvacalcio’ law is that some professional
sports clubs, especially major football clubs for which
players’ contracts are the biggest item of
expenditure, may be able to submit accounts which
underestimate their true costs in a given year, hide real
losses and give a misleading picture to investors.

In the words of Umberto Lago, an academic from the
University of Bologna and co-author of ‘Il Business
del calcio’ [the Business of football], “Italian
football is suffering a vary bad financial crisis,
largely due to lack of management, mistakes in
forecasting demand and in interpreting the nature of the
business. The huge expenses of the past years have
produced other expenses (mainly for wages) which have
never been matched by the expected increase in
revenues”.

In a special report by El País, in
conjunction with Le Monde and La Repubblica, Emilio
Marrese claims that Italy and Portugal “have, when
it comes to sport, won the latest European championship
for corruption”. He points out that Parma, Lazio and
Napoli are among top flight (Serie A) Italian clubs on
the brink of bankruptcy. Fiorentina went bust a few years
ago but have now fought their way back into Serie A.

Analysts maintain that football is a business and
should therefore be treated as such, both in terms of
fair competition and accounting regulations. They also
claim that the vast popularity of football is used by
unscrupulous clubs to obtain undue advantages which are
not only unfair in terms of competition within the
business but also in comparison with economic policies in
other industries.

From next season there will be a new UEFA club
licensing system, whereby clubs must meet various
criteria to be eligible for UEFA’s lucrative cup
competitions. Many clubs are expected to struggle to meet
some of the financial criteria.

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Italy hit with two month ultimatum to change 'salvacalcio' law

Following the Commission's warning that the 'save football' law breaches EU accounting directives, Italy has two months to come up with a satisfactory reply or face the prospect of legal action at the ECJ.