Special Report: Soccer's new goal: kick the spending habit

Fri Aug 12, 2011 9:00am EDT
 
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By Matt Scuffham, Rhys Jones and Neil Maidment

LONDON (Reuters) - Talk about inflation. In 1977, when English soccer club Liverpool sold two-time European player of the year Kevin Keegan to Hamburg they charged the German club a 500,000 pound transfer fee.

In 2009, as the world struggled to emerge from the worst financial crisis in more than half a century, England's Manchester United sold European player of the year Cristiano Ronaldo to Spanish club Real Madrid. The fee: 80 million.

Ronaldo may be a goal-scoring machine, but is he worth 160 times more than Keegan? That increase outstrips the UK inflation rate between 1977 and 2009 by a factor of 35. If costs in soccer had mirrored the real world, Ronaldo's transfer fee would have been around 2.3 million pounds.

But soccer finances rarely resemble reality. While no transfer has broken Ronaldo's record in the past two seasons, deals worth 30 or 40 million pounds ($49-65 million) are now commonplace. Even a journeyman player can cost 20 million pounds. And that's before player wages, which have also exploded. In the final year of Ronaldo's 6-season contract with Madrid, the Portuguese superstar will make 556,000 pounds a week.

European soccer's governing body UEFA wants to change that. To end lavish spending it has devised new regulations to force clubs to pay out no more than they earn.

The new rules, which UEFA calls Financial Fair Play (FFP), begin this month with the start of the European season. Clubs will have two years to begin balancing their books. If they don't meet FFP targets from the 2013/14 season, UEFA says it will expel them from club soccer's premier Champions League competition. That would lose a club tens of millions of euros in television revenue plus the global exposure that helps generate millions more in merchandise sales.

UEFA General Secretary Gianni Infantino believes change is vital. In an interview at UEFA headquarters in Nyon, Switzerland, Infantino said the global financial crisis and years of losses in European soccer -- 1.2 billion euros in 2009 alone -- have convinced even club bosses that they can't go on spending more and more.

"They were as worried as we were about the escalation of finances in club football. We had to find a way to make sure that club football was sustainable in the future," Infantino, 41, told Reuters. "If this continues and nothing is done, the whole system will collapse."   Continued...

 
<p>Real Madrid's Cristiano Ronaldo celebrates after scoring a goal against Tottenham Hotspur during their Champions League quarter-final soccer match at Santiago Bernabeu stadium in Madrid, in this April 5, 2011 file picture. REUTERS/J. Sanchez/Files</p>