How To Save European Soccer From The Players

Soccer players are stealing our profits!

This is the woeful cry of soccer-or, as they have it, "football"-club managers in the UK and Europe, according to the recent Financial Times story citing a just-released annual report from Deloitte's, one of the Big 4 (or is it 3 now? I don't remember. It used to be 8.) global bean-counting firms, on the financial side of football in Europe.

The good news for owners and shareholders of UK football clubs is that continued strong attendance and TV advertising revenues brought in $2.9bn for the UK Premier League in the 2008-9 season. Add in about $1.8 billion from each of the German, Italian and Spanish leagues and we're talking some serious money here-somewhere in the ballpark, so to speak, of $8 billion.

The bad news is that these money-grubbing soccer players who actually draw in the crowds and the TV audience targeted by the advertisers stole an exorbitant portion of this valuable intake: 67% in the UK Premier League, 63% in Spain's La Liga, 51% in the relatively parsimonious German Bundesliga and-wouldn't you know?-a staggeringly greedy 73% in Italy's Serie A. If you tot all that up, you find that these swarthy, over-muscled, long-haired/shaven-headed, tattooed soccer players have siphoned off $5.3 billion of the 2009 takings, leaving only about $3 billion to cover overhead and profits for the owners and shareholders.

In a related story, Forbes has revealed that the world's 10 richest owners of soccer teams enjoyed an increase in net worth of $36 billion in 2009. But given this kind of outrageous wage inflation among their soccer employees, who knows how long that will last? Pretty soon you might well see Russian ex-oligarchs and Indian steel magnates holding their hats out in front of the entrance gates at the major European soccer venues. Not to mention Silvio Berlusconi at his club, A.C. Milan, which, given the esurience of the Italian players, must surely be one of the more egregious offenders.

Deloitte, according to the FT report, is warning that much of the increase in revenues is being "swallowed up by players and their agents" in a "dysfunctional business model" where clubs are "continually driven to maximise wages rather than profitability".

A Mr. Dan Jones of Deloitte's commented that "there needs to be a healthy dose of restraint on the business side. Clubs can take a hundred years to develop but can be put in jeopardy in the space of a few weeks of poor transfer dealings". Yeah! All those hundreds of years we've spent building up these clubs, gone, just like that! Mr. Jones says that the impending World Cup is only going to make things worse by "fueling the demands of top club players".

UEFA, football's governing body in Europe, has been studying this and other issues and has reached an agreement in principle to control wages.

And that really gets to the bottom of the problem:

SOCIALISM!

This is Europe we're talking about. Isn't it obvious? The people get everything, the entrepreneurs get nothing. Won't they ever learn that this is a business-killing strategy?

The question is what to do about it? One member of UEFA who wishes to remain anonymous has proposed a solution. Instead of having everybody come to watch these ragtag ruffians playing soccer, they should put a big conference table in the middle of the football pitch and gather the clubs' Boards of Directors there. TV cameras and everything, just like before. Only instead of watching a soccer game, they can watch the Directors making Strategic Decisions. You could even sell copies of the Minutes afterwards, for extra revenue.

Of course, here in America, we don't go in for hare-brained schemes like the Socialist Europeans. We've long ago found the answer to Socialism: it's called Capitalist Free Enterprise. Check out our corporate profits as a percentage of GDP and you just can't avoid the logic of this. We have always been smarter than Europeans, and we know how to handle these business situations. (Hint: In our country, the lion's share doesn't go to the ones who do the dirty work, it goes to the guys on the Executive Floor.)

The answer is perfectly obvious: Outsourcing. Fire all the players and bring in the Chinese. They'll work for almost nothing and like it. Can you imagine what that will do for margins?

Bend over like Beckham, boys!

Carl Hegelman (a pen name) is a corporate bond analyst and a connoisseur of leisure.