Competition between European football clubs - published: 29/09/2010

Abstract

In Europe, the economical competition is as relentless as the sport competition between professional football clubs and this fight is clearly unequal between the big and small clubs.

How can we explain the competitive differences between the best French football club and the best clubs of the other 4 big European Champions (England, Italy, Spain and Germany)?
The basic hypothesis is that since 1998 and the French Team consecration during the World Cup, French clubs have difficulties to survive and assert themselves on the European scene. However, the French players' level is not to be put into question. Moreover, a large majority of players, who are part of the national French team are now playing in big foreign Championships (England, Italy, Spain, Germany). Zidane, Henry and others find in those big European clubs what doesn't exist in France: a very high level of football, a spectacular game with full stadiums and some huge salaries that French clubs cannot offer.
With the Bosman decree and the opening of the market, football lost its autonomy during the last decade. It became a real economical activity; some negative aspects appeared very quickly. For these reasons, the State Leaders and Heads of the governments tackled this problem, the ‘sport specificity', during the Nice conference. The negotiations resulted in a text proposing a different orientation ‘so that sport would be considerate as a particular domain in terms of competition'. This particularity could lead the European Union to acknowledge ‘the sport exception' and go back to the Bosman decree and its unfair competition consequences.

The tax laws and national insurance contributions are the first handicap for French clubs compared to the other European Union countries. That's why, in spite of a good formation, French clubs can't face their players exodus to those countries. But according to Jean-Pierre Karaquillo, director of the Law and Economics Sport centre and author of ‘Sports Law' (Dalloz), “it's not only because of the law and tax system that the Spanish, Italian and English clubs attract our stars”. With only about 18,000 spectators per match and a non-existent merchandising, French clubs don't have the same abilities as Real Madrid, Manchester United, Bayern Munich or Milan AC, even if they had the same tax system. Indeed, French teams are late in terms of income diversification (ticketing, TV rights, by-products, quotation in Stock Exchange) and cannot take advantage on those profits in order to increase their budget and catch up with their European neighbors.
Giving the TV rights to Canal plus for 600 million euros per year for the next three seasons is a real turning point in the French football economy. L1 and L2 clubs stay prudent with this enormous amount: it will be invested for a long term to develop their structures, but they all fear the threat of TPS and Canal plus merger.
Today, French clubs have to do exceptional careers, such as the 2003-04 season (Monaco was the finalist of the Champion's League, Olympique de Marseille was the finalist of the UEFA Cup and Olympique Lyonnais, in the Champion's League quarter final). This is essential to see the future with more confidence: European campaign 2003-04 brought almost 10 million euros to OM!

Good sport results and rigorous club management bring interesting results and the clubs' accounts are a bit relieved. About European football in general, a lot of clubs (principally English and Italian) suffered the biggest financial crisis (Lazio, Parme, Leeds United).
The Premier League currently holds 922 million euros debts! Calcio, more than 2 billions euros! In Spain, FC Barcelona holds about 150 million debts, which is the total of L1 clubs debts!

French clubs are lucky to be out of this ultra-liberal system. They survived the global European recession, and in this new finance regulation period, French specificities such as financial public support from the communities, management control, and gathering of TV rights could become the example to follow in Europe. If the French clubs involved in the Champion's League this year have good results, France could consider joining its four neighbors in the best European team charts.