Economy & Trade, Europe, Headlines

EUROPE: Football – The Game Is Not Just Sport

Tito Drago

MADRID, Sep 2 2003 (IPS) - Football, considered the world’s most popular sport, is increasingly swayed by the demands of the transnational business it has become, pushed and pulled by big capital – and by satellite television.

The phenomenon can be seen in the purchase of football clubs by new multimillionaires, in television network battles for exclusive rights to transmit or broadcast matches, and in the impact of the football "business" on national economies.

It is also evident in the lucrative product endorsement contracts of the top teams’ star players, particularly in Europe, and even in the money involved in recent international tours by Spain’s Real Madrid club.

Then there is the illegal transfer of funds, as indicated by the legal charges against Brazil’s Ronaldo, who plays forward for Madrid. He is caught up – alongside his agents and representatives – in an investment trafficking case begun earlier this year in the Brazilian courts.

Football-related income in Spain is the equivalent of one percent of gross domestic product (GDP), according to figures from the Professional Football League (LFP), the institution that coordinates and directs football activities in Spain.

The referees earn wages of six million euros each season, while the budgets of the football clubs in the first and second divisions reach nearly a billion euros (680 million dollars).

This year, Spain’s LFP championship is predicted to take in 240 million euros (some 272 million dollars), just for the exclusive rights to televise the matches.

The Spanish state, meanwhile, will see more than 700 million euros (800 million dollars) in social security contributions for players and referees, and in income and value-added taxes.

The executives at Real Madrid had not yet tallied the money earned during the team’s 30,000-km tour of Asia in August when club president Florentino Pérez began looking at offers from companies to organise another series of matches, some of them in the United States.

This new round of games abroad could bring in at least 11 million dollars for the Spanish football club.

And if that were not enough, Pérez, who is also one of Spain’s biggest realty and construction tycoons, already has another project geared up to issue membership cards to Real Madrid fans to citizens around the world.

The plan would not only dramatically increase the revenues of the sport institution he heads, it would also strengthen its international image, already solid since the Fédération Internationale de Football Association (FIFA) consecrated Real Madrid as the best club of the 20th century.

As for the fate of that money, the matter is apparently clear to the executives at Real Madrid.

"Real Madrid is not a corporation, it doesn’t distribute dividends, so the income redounds to the advantage of the club and its members," Jorge Valdano, an Argentine who years ago was a star on the pitch and is now the Madrid club’s sports director, said in an IPS interview.

The same cannot be said of other football clubs, whether in Spain or abroad, which are owned by individuals or are corporations.

Since early July, the British club Chelsea has been the property of Russian multimillionaire Roman Abramovich, whose fortune is estimated at 5.7 billion dollars.

The British press came down hard on that transaction due to the questionable origins of the buyer’s millions. Abramovich served a prison sentence in Latvia for illegally diverting fuel shipments and is currently under investigation by Swiss justice authorities for his financial dealings.

In Spain, Jesús Gil, owner of Atlético de Madrid, Real Madrid’s rival in the Spanish capital, was forced to resign as president of the club when he was charged with embezzling.

Gil also had to resign from his post as mayor of Marbella, a city on Spain’s southern Mediterranean coast.

During a trial still underway in Marbella, it was revealed that current mayor Julián Muñoz and José María del Nido, president of the Sevilla Football Club, were accused by the Spanish government’s anti-corruption prosecutors of additional financial crimes, and of lying under oath.

Meanwhile, the battle over the rights to televise the football matches is entering a difficult phase in Spain. Only Real Madrid and Barcelona, currently the country’s leading clubs, have contracts through the 2007-2008 season, with guaranteed revenues of more than 340 million dollars.

Over the next two months, the other clubs will have to renegotiate their contracts with AVS, the company that won exclusive televising rights in a bidding process. AVS has already announced that it will be cutting budgets because television revenues fell 13 percent last season with respect to the prior year.

But the major clubs, like Real Madrid, can count on money not only from inside Spain, but also from the rest of the world.

With that in mind, Pérez has instructed his staff to negotiate an agreement with LFP to schedule some games around midday, local time.

The idea is that those matches could be broadcast live during peak viewing hours in Asian countries, a massive market of potential fans. Efforts like this ultimately could make the international market the most lucrative scenario for Real Madrid.