Club football, the game’s source spring, faces financial headwinds

Strangely, Barcelona and Bengaluru FC (as well as other Indian clubs) have the same root cause for their financial woes — soaring player salaries. Spanish publication El Mundo which broke the story about the threat to Barcelona, highlighted the fact that 74 percent of the club’s substantial Euro 855 million in revenues go to pay players’ wages. While Indian players aren’t in the same league, they too are their clubs’ main head of expenditure.

According to the website transfermt.co.in, the highest-paid stars in the ISL this year, foreigners all, are the 33-year old Gary Hooper who earns Rs 6.66 crore playing for Kerala Blasters FC and Mumbai City FC’s 34-year old Adam Le Fondre along with NorthEast United FC’s Idrissa Sylla both of whom will take home Rs 5.8 crore each.

Of course, those figures pale in comparison with what these players earned in their prime. Hooper, for instance, had a peak market value of Rs 50 crore in 2013 when playing for Norwich City. That same year, Fondre earned Rs 33 crore playing for Reading FC. Those numbers though, were achieved in the cash-rich Premier League and the Championship which are valued in billions of dollars. The ISL, by contrast, is valued at $58 million. For comparison, the Persian Gulf Pro League, Iran’s highest division for professional football, has a total market value of $109 million.

That number places in perspective the limitations of the major Indian clubs with limited revenue opportunities. Data from the Ministry of Corporate Affairs shows that most ISL clubs have consistently reported annual losses averaging around Rs 30 crore in the first four years of the league.

In fact, the last 10 years have been particularly harsh to them with even the top names in the country — ATK Mohun Bagan and SC East Bengal hitting financial rock bottom and needing bailouts to survive. At least they were lucky. Others such as Mumbai FC and JCT Mills simply folded. That’s because most Indian clubs are dependent on support from corporate houses and a decline in the fortunes of their patrons spells doom for them.

Thus, FC Pune City found itself in a limbo after the Dewan Housing Finance Corporation Ltd. (DHFL) crisis led to the exit of the Wadhawan Group, its principal backer. Mohun Bagan and East Bengal’s troubles started after the UB Group which was sponsoring both, went into a nosedive.

It is a strange paradox that a game played by millions and loved by billions, is in such dire straits across the world.

Ten years ago, the UEFA pushed through the Financial Fair Play (FFP) regulations in response to the growing losses of major clubs. The objective was to instil some degree of financial discipline such that their long-term survival wasn’t threatened by massive spends largely on buying players who can be a draw at the turnstiles. As former UEFA President Michel Platini said on the eve of the announcement of the new regulation in 2011-12, “50% of the clubs are losing money and this is an increasing trend. We needed to stop this downward spiral. They have spent more than they have earned in the past and haven't paid their debts.”

Sadly, the new regulations have done little to stanch the sea of red which is threatening to engulf football. Time for some serious introspection from the big clubs.