Financial crisis looms over European soccer

[EUROPE] The English Football Association Chairman Lord Triesman warned Tuesday that the global financial situation could hit English teams badly because of the amount of debt they're carrying. He said that the collective debts of the English game amounted to an estimated $5.3 billion, around one third of which is being carried by the country's top four clubs -- Chelsea, Manchester United, Arsenal and Liverpool.

The global credit crisis meant that not only was the volume of the debt a problem, but "those who own the debt are themselves now often in serious problems," Triesman told the Leaders in Football conference in London.

His point was illustrated perfectly on the same day when an Icelandic bank, in which EPL team West Ham United owner Bjorgolfur Gudmundsson is a majority shareholder, was taken over by Iceland's Financial Supervisory Authority because of a fear that the bank could default. West Ham's Vice Chairman Asgeir Fridgeirsson claimed the club was not for sale and that Gudmundsson is "still standing. At the moment he's not planning any changes." Last month West Ham's sponsor, travel firm XL, went bust.

Triesman called for clubs to be more transparent about their finances, and said the FA needed to more stringently apply its hitherto discredited "fit and proper persons" test to those taking over English clubs. He also forecast that players' astronomical wages, which have soaked up much of the Premier League's income, would have to come down.

In Germany, meanwhile, the precarious financial situation of the much less wealthy Bundesliga has been threatened by a collapse in the share price of Premiere, the subscription only TV company that pays $300 million a year for partial broadcasting rights, over half of the $557 million annual total. On Friday it issued a profit warning for 2008 because of a shortfall in projected subscription numbers, and its share price fell by over 50 percent. By the close of trading Tuesday its share price had sunk to $3.64, down 80.5 percent on the past 12 months.

The current Bundesliga TV contract expires at the end of this season, and there's nothing in place for 2009-2010 after a proposed $627 million annual deal between the league and the Sirius group of media entrepreneur Leo Kirch broke down this past summer when the Federal Cartel Office insisted on a free-TV highlights package before 8 p.m. on Saturdays. Last week the Bundesliga opened up the bidding again, and plans to award the contract in November. Kicker revealed Tuesday that the league is offering as bait staggered kickoff times across the weekend, a move that in previous years has lead to strong protests from German soccer fans, who regard Saturday afternoon kickoffs at 3:30 p.m. as almost sacrosanct.

German fans are also traditionally reluctant to pay for watching soccer on TV -- Premiere has sold just 800,000 soccer subscription packages. If no lucrative TV deal for the Bundesliga rights materializes, they may end up having to pay at the gate instead, in a country where ticket prices have resisted the same kind of sky-high rises that English teams have imposed on their fans the past few years. One way or another, they will end up having to compromise.
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