The Football Industry: From Sports to Balance Sheets

SPORT is the one that arouses the most interest – including economic ones – and passion. Also and above all in Italy, the historic homeland of football. But what has long been a real industry suffers from a lack of financial sustainability. Although some signs of improvement have been seen in recent years and there are exceptions of companies – one for all the Bergamo-based Atalanta – that present accounts in order, the panorama of Italian football clubs from Serie C to Serie A is certainly not flattering. According to the FIGC 2024 report referring to the two-year period 2022/2023, the overall turnover of Italian professional football was 4.251 billion compared to an aggregate debt of 5.7 billion. A turnover, warns Francesco D'Angelo , professor of commercial law and of crisis and insolvency law at the University of Florence, lawyer, founding partner of Tombari D'Angelo, a "boutique" law firm with offices in Milan, Florence and Bologna, specialized in business and corporate law, completely insufficient to face a debt of this size.

Among the shadows of the sector, unfortunately another number stands out, that of the aggregate loss of Italian professional football in the last 5 seasons (from 2018 to 2022/2023): equal to 4.9 billion. The overall impact of football (also taking into account the induced effects) is however significant, amounting to around 19 billion and contributes around 11 billion to the Italian GDP, with a tax revenue of around 3.3 but also debts with the treasury of around 500 million. The division of revenues is for around 35/37% deriving from television rights, for around 17/20% from capital gains, for 19/22% from sponsors and commercial revenues, for 8/13% from stadium revenues and for the remainder it is other revenues and contributions to operating account. However, 70% of the costs are due to labor, which has increased with the rules introduced by the Bosnam law, the increasingly onerous charges paid to agents, while the recent decree that increased the possibility of fixing player contracts from 5 to 8 years, underlines the lawyer D'Angelo, could serve to calm costs by tying the athlete more closely to the shirt. The mix of low revenues compared to costs has meant that, looking at the balance sheets of the companies in the 16 years of experience of the report, about 80% have closed at a loss. And from 2000 to today, almost 200 football clubs have "gone bankrupt" (the majority, more silently, in Serie C) including a glorious club like Fiorentina for which Professor D'Angelo was part of the legal team that followed the financial crisis of the Viola team. The management of the crisis of football clubs in recent years has seen the use of new tools, it is enough to mention the cases of Sampdoria, Genoa and Reggina, even if the latter then went bankrupt. Which has raised controversy, as lawyer D'Angelo always recalls, due to the possibility of obtaining significant write-offs of the tax debt with the consequent distortion of competition and the principle of equality of arms between the teams.

But how is it possible for companies that should be subject to stricter controls and rules than ordinary law companies, to end up with unpaid tax debts for such significant amounts? In the case of Reggina, the cancellation of almost 95% of the tax debt (the transaction envisaged the payment of only 750 thousand euros out of 15.7 million of total debt but the company then went bankrupt due to late payment of the debts). For Sampdoria, the payment in installments of approximately 35% of the total debt and therefore approximately 17 million out of 48, while in the case of Genoa, a write-off of 65% and the payment in installments of the remaining 35% of the tax debt (35 million out of 107) "These are completely legitimate solutions for our 'common' legal system - warns Professor D'Angelo who has long participated as a speaker at seminars and conferences on the subject of financial sustainability and the crisis of football clubs -: bankruptcy is in fact the extreme solution and if there are convenient alternatives they must be pursued. It is certainly clear to everyone how debt relief (especially for tax debts) creates a distortion of the principle of equal conditions between football clubs. This is also why the federal rules have been integrated and modified in the sense of introducing restrictions (impossibility of participating in transfer market sessions) for clubs that resort to crisis resolution tools. But these are restrictions considered quite mild and not sufficient to protect the principle of competition between companies".

This shows how there is not always coordination between the rules of common law and the rules of sports law. And how more effective financial control systems on companies are needed. In this sense, although not independent following the example of England, the new Abodi commission for the supervision of sports companies could improve the situation. But to fuel a virtuous path capable of creating the conditions for greater economic/financial sustainability, much more is needed. "There is no solution, even if the balance sheets reveal the importance of sports results on the profit and loss account, it is enough to mention the case of Inter - concludes lawyer D'Angelo - but only a method. That is, a strategic approach that looks at the world of football in a medium-term perspective and that is able to incentivize or allow infrastructure investments starting from the stadiums owned and trained. Training means not only the (necessary and irreplaceable) attention to youth sports sectors but also the training of the managerial class knowing that football clubs are businesses".