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Italian football tries to cope with debt but rules are not stringent enough

by Gianni Dragoni

These are sweaty days for the teams in Serie A, Italy’s Premier League, with regard to their enrollment next season. This year the Italian Football Federation (FIGC) will examine the state of each club’s finances, according to the mini-fair play financial terms announced in 2015, after the bankruptcy of Parma FC.

Their limitations are not as stringent as those of UEFA, which impose the principle “you can’t spend more than you earn.” Nevertheless, the Italian clubs – the majority of whom are afflicted with debts and budget losses – could find themselves in trouble if their accounts are deemed not to be in order.

The balance sheets being examined are for the period ended June 30, 2016, and have not yet been approved by the clubs’ companies. They will be ready by September/October. However, Covisoc, the FIGC’s commission tasked with monitoring the clubs’ accounts (nicknamed “The Football Securities and Exchange Commission) is ready to begin its work.

The first meeting will take place on July 9, called for by its president, Cesare Bisoni: a university professor who is a member of the board of auditors at UniCredit, the largest Italian bank in terms of assets (and one of the principal sponsors of the Champions League).

These examinations by Covisoc’s five commissioners will be used by the FIGC’s federal council, which is presided over by Carlo Tavecchio, and whom, by the end of the month or early August (before summer vacation), must give a decisive green light to the next season.

On June 16 last year, SSC Napoli’s owner Aurelio De Laurentiis sounded the alarm: “I’m not worried about the high number of foreign players, I’m worried about our clubs’ accounts. I talked about it with Tavecchio, who confirmed that most likely only three clubs would be able to enroll in next year’s championships.”

Surely Napoli and Juventus were among the clubs in good standing; it is unknown who this third club might be, since De Laurentiis didn’t name names. This year, the situation doesn’t seem to have improved. However, in the summer of 2015 none of the clubs were thrown out of Serie A, neither for financial reasons nor any other reasons.

The FIGC’s mini-fair play financial terms requires the teams to submit a report before the end of the previous season indicating their liquidity and it is finalized to measure their level of short-term financial stability; that is to say, each club’s capacity to cope with their financial obligations over the next 12 months.

Should any club fail to comply with these agreed-upon guidelines, the financial gap must be covered by the club. The FIGC introduced two other parameters: a debt indicator and an indicator of growing labor costs, both of which can correct a lack of liquidity. According to Juventus president Andrea Agnelli, the whole mechanism of requiring clubs to perform financial acrobatics is complex, but still weak.

For example, the debt parameter does not encourage clubs to reduce their debts, but rather could give more leeway to clubs already in debt. In order to obtain a national license to enroll in Serie A, clubs must show that their salary payments to players, coaches and other employees are in line through May 2016. This year there will be a sanction if clubs are found to not be in good standing: a ban on player transfers in the January 2017 transfer window, in which new players can only be bought with the funds from other transfers.

This financial balance is not yet required by the FIGC: it will become obligatory in two years’ time. However, the FIGC does allow the club owners to write off their liabilities with injections of capital, a remedy that is instead banned by UEFA as a requirement for entering European competitions. In the meantime, as far as the summer market is concerned, the club presidents are free to spend and keep the fans dreaming. The accounting can wait for the fall.