Harvard study finds huge lack of financial integrity in world football

FIFAA recent study by Harvard University, says there is a huge lack of financial integrity in world football that poses risk to the game, beyond the revelations of corruption in the world governing body FIFA.

The study by the Centre for International Development (CID) at the University found that there is a high lack of financial transparency and integrity, high financial concentration and inequality in the game, and huge indebtedness affecting sustainability.

According to the study Off pitch: Football’s financial integrity weaknesses and how to strengthen them, over 90 per cent of European clubs, and more in other regions, do not provide any public standardized reports on their financial capacity and financial management.

Only 150 to 200 clubs in Europe provide standardized reports on their finances; but even then, there are significant concerns about their data and methods.

The study says this “dark space” in more than 90 per cent of the world’s football clubs is “a breeding ground for financial integrity issues.”

Along with the football clubs, the top governing bodies such as FIFA and UEFA, and the vast majority of football federations and associations, lack financial transparency.

“FIFA and UEFA produce financial data with major gaps, lagging behind trends in areas like disclosure of executive compensation or administrative and governance spending. FIFA and UEFA are also not transparent about potential conflicts of interest in revenue sources and bidding processes,” the study says.

The writers of the report recommend among other things, that FIFA enhance transparency, build a global club registry and train finance personnel to improve club reporting.

Sports, according to the study, generates $80 billion a year and while football accounts for $33 million (about 40 per cent) and more than any other sport, world football is dominated by a small elite minority of clubs, players, leagues, governing bodies and officials.

It notes that new revenue sources, such as corporate ownership, sponsorships and broadcasting connections have led to significant growth in Europe’s top leagues, with accompanying allegations of corruption, money laundering and mismanagement, it has widened the gap between the “haves” and “have nots”.

In the top tier leagues of England, France, Germany and Italy, the richest four clubs have 46 to 55 per cent of the revenue; and in the Spanish La Liga the richest four have 66 per cent.

The top four leagues in Europe also account for about 60 per cent of the revenue in the top 54 leagues. Comparing world regions, there is also a huge gap between Europe and the rest of the world as Europe is dominant and has an unhealthy concentration of finance and talent.

“This concentration is reflected across the world, as a story of nested concentration in a winner­‐takes­‐all sector where few clubs in few leagues are monopolizing most of the money and sucking in most of the talent. Outside of Europe’s top leagues, clubs have been crowded out of the global financial game and lack revenue raising capacities to compete on the field and survive off the field. This is most apparent in the transfer market, where a small group of clubs dominate.”

“The disparity between this small ‘green zone’ and a vast ‘red zone’ raises serious questions for the future of football,” the study says.

The research also analyzed financial sustainability of clubs and leagues through revenue attraction, player costs and bankruptcy risk and found that 70 per cent of the clubs in Europe’s leagues are medium to high risk in terms of financial sustainability, while 14 per cent are at medium risk and only 11 per cent are at low risk.

It is estimated that 60 per cent of national football associations across the world, are at high risk of bankruptcy.

On fiscal responsibility, which is tax debt to revenue ratios, clubs in over 80 per cent of European top leagues, are medium to high risk and rising fast.

The study also indicts FIFA of weakness in enforcing regulation and combating issues like match fixing, money laundering and human trafficking which give the sport a very negative moral reputation.

By Emmanuel Odonkor

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