Friday, December 22, 2006

South American clubs must sell players to Europe

Almost all South American football clubs rely on trading players to European teams to stave off bankruptcy as match attendances in the region decline, according to a study by Deloitte & Touche LLP. Brazilians clubs, which post an average annual operating loss of $83.5 million, sold 804 players in 2005, generating US$100 million, the accountancy firm said. Half came from Robinho's move from Santos to Real Madrid. "Clubs have to invest in and strengthen their assets and financial position," Deloitte said in a synopsis of its 16-page report qioted by Alex Duff of Bloomberg. "The situation is far removed from that in the Old Continent," it added, referring to Europe.

Brazilian and Argentine teams derive 30 percent and 50 percent of revenue from trades respectively. They are increasingly turning to financial advisers as they seek to lift income from television rights, sponsorship and ticket sales, according to Deloitte. An average of 7 percent of Brazilian clubs' revenue comes from ticket sales, compared with 12 percent in Argentina. "Because of socio-economic problems in the region, together with safety concerns in various South American stadiums, attendances have gone down considerably," the report said. The average attendance has dropped to 12,000 from 16,000 in Brazil since the 1980s, it added.

Brazilian clubs get as little as US$9 million from TV television rights, 20 percent of total sales, the report said. In Uruguay, Penarol and Nacional, with eight elite South American titles between them, survived on sales of $3.2 million and $6.5 million respectively in the 2004-05 season, according to Deloitte. Nacional received $2.6 million from player trades, allowing it to post a profit of $300,000. Penarol had a loss of $300,000 and got $800,000 from player trades. In Chile, Universidad Catolica earned $1.8 million from player trades, 90 times as much as it got from the sale of merchandise including team shirts.

No comments: