There are teams in England inching closer towards bankruptcy. In Spain, the most prosperous of club are nearing debts of almost a billion euros.
There is a saying in Latin America that says “If America has the sniffles, then Latin America has pneumonia.” So far that reality is exactly that especially in football pitches around the region.
Of course, there are clubs in Brazil that cannot pay their players despite that nation finding its economic situation in less of a boom than it was at this point last year. Colombian football is one light breeze away from falling into a precipice. As of right now there are a handful of clubs that could keep their sporting recognition from ColDeportes because of the moneys they owe to players, coaches, employees and even vendors. Even Peruvian football is gong through one of its worst crises ever after seeing Universidad San Martín de Porres- a team that has won three league titles since delving into the professional ranks in 2004- decided to commit football harikiri this past week and cease operations. That left several players without a job and several fans without a team. Many supported this because the club, which was in good standing, would be penalized for the financial mishaps of others. Yeah, big time pneumonia.
There is one case that many talk about but few are doing anything reasonable about it. It is the typical case of most worrying case that emerged this past week was in Argentina. AFA announced that they made a profit in the past year. Not an issue, right? Well there is a little caveat in this statement.
If you begin to include all the debt that the clubs accumulated this past year; that number easily surpassed the annual subsidy moneys that the government… er, Fútbol Para Todos gives AFA on a monthly basis. Not only that, there are still some pending
Even reigning league champs Boca Juniors are looking to have to begin to disband their side come June. What seemed to have been an impressive profit this past year seems to be less optimistic than expected. A fee members of Boca’s board came out and said publicly that the team would have to sell at least two big time players or you will really see them join in the the collective dirge of economic mishaps that have led to this point.
Is the cash cow running out of pasture?
What I mean by that is that the checks are not coming in as promptly as they were at the beginning of Futbol Para Todos. The premise behind this government-aided program was to inject money into the game in an effort to help clubs to eliminate debt.
AFA has always been the benevolent Godfather to the clubs at different levels. But things might be changing rather abruptly. According to a report in Argentine daily La Nación, a very close associate of Grondona within AFA told the club presidents in their first board meeting of the year to not “put their hands out”. To smaller clubs, the club presidents are offered moneys to improve their venues or at least the promise to do so. They are also gifted with trips to World Cups as well as the possibility of seeing the national team on a consistent basis. Meanwhile the top flight sides get convenient advance loans on television rights revenues so they can either purchase players or, more importantly, make ends meet.
Julio Grondona generated this type of dependence that the clubs have with the federation. This is the primordial reason he is undisputedly the most powerful man in Argentine football 34 years running and is also Sepp Blatter’s right-hand man at FIFA.
Economic Troubles
The giveaways are a constant sign of the populist state of affairs not just in the game but in Argentine society as well. English newspaper The Economist published on Friday that they would no longer use that nation’s market indicators as a proper source. This also led to lots of speculation
Having gone lived and visited Argentina the past few years, I can tell you for sure that inflation is not just 5-11% as per the latest official numbers give by that country’s government.
If there is such “mild” inflation in Argentina right now, then why were unions like the Province of Buenos Aires Teachers Union demanding a 30% pay raise in order to “maintain a standard of living” and be able to give teachers more “purchasing power”. Of course, those negotiations fell through and the school year that was scheduled to start on February 28th will see a delay as said union decided to call a three-day work stoppage to protest.
Oh, by the way, I am forgetting about the alleged threats by government officials towards certain economists. I will that hot potato right there.
The inflation is also being met by strict restrictions in the purchasing US dollars where citizens are limited to a minimal percentage of American currency they can buy all based on their monthly income as well as what their intentions are in buying the money. Even online banking in October was suspended.
Oh, also foreigners beware. Ezeiza International Airport now has trained dogs that can detect dollars in luggage. So this restriction is not one to discriminate based on nationality, either. By the way these measures are more like the ones that were made by the Venezuelan government a few years ago.
This limitation in American currency could lead to the disinterest in investors wanting to go to Argentina; but let’s leave that type of speculation to the “experts”. One thing is for sure, one will have to keep an eye out on how the talks between the US and the Kirchner administration pan out as the South American nation looks to reduce the debt they have with Uncle Sam.
I know I went a tad too political on this post, but there are reasons to look into this topic much closer in the coming years. Ladies and gentlemen, the problem that is Argentine football right now is not going to be solved by throwing money at it.
If we want to look at this economic situation in a more domestic setting, you would have to compare it to the parent that gets their kid a credit card. The kid goes and charges like there is no tomorrow and ends up maxing it out- and then some. So what does the parent do? He gets them another credit card to pay off the one he maxed out. The kids repeat the behavior and the debt grows larger. The parent repeats the behavior and the child follows suit.
It is a spiral that has no checks and balances but both sides continue to perpetuate it. The problem was actually exacerbated when throwing money at it. There was really no control or limits as to how the money should have been used. If the government really wanted to put a stop to it, they could audit the teams as well as AFA, but that would also bring in FIFA opening a can of worms that not even Julio Grondona would be able to seal up again.
Now if these reports that are emerging, the future for clubs at all levels looks even dimmer than it was to begin with. The clubs have even gone to AFA to see if it can go to the Argentine government to see if there can be an increase in the moneys subsidized. There have to be many other issues solved before government can come with more funds to inject into the game.
The problem lies in the restructuring of the game there from every single aspect conceivable. The teams have done little to curb spending, although now AFA has developed a committee to see how clubs can reduce debt. The big question there is how long will it take for it to start finding answer. Better yet, how long will it take for them to truly start to look for them- the type that will lead to solutions and not just temporary band Aids.
For many in the Kirchner government, the harsh lessons of 2001 look to have been lost in the back pages of time. This has been a paradox because things have been done incorrectly in the past, yet they are committing those same mistakes again. At the same time they are always looking to the past Cristina Kirchner’s legacy is destined to reach an almost Evita-esque type stature… or at least that is what she wants to do by any means necessary.
AFA, for now, seem to be along or the ride and are happy to do whatever she says as long as she shows them the money. The problem is that seeing how things are from the eyes of the average Argentine that has seen their country erode socioeconomically and politically.
While the government dumps millions upon millions on their most important propaganda machine, the citizens suffer from the effects of inflation that gives many flashbacks of the 1980′s. At the same time, the topic of public safety gets thrown around rhetorically but results are further away then ever.
The government well knows that they have to appease the masses by keeping the circus open. Remember this is a country that asks which team a presidential candidate supports. They have to do their best to keep the façade as sturdy as they can.