Milan and Financial Fair Play

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Post by Brigate Rossonere Fri Aug 12, 2011 4:30 am

I was just reading some posts around the Milan forum and saw a few people discussing Milan and FFP.

I will tell you know, we are in big trouble. Galliani does not joke when he is saying that Serie A can potentially fall behind Ligue 1.

What does Serie A currently have? Global viewership? Not to the extent that EPL / La Liga do. Huge commercial sales? Inter and Milan make about 20% of what Bayern do. This is not all, in fact, those are the smaller problems. The biggest issue for Italian clubs is matchday revenue. We are losing out not only because of old and outdated stadiums that no-body wants to visit, we are losing out because Italy is in a tough financial situation and even with these low tickets prices that Italian giants are currently charging, there is still a falling number of total spectators each year.

A lot of arguments for Serie A still being the third strongest league is that the giants in Serie A are much stronger than the German giants (Bayern, Borussia, Schalke etc) and most definitely stronger than the French giants (Marseille, Lyon etc). Well, once FFP kicks in, the top Serie A sides, especially the two Milan clubs whose owners are constantly covering losses and contributing capital, will suffer most and will be hurt to such an extent that we will no longer be a feared force in Europe.

This is nowhere more apparent than with Inter's current state. They have a team of champions, a team that is basically unchanged since they won the UCL and Moratti was happy with this. The problem with this team is that they are all in the latter stages of their careers and are all swallowing huge wages. Moratti seems to have just realized that their value is quickly depreciating and if he wishes for Inter to break even, they need to get rid of the biggest earners and sell at least one or two of their top assets to recuperate losses. Who have Inter brought in to replace their departing heroes? Ricardo Alvarez? Sneijder's boots are too big for him to fill. Transfer targets? Palacio is not on the same level as Eto'o.

Milan will soon have a similar issue. Nesta, Oddo, Zambrotta, Ambrosini, Seedorf, Gattuso and Pippo are all players who will need to be replaced in the near future (this or next year). If Milan wish to participate in European competition, they will only be allowed a leeway of 45m euro loss each year for three years from when FFP starts in 2014 and even less from then on.

MILAN LOST 70+M EURO'S LAST YEAR.

Who did we purchase? Sure we spent 16m on Robinho, but Ibra only cost us 6m in that year and Boateng was only paid for this year. How can we replace the seven players leaving / retiring in the next two years without going to Berlusconi for yet another capital injection?

The answer is through the two things that FFP does not include, stadium and youth academy development. I know I sound like a broken record, but the only thing that Milan can do to solve their issues is to either buy-out the San Siro (which is costing us 13m euro's a year just to rent) or build a new stadium. It would attract more viewers and eliminate the council fee for renting the San Siro. A loan could easily be taken out to finance the stadium and instead of using 13m annually to rent a stadium, we could be using it to pay off a loan so that in the future Milan own their own stadium and become more self sufficient.

Inter and Roma should both follow a similar path.

Juventus have prepared themselves already for FFP. Their owners have built them a brand new stadium, one with no running track, stands that are as close to the pitch as the FIGC allow and many corporate boxes, all of which have already been sold for the season ahead. Their owners have also injected 100m + in capital to improve their squad before the start of FFP so that they can be compeitive both on and off the field. They are doing everything right at the moment and should be lauded for this.

The FIGC and Italian government needs to realize the issues with the sport that brings in much revenue to their country and must change the laws so that stadium privatization is easier for sport clubs to achieve otherwise their fear of owning outdated stadiums with no revenue streams will come to fruition anyway as their country will be home to a non-relevant European league.

Doing nothing will kill Italian football.



I will update this thread as often as possible.
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Post by KR10 Fri Aug 12, 2011 4:36 am

The article talking about how Inter will get torn to shreds by FFP was one of the best ever

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Post by Brigate Rossonere Fri Aug 12, 2011 5:03 am

KR10 wrote:The article talking about how Inter will get torn to shreds by FFP was one of the best ever

Don't say it twice, Milan will not fare too much better. Sure we have a wider global reach, but Inter make up for that with their stronger fan base in Northern Italy. They have been averaging higher attendances than Milan for the last 5 years and have an owner who has repeatedly shown a willingness to invest into a new stadium.
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Post by Chagur Fri Aug 12, 2011 6:30 am

It's probably would sound very pessimistic, but we'll be done in future without our own stadium. I remeber just right after WC 90, we had the new stadiums all over Italy, they were crowded, owners were ready to invest, teams like Lazio,Parma have won UC. That is exectly the main reason why Serie A was the best league in the world, every player wanted to play in Italy.

We spend almost all our revenue for wages+cosmo taxes. And I'm almost sure in few years we'll behind France.
There is nothing strange in Galliani's words about "pizzeria", he only wants to awake all those bureaucrats and do sth. for calcio, but it's very unlikely to happen.
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Post by Brigate Rossonere Fri Aug 12, 2011 12:53 pm

Are those bureaucrats stubborn or ignorant to the facts? The only reason they refuse to pass the law on stadium privatization is that city councils fear they will have unused, outdated stadiums that provide little to no source of revenue. Do they not realize that if Italian clubs continue like this, they will no longer need these large stadiums as very little people will come to these games?

The law must be passed.
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Post by Arquitecto Fri Aug 12, 2011 1:13 pm

Very troubling news indeed.

I'd say the best option would be to buy out the San Siro as a new stadio would take too much time and San Siro is Milan's home along with the fact that its full of potential to renovate.

Italian Economy sitution? Its bad but has much potential to recover well if the Italian government make the right moves by signing an austerity approval and other counter measures.

The positives are that an influx of cash can come into Italia with the 2020 for for the Olympics which benefits the country as a whole.

Plus, your missing the fact that Finninvest has been gradually balancing the books further year after year although the losses seem imminent so far.

What pisses me off is why frakking France has gotten the Euro 2016 when Italia needed it 10 times as much as them. Must be all the well-fed french officials behind UEFA.

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Post by Eivindo Fri Aug 12, 2011 5:01 pm

England and Spain are cheating. England not too many years ago, had an empire spreading all over the world, with many people having to learn their language to engage in their lucrative business. Spain killed millions of Indians in South America, and forced their language on nearly all the areas of the continent.

Result? Much easier for Spanish speakers to relate to the Spanish league in Latin America, and English is the language we all communicate with today, so its waaay easier for a neutral to get sucked up in the Premface bandwagon.

Solution: Italy must force their language and culture on countries with big populations:D
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Post by Eivindo Fri Aug 12, 2011 5:04 pm

Arquitecto wrote:Very troubling news indeed.

I'd say the best option would be to buy out the San Siro as a new stadio would take too much time and San Siro is Milan's home along with the fact that its full of potential to renovate.

Italian Economy sitution? Its bad but has much potential to recover well if the Italian government make the right moves by signing an austerity approval and other counter measures.

The positives are that an influx of cash can come into Italia with the 2020 for for the Olympics which benefits the country as a whole.

Plus, your missing the fact that Finninvest has been gradually balancing the books further year after year although the losses seem imminent so far.

What pisses me off is why frakking France has gotten the Euro 2016 when Italia needed it 10 times as much as them. Must be all the well-fed french officials behind UEFA.

Its sad that FIFA is so obviously corrupt, and that people want to keep the italian league down for good. Euro 2016 would have saved the league, but lets give it to League 1 instead lol.
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Post by Chagur Sat Aug 13, 2011 8:16 am

Eivindo wrote:
Arquitecto wrote:Very troubling news indeed.

I'd say the best option would be to buy out the San Siro as a new stadio would take too much time and San Siro is Milan's home along with the fact that its full of potential to renovate.

Italian Economy sitution? Its bad but has much potential to recover well if the Italian government make the right moves by signing an austerity approval and other counter measures.

The positives are that an influx of cash can come into Italia with the 2020 for for the Olympics which benefits the country as a whole.

Plus, your missing the fact that Finninvest has been gradually balancing the books further year after year although the losses seem imminent so far.

What pisses me off is why frakking France has gotten the Euro 2016 when Italia needed it 10 times as much as them. Must be all the well-fed french officials behind UEFA.

Its sad that FIFA is so obviously corrupt, and that people want to keep the italian league down for good. Euro 2016 would have saved the league, but lets give it to League 1 instead lol.

France had WC in 98, but Platini gives Euro to France again, even though we need it more. Besides his beloved Juve already has a stadium, so probably he thinks it's OK Very Happy (enough for them)
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Post by Cruijf Sat Aug 13, 2011 9:25 pm

It's a very bad situation. FIFA's obvious corruption is nothing new, but disturbing all the less. IMO the best solution is to buy the San Siro and follow Juve's path. For the sake of Serie A, Inter and Roma should follow suit.


Last edited by ACMRox on Sun Aug 14, 2011 5:58 pm; edited 1 time in total
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Post by baresi Sun Aug 14, 2011 2:46 am

The situation is much more than stadiums, if you look at the way out stadiums will be the last on the priority list, stadiums dont mean easy money in the clubs accounts, they need havy budgets to maintain them and they will be close to useless if there is no strategy to fill them up. Look at the avg attendance to Serie A matches you will be shocked compared to other leagues.

Taxes are on of the major issues, I've been researching it for about a week, and found many interesting points,dy is not yet complete but this where I've gotten to.

In Italy you pay 45% of your income if you earn 112000 USD or above regardless of the source, so for Ibra he earns 9M but recieves 4.5M; even better an additional 30% of the salary is paid by the emplyer and 10% is paid by the employee as social security. Now we can all see why it is soo difficult to attract big names to play in Italy.

In England you pay up to 50% income taxes on salaries and 0% on bonuses, so many players take a huge part of their salaries as "bonuses", or they might establish marketing companies and give them their marketing rights, then they fall under the corporative taxation system and end up paying much less than 50%.

In Italy clubs pay income tax of about 30+%, then many different types of taxes are added (still researching them), and that is regrdless if they do a profit or lose. Now if profit is gaine there is profit tax.

In England a club with a lose can carry the lose to the following year and not pay tax on that year!!!

In Germany football clubs DO NOT PAY TAXES.

Anyway I am sure there is much to follow, I hope I get the time to finish it the coming week, I am trying to put France in this mix, I want to do a very comprehensive study, and assume a club is making an income of 400M a year and see what will be left for this club if it were in Italy, England, Spain, France, and Germany.


PS. Players transfers are subject to 20% VAT in Italy. LOL
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Post by baresi Sun Aug 14, 2011 2:47 am

Trust me FIFA and UEFA, have no intentions on keeping Serie A down on the contrary they would love to see as much competitive leagues as possible, it means more money for them.
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Post by Dante Sun Aug 14, 2011 3:13 pm

Very interesting thread .. I am not sure what should be done about it , but Milan should do something that will have long-term effects , not just quick fixes..
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Post by Swanhends Sun Aug 14, 2011 3:28 pm

We're all in the toilet atm :coffee:
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Post by Dante Sun Aug 14, 2011 4:13 pm

bhends wrote:We're all in the toilet atm :coffee:

i can smell that ..
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Post by Brigate Rossonere Mon Aug 15, 2011 10:32 am

baresi wrote:Ibra he earns 9M but recieves 4.5M;

Brilliant post Baresi with some great information, only this part is wrong. Ibrahimovic earns 9m euro's AFTER TAX. Milan have to pay the gross amount so that the amount after tax stands at 9m euro's. They pay the same amount of gross wages to the player as Barca did, except in Barca he earned 11m annually.
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Post by Sabra1 Mon Aug 15, 2011 12:02 pm

baresi wrote:
In Germany football clubs DO NOT PAY TAXES.


But Germany has the most strict financial regulations in Europe right now. Debt stacking up isn't allowed, and can be punished by relegation. Plus, in Germany the income tax is quite high for players. German clubs don't pay over the limit for players in transfer fees or wages because they care about their finances, hence them remaining the least indebted teams in Europe. The UEFA Financial Fair-play will do German clubs the most good.
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Post by Chagur Mon Aug 15, 2011 12:55 pm

Sabra1 wrote:
baresi wrote:
In Germany football clubs DO NOT PAY TAXES.


But Germany has the most strict financial regulations in Europe right now. Debt stacking up isn't allowed, and can be punished by relegation. Plus, in Germany the income tax is quite high for players. German clubs don't pay over the limit for players in transfer fees or wages because they care about their finances, hence them remaining the least indebted teams in Europe. The UEFA Financial Fair-play will do German clubs the most good.

And will slowly kill italians. however, hope for the best
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Post by Guest Mon Aug 15, 2011 1:10 pm

i thank to you all for this information, i have been dying to know all these little details i had no idea about...

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Post by baresi Tue Aug 16, 2011 1:33 am

@Brigate
Good point, I never knew Ibra collects 9m net; that mean Milan should be paying around 16-17M for the big guy.

One point might sound positive is Milan is not on it's own, its under Finninvest which means it's accounts go under Finninvest accounts, now the point I am not sure of is; is it enough from Finninvest to have a positive account for Milan to be concidered in the positive or will they look at the income/expences of AC Milan seperatly??

Maaaaaaaaaaany more things to look at, for example @sbara1 I dont know how income tax is calculated for non-germans? In Italy non-Italian pay more income txes affraid .

Plus one additional tax I found is being paid in Italy which is "Estate" tax, a club pays a certain percentage (came across it but can actually remember the exact figure, I believ its 7% not sure) of the VALUE of it's buildings, Stadiums included and it is paid YEARLY, one of the major points holding many clubs from investing in stadiums.

If we do a simple calculation to see if Stadiums are profitable or not

the taxes paid "Estate tax" +maintainance fees+ Insurance (natural disasters, violence, casualties, liabilities, etc..)+ Income taxes (from ticket sales).

You'll see a club paying around 25-35M yearly for owing a stadium (depending on it's capacity, and tickets sold), no wonder Pozzo wants to renovate the citys' stadium rather than owning one.

Rental fees for the San Siro is 11-13M yearly, why would any club want to own it's stadium?

More to come.....
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Post by Ganso Tue Aug 16, 2011 1:56 am

We should keep buying as many youngsters as we can.the future can look better if we give players like Stephen and pato chances,not sure we will be able to buy stars like ibra and robinho for many years to come
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Post by Brigate Rossonere Tue Aug 16, 2011 9:30 am

baresi wrote:
One point might sound positive is Milan is not on it's own, its under Finninvest which means it's accounts go under Finninvest accounts, now the point I am not sure of is; is it enough from Finninvest to have a positive account for Milan to be concidered in the positive or will they look at the income/expences of AC Milan seperatly??

Milan, when FFP is underway, will be treated as a separate entity, just as it is treated by Deloitte when they do their finance reports. Finninvest will still own the company, just that under FFP, Finninvest (and in turn Berlusconi) will no longer be able to contribute capital to the club as freely as they used to.
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Post by Brigate Rossonere Tue Aug 16, 2011 9:31 am

Good read from footballitaliano

Gaining ground in Serie A's stadium situation

By Marco Maioli
Wednesday 29 June 2011



Over the last few weeks, the ongoing issue in the Italian game surrounding stadium ownership and control has again resurfaced, although some clubs are now gaining ground.

The fight between Claudio Lotito and CONI (the Italian Olympic Committee) over the debt owed by Lazio for the lease of the Stadio Olimpico and the decision of Chievo to ask the local council of Padova for the permission to play their home games at Stadio Euganeo have highlighted the need for a resolution to this longstanding subject.

Both Chievo and Lazio assume that they are paying too much to the owners of their stadiums and many share the idea that local councils (or, in the case of Stadio Olimpico, CONI) are exploiting football clubs - fearing the building of new, club-owned grounds - as these bodies could lose a revenue stream and get left with a useless building on their hands. Also, the fact that Catania has been heavily criticised for having denied use of the city stadium to Italian rock star Vasco Rossi - deciding that playing a Serie A fixture at home was more important than a rock concert - suggests that the time has finally come for clubs to have their own football dedicated venues.

At the moment it seems that everybody is waiting for a new law - the famous Legge Crimi - to be passed by the parliament. This should help the process of privatisation of the stadiums and make it easier to build new ones, thus finally allowing clubs to increase their match day revenues with the aim of competing with their European counterparts. Currently, a club would have to wait eight years before beginning the construction of a new ground, while under the new legislation this amount of time would be reduced to one year. Moreover, the clubs could get favourable credit arrangements and would be allowed to build commercial centres, cinemas and houses in order to recoup part of the outlay.

Regardless of whether or not the law will be approved, some clubs have already started planning new stadia. Having reached an agreement with the local council of Torino in 2003, Juventus will play its home matches at the new Juventus Arena starting from next season. In some cases, thanks to the co-operation between some local governments and football clubs and with the financial help of Istituto di Credito Sportivo, new stadia may be built. Palermo president Maurizio Zamparini has announced that their new stadium will be owned by the Rosanero thanks to a law passed by the regional government of Sicily, while Udinese’s Stadio Friuli, despite undergoing serious renovation with the elimination of the athletics track, will still be property of the local council.

With the construction of a number of brand new grounds and the removal of all the cages and the fencing that separate the fans from the pitch, announced by Interior Minister Roberto Maroni as a result of the decline of fan-related incidents at football matches, in order to create “open structures, without barriers and distinctions”, it is likely that in the future Italian stadiums will start to come closer to the example set by those in Britain.
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