Any fans who take a passing interest in French football may have been quite surprised this summer. A number of sides traditionally associated with French football have been enduring grave financial problems of late and this off-season it seems that the dam has finally burst. Numerous clubs including Cannes , Angers , Tours and most notably Strasbourg and Grenoble have either struggled so badly with their finances that they have had to suffer administrative relegation or even worse, enter into liquidation.
So how has the situation gotten so bad in France ? There are a number of reasons and it is difficult to single out one major factor but it finally seems time for the ownership of many clubs, especially in the lower leagues to be addressed to avoid further losses.
In charge of this operation are the body Direction Nationale du Contrôle de Gestion (DNCG) who administer the finances of all professional French teams in the top five divisions. They assess the state of each clubs’ coffers every summer and determine whether the clubs are in breach of the rules and those who are guilty of offending are met with a variety of punishments. Normally demotion or being re-assigned to the amateur leagues are seen as the harshest of punishments that the DNCG can hand down so, given the amount of teams who have suffered this sanction already this summer suggests that the financial problems are widespread amongst French sidesl.
One of the biggest problems in French football is caused by the DNCG’s stringent fiscal policy that prevents French teams borrowing and contracting their debts to the same degree as their European counterparts, England and Spain in particular. Although on the face of it this is a good thing and should be adopted by other leagues around Europe, it has hindered French sides particularly when it comes to competing in Europe . Because the sides have to carefully monitor how they use their money, they are unable to spend as freely as other European sides on players to strengthen their squads and have to find other ways to compete, such as promoting young players through their youth academies and buying top domestic talent at a lower price.
In theory this governing body is a great tool and it ensures financial equality at all levels of football in France however; it is also a harsh form of justice for those deemed to flaunt the laws. When a club’s debt reaches a critical level, the DNCG will denounce the club as liquidated or put them into “administrative demotion” which usually sees the club drop into amateur football. This sanction quite often fans the flames that will already be raging at a club in disarray and more often than not will be the final nail in the coffin, forcing the team to start over again and rebuild its identity.
So how do the teams find themselves in situations where the DNCG has to take action in the first place? There are a number of reasons that lead sides to the brink of financial oblivion and they all centre on most French sides’ inability to bring in enough money to be sustainable. All French clubs are dependent on TV rights for income as fans and other local investment cannot garner enough money to keep top-flights sides afloat.
The stadiums in France do not bring in enough income in their current form. Few clubs own their stadiums, such as Rennes , and instead rent them out from the council which creates a problem for those with big fanbases that regularly fill their stadium and then cannot expand as they do not own their home. Conversely, working in tandem with the local council, Lille OSC with some intelligent planning have recently worked around this issue to create the Grand Stade Lille Métropole. Les Dogues have started to enjoy greater success domestically and in Europe recently, filling their stadium and even the Stade de France on occasions as they bring great exposure to the Pas-de-Calais area. The local council have recognised this and thanks to some canny thinking from club supremo Michel Seydoux, the side now have a fantastic state-of-the-art stadium on the way courtesy of their local government.
Many sides have also take the opportunity to state their case for a national team stadium for France ’s Euro 2016 hosting duties with Nice and Bordeaux benefitting from this event. Sadly this won’t be the case for every other club in France though as many stadiums fail to bring their clubs much money due to the fact hat they are never full because they are old and uncomfortable. Ajaccio for example have been between Ligue 1 and Ligue 2 on numerous occasions over the past decade and their stadium has regularly failed to meet Ligue 1’s stadia standards. However, the Stade François Coty is rarely full and it does not make it worthwhile for the council to renovate or expand on a stadium in an area that fails to garner regular support for its team.
That leads me on to the next issue; many teams come from areas with little or no footballing culture so when it comes to the issue of stadiums, even for the biggest matches they never see full capacity. Take Monaco for example, their average attendance is around 3,000 in a stadium that holds 18,500. Even for the bigger matches it struggles to draw a large crowd so the problem lies within the area and the fact that there is little footballing culture in the principality combined with a cyclical population depending on which time of year it is so there is little in the way of a regular fanbase.
Another problem in France much like in England is the price of tickets. To buy a seat at a big game now costs a lot of money for what French people believe is sub-standard football. Whilst people are still happy to fork out fortunes for football they believe to be the best in the world in England, people are not so keen to do the same in France although it must be noted that French football generally is very good value for money as a foreigner.
Many fans see the football on offer in France as inferior to other European leagues and this puts them off going to the stadium and watching so the team’s attendances suffer as a result. This would explain why a number of France’s biggest companies are not willing to put their money into backing their local sides as it seems that the apathy that afflicts many French football fans regarding Ligue 1 also affects those in high-up positions in important companies such as Total in Paris and Airbus in Toulouse.
For a number of years Paris Saint-Germain have relied heavily on foreign investment after Canal+ withdrew their shareholding in the club in 2006 and was the bought by American firm Colony Capital with help from local firm Butler Capital Partners and Morgan Stanley. Although the trio made regular investments into the club, it was never enough to push PSG out of the financial quagmire they found themselves in and it is no match for the financial powers of their new owners Qatari Sports Investments. The financial body which recently acquired a 70% controlling stake in the club have now set about transforming the club into France ’s biggest team, something that arguably Total could have done, albeit with less of an endless stream of money and negated the need for foreign investment.
Although le Téfécé are now a solid, steady club that face no immediate danger of dropping out of Ligue 1, there is very little better than a regular place in Europe for the side to hope for without greater investment. That necessary finance will not come from Sadran who has turned the club into a successful financial entity by selling some of their best talent in recent years. Players such as Andre-Pierre Gignac, Achille Emana, Jeremy Mathieu, Cedric Carrasso and Johan Elmander have all contributed to TFC’s stable financial footing lately and without significant investment and an ability to retain their best players, the club will struggle to break into the upper reaches of French football.
However, this leads us onto the impact that social aspects of the French population have on football business. French people could never comprehend a businessman of local stature such as Sadran or Seydoux spending millions to help make their club a success and retain its best players whilst laying off employees or shutting down local work to retain their company’s levels of profitability. The game of club ownership in France is a complex one that requires the benefactor to constantly juggle a number of balls and consider all sorts of ramifications socially and economically in a complex environment. Not to say that this would be more widely accepted in other countries but many of the other leagues are past this sort of club structure and now have majorly wealthy owners or investment groups who can support their teams on their own.
This then brings about the topic of the types of owners in French football. There were generally two types up until PSG’s recent takeover and those are the clubs owned by a local entrepreneur (i.e. Toulouse) and those owned by performance-driven economic businessmen (i.e. Lyon’s Jean-Michel Aulas) who set their club up to be affordable and generate money by turning it into a brand. Many of the teams run by old-school local businessmen are unable to make the transition into a more viable economic entity because without a strong sponsor they are unable to compete with those other sides and consequently they tend to struggle to survive or eventually drop into Ligue 2 which makes it even harder to cope.
An exception to this would be Grenoble Foot 38 who were taken over by arguably France ’s first foreign investment group Index, in 2004. A consortium of Japanese-led investors who had ambitions of making the tiny club from the foot of the Alps Champions League contenders by 2014, discovered the harsh realities of French football’s financial currents when they recently went into semi-liquidation and were demoted to CFA-2, one of France’s amateur divisions. Despite building a brand-new 20,000 capacity Stade des Alps in 2008, the group never really considered the more complex issues of team ownership in France . They failed to comprehend that in a small city with no footballing tradition due to their preference for winter sports, a cyclical population given its status as a student city and a limited fanbase, the project was never really going to succeed. On top of that, Grenoble were constantly overshadowed by more successful neighbours Lyon and Saint-Etienne .
Another thing that the Grenoble case did bring to people’s attention is the fact that some teams lack the ability to make the transition from amateur/semi-pro to being a modern-day professional football club. The financial crisis of a few years ago helped expose clubs such as Grenoble who were poorly-structured financially and underlines the point that there is a huge difference in the way that big clubs in Ligue 1 are run and how sides in Ligue 2 and below are run. Teams in Ligue 2 generally have management structures on par with some amateur clubs in England and some teams in the Championnat National (France ’s equivalent of the Conference) cannot attract attendances similar to those of their English counterparts.
However, whilst the provincial Grenoble suffered the ignominy of dropping out the professional circuit thanks to their over-ambitious and not so streetwise owners, one of French football’s biggest financial disasters of the last 10 years occurred earlier this summer. RC Strasbourg, the Coupe de la Ligue winners of 2005 with a team boasting the likes of Mamadou Niang and Mickael Pagis and a fertile youth academy who were playing in Ligue 1 as recently as three years ago have dropped through the leagues and will compete in next year’s CFA amateur divisions.
The relegation was embarrassing enough but the boardroom antics of Jafar Hilali ensured that the club were to go into liquidation and only saved from the heartbreak of extinction by a local IT manager Thomas Fritz who bought the rights to the club for €1. Hilali failed to make necessary investments and allowed the club’s already substantial debts to spiral further out of control. On top of this, he even saw fit to start telling coach Laurent Fournier which side to pick as the team narrowly missed out promotion back to Ligue 2.
With an unknown chairman in charge and a club in financial chaos, many French football luminaries such as Arsene Wenger have stated their concerns at the plight of le Racing but their case does bring two more crucial element to light-the issue of image rights and the question of French management methods. With the issue of image rights, essentially the French government protect this issue and therefore the clubs cannot benefit fully from any financial windfalls that they may be entitled to through their players. This does not affect the top teams in France but the lower league sides who cannot afford to miss out on €1-2 million are greatly affected and run tight budgets that are hard to operate on.
Because of this, clubs are forced to pay players greater gross salaries so that they money they actually earn is equal to what they could receive in other leagues. This puts French sides at a competitive disadvantage, particularly in Europe , and Union des Clubs Professionnels de Football president Jean-Pierre Louvel describes this as an “archaic” entertainment tax.
A bigger problem however, is the issue of traditional French management methods which have seen a number of clubs struggle over the last few years. What normally happens is that the buyer surrounds themselves with people they favour as opposed to people who can give them good advice and this normally turns out to be a poor choice as the club is then run by people who lack experience and knowledge of doing this. The owners’ incompetence often results in poor short-term decisions which in turn lead to bad results. Those bad results eventually lead to relegation which means the teams bring in less money and the financial situation worsens. This then sees the club stuck in a rut, unable to get out whilst the pressure on all those associated with the team gets bigger, Nantes are a good example of this.