Italian crisis spells warning to Premiership

Not one Serie A club made a profit last year. The combined losses of four of Italy's biggest clubs, Inter Milan, Parma, Lazio and AC Milan, exceeded a quarter of a billion pounds.

Unless the Italian League introduces a salary cap in season 2003-04, as advocated by a number of club presidents and tacitly supported by UEFA, a succession of clubs, already close to extinction, will simply cease to operate.

The reason for this parlous situation has a certain resonance with the situation in English football. In the space of three seasons (1997-2000), Italian clubs increased their reliance upon the broadcaster's shilling to the extent that, on average, 56 per cent of their income is now generated from television receipts.

The same trend has been increasingly evident in England since satellite television effectively began its support of the Premiership in 1992. What has proven to be an unhealthy reliance upon broadcast receipts in Italy will be even more evident when the effect of the present broadcast contract, worth £1.1billion over three years, feeds into Premiership club accounts.

Italian clubs, anxious to maximise their income in the face of rising wages, abandoned the English-style collective bargaining arrangement and negotiated their own, individual pay-per-view contracts with one of two broadcasters, Stream or Telepui.

In a show of largesse that would make Croesus cringe, the broadcasters concluded six-year deals with some of Italy's largest clubs worth more than £90m per season, per club. So far, the broadcasters are unhappy with subscriber levels and, with their combined losses running at more than £400m per year, they are anxious to merge and renegotiate the broadcast contracts.

On top of that, Italian anti-trust investigators have concluded that the pay-TV contracts must be no longer than three years.

Clubs face financial ruin because broadcasters see no prospect of recouping their huge outlay and are reluctant to continue paying them colossal amounts. For years, instead of operating within their means, Italian clubs, seemingly assured of an everincreasing broadcast revenue, spent it all - and more.

In a belated attempt to develop additional revenue sources, Inter and AC Milan are jointly trying to buy the lease to the San Siro stadium and Juventus, who cannot rely upon the generosity of the Agnelli family forever, are selling 32 per cent of the shares in the club.

The Italian crisis stems from the fact that clubs overestimated the amount of money broadcasters would pay to televise games over the long term. Add in sky-high wages and the result is one that could be reproduced here.

It could never happen? That's probably what they said in Italy in 1997.