After a 10-minute hearing in Italian court last week, Parma F.C., with it’s outstanding debt estimated at nearly 200 million euros, was declared bankrupt. This means that for all intents and purposes, the club is dead. Long live Parma.
For a club that collected four European trophies and four additional Italian trophies in the late 1990s and early 2000s while swashbuckling around the pitch in its blue and yellow striped kits emblazoned with the logo of dairy giant and club benefactor Parmalat, the fall from grace has been swift.
I'm left with this question: How could a comfortable member of European football’s middle class burn through three different owners in the past six months and ultimately end up in bankruptcy court?
The Parma story starts with Parmalat, which bankrolled the team through its glory days.
On the back of the vast dairy money, Parma seemed secure as a member of the Italian top flight, with aspirations to challenge traditional Serie A giants like Juventus. When Parmalat imploded during a massive financial fraud scandal in 2004, Parma was declared insolvent before being bought by Tommaso Ghiradi.
Under Ghiradi, Parma found mixed success on the pitch, but qualified for European competition as recently as last season with a sixth place league finish. While it was not claiming UEFA Cup titles, the club seemed to have stabilized after its financial struggles.
The first cracks in the façade appeared when UEFA kicked the club out of this season’s Europa League for an unpaid tax bill. Ghiradi chalked the issue up to a clerical mistake rather than underlying financial issues.
He proved to be a poor liar though, as the depths of the club’s financial struggles were revealed over the following months.
Players haven’t been paid since August and are now forced to do their own laundry and drive the team bus to matches. Meanwhile, the club has had to cancel home matches because it quite literally can’t keep the stadium lights on. The youth team can’t even afford water bottles.
In December, Ghiradi sold the team for a single euro, passing on its debts to a Cypriot-Russian company, which promptly sold it—again for a euro—in February to Giampietro Manenti, a Milanese businessman. Manenti promised to pay off debts, including back wages for the players. His failure to do so, culminated in Parma’s day in court. Manenti was arrested on money laundering and embezzlement charges last week.
After the bankruptcy ruling, Parma looks doomed. The club has already received an emergency loan from the other clubs in Serie A in order to complete its season. Unless a financial backer steps forward to buy the team and pay off the massive debts, the club will dissolve at the season’s end, forced to start again under a new name in the lowest professional tier in Italy.
It’s hard to assess blame for Parma’s demise without laying the bulk ofit at Tommaso Ghiradi’s feet. When he bought the club before the 2006-2007 season, Parma’s gross debt was estimated at 16.1 million euros, a substantial amount, but relatively insignificant in comparison to debt at other football clubs. Under his watch, the debt ballooned to its current levels.
Since the Parmalat bankruptcy, the club has clearly spent beyond its means. By my count, it has over 150 players on its books, an absolutely massive amount, with most out on loan throughout Europe. For comparison, Chelsea, a club notorious for snapping up young talents then sending them out on loan, has about 50 players on its books.
The problem though is also an institutional squeezing of the football middle class, especially in leagues like Serie A and Spain’s La Liga. The biggest problem is the massively inequitable split in TV revenues in those leagues, with the vast majority of the money going to a few titans like Real Madrid, Juventus and Barcelona. This stands in stark comparison to the relatively even split in the Premier League. Clubs from smaller areas face other issues as well.
They can’t depend on large ticket revenues and therefore have to spend outside their means to challenge for titles.
Parma’s tale is a tragedy, but it’s not entirely uncommon, especially in Italy, where corruption and shoddy management seem inexplicably linked with football. Fiorentina and Napoli both underwent similar deaths in the early 2000s and have since returned to competitiveness in both the Serie A and Europe.
Outside of Italy, storied clubs like Glasgow Rangers, Leeds United and Portsmouth F.C have “died” and been resurrected, although they have yet to reach their prior heights. So while Parma certainly seems dead and gone now, there remains a sliver of hope for its future.