Professional Football clubs who relegate from the Eredivisie national league live a precarious life. The financial backdrop can be significant and promotion in the following season is essential to survive. The most important reason behind a bankruptcy is an unexpected relegation, says sports economist Dr Thomas Peeters of Erasmus School of Economics. ‘With large fixed costs, there is less money for players. As a result, promotion is far too long in coming and they continue to carry debts. Until someone takes over.’
According to Dr Peeters, the best strategy depends on the possibilities. When Football clubs have to incur high fixed costs, these possibilities are limited. Take for example FC Twente. This club has a too large structure as well as a too large stadium for playing on a lower level. Moreover, the size of these cannot be reduced within a year. However, FC Twente is not the only club with faces such kind of problems: De Graafschap has also explained in its annual report that it will always realise a operational loss when playing in the First Division. Only when it will play in the Eredivisie national league, a loss is prevented. However, this only happens once every three years. Such years of losses are usually made up with transfers. Not only clubs that fight against relegation do so, but this is how every club responds to disappointing financial result. Because in the end the business model of multiple clubs is comparable.
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Read the entire article on NRC Handelsblad, 11 January 2019