Discussion Paper Series, Forschungsinstitut zur Zukunft der Arbeit 7018
There are three main critical areas in the Italian football industry. First, we find that the revenues of teams playing in Serie A are low and highly concentrated on TV rights, hence vulnerable to changing conditions in the mass media industry. Second, we document that there has been an exponential growth of players' salaries, which has been historically driving up the total costs up to unsustainable levels. The third problem relates to a lack of credibility of the competition, due to a long list of scandals and its potential effects on revenues. In particular, the 2006 investigation on match rigging, and the new episodes on betting scandals in 2009 and 2010, have depressed the total revenues of all teams not only of those directly involved in match fixing. There can also be second round effects via a deterioration of the quality of games, which may also reduce revenues of the clubs. Possible ways out of these problems are discussed in the last section.