David Conn: Boom and bust: Why Italian clubs face future of financial inequality

A League which only three clubs can realistically win; financial scandals, insolvent collapses, a huge gap between the rich and the rest, a Parliamentary inquiry calling for better management and more even sharing of money. Some of that may sound mighty familiar, but it is not a description of our own Premier League-Football League divided national sport, but of Europe's second-most lucrative league, until recently the last word in style and glamour: Football Italia.

A League which only three clubs can realistically win; financial scandals, insolvent collapses, a huge gap between the rich and the rest, a Parliamentary inquiry calling for better management and more even sharing of money. Some of that may sound mighty familiar, but it is not a description of our own Premier League-Football League divided national sport, but of Europe's second-most lucrative league, until recently the last word in style and glamour: Football Italia.

Back when Sky was still a television backwater and the English game was awaiting its post-Premiership commercial make over, Channel 4's coverage of Serie A, with James Richardson the wry host on the sun-kissed terrazzo, threatened to become the televised game of choice for cultured football fans.

However, as Chievo and little Livorno take on the Milan giants Inter and AC tonight for the start of the Serie A season, that hasn't happened. The Premiership has thundered into an all-conquering soap opera, while Italian football has cracked into crisis; the last straw for Channel 4 came two years ago when the Serie A season was delayed for a fortnight with clubs haggling over television deals.

The game's most spectacular victim was Fiorentina. The buccaneers of the late-1990s, spearheaded by the Argentinian centre-forward Gabriel Batistuta, went bust in 2002 and began again three flights down, in Serie C2. However, Fiorentina are back already, a new club having cheaply bought the name and logo of the old club, and, supported by Diego Della Valle, a shoe magnate in the Italian tradition of football club-owning industrialists, won promotion via the play-offs to arrive in Serie A one of the healthier clubs, enviably debt-free.

Napoli, forever remembered for winning two Scudetto championships in 1987 and 1990 with Diego Maradona leading their line, will be hoping for a similar renaissance now they too have gone bust and been relegated to Serie C. Their toppling of traditional northern dominance in favour of the poorer, benighted south is now a distant memory, as the big three - Juventus, Internazionale and Milan - bestride the Italian game more powerfully than ever. Recently, there has even been a danger that the capital, Rome, would have no club in senior football, as both Lazio and Roma were walloped with financial crises.

Lazio's was a scandal; the club's owner, Sergio Cragnotti, owner of the food giant Cirio, had bankrolled the club from the 1991 signing of Paul Gascoigne to Sven Goran Eriksson's recent extravagant tenure, but in late 2002 Cirio collapsed, leading to a still ongoing police investigation during which Cragnotti himself was arrested and questioned. Lazio, staggering on, reportedly owe €272m (£186m), the highest debt in Serie A; Paolo di Canio is said to have taken a 75 per cent pay cut to leave Charlton for the club he has always supported.

Parma's demise was also a scandal, part of "Italy's Enron", the €10bn collapse of Parmalat, previously Italy's largest dairy company. The Tanzi family, who owned Parmalat, bought Parma in 1990, after the small-town club had just won promotion to Serie A, and funded the rise to European success. However, when Parmalat imploded last year in a welter of false accounting allegations, the club was plunged into crisis. The Tanzis have since stepped down, and Parma, for now, are being run by the equivalent of an administrator.

Other Serie A clubs have been beset by a disease familiar over here. Known colloquially as "living the dream", the condition generally affects clubs just below the rich and successful few, which overspend in doomed attempts to compete. At Roma, resulting debts estimated at €250m, including €117.6m in tax, led to serious worries for the club's future, talk of a Russian takeover and a desperate call for investment.

The maddening part of this, as over here, is that the bust has been fashioned from an unprecedented boom. Like the English, Italian football has reaped huge windfalls from cable and digital TV; the Italian Parliamentary commission reported in late July that Serie A and B clubs increased their income from €813.9m in 1998 to €1.39bn last year. However, the clubs piled up debts of €2.25bn during that same period. Despite wage cuts, the average player's wage in Serie A and B is reported to have been €1.8m last season. The 18 Serie A clubs made operating losses of €535.6m and club owners pumped in €580m to keep their debts within acceptable limits.

Underpinning this, however, is a very significant difference between there and here. In 1999, under pressure from Italian anti-trust authorities, Serie A clubs scrapped collective selling of their TV rights. Rather than the League doing a deal and then distributing the money among the clubs, as happens here, the clubs sell their rights individually, sharing just 18 per cent between them, and trickling €103m down to Serie B. This change led to such extreme inequality between the rich, northern three and the rest (see table) that no other club can realistically challenge them on the field.

"Just a few years ago, Italians talked of 'Le Sette Sorelle', the seven sisters, Juve, Milan, Inter, Fiorentina, Parma, Roma and Lazio, all contenders for the title," says Frank Dunne, who has covered Italian football's crack-up for the magazine TV Sports Markets. "Now, the competitive balance has gone. The big three are utterly dominant."

Juventus, although owned by the Agnelli family who own Fiat, are not bankrolled as Milan are by the Prime Minister Silvio Berlusconi's Finninvest media conglomerate, or as Internazionale by the oil billionaire Massimo Moratti. Steered by a long-time Fiat executive, Antonio Giraudo, Juve made a profit for seven years until 2003, and won the Scudetto in 2002 and 2003, and look formidable again this season with a squad boosted by the signings of the Swedish international striker Zlatan Ibrahimovic, the defender Fabio Cannavaro and the Brazilian midfield playmaker Emerson. Milan, champions last season, have signed Jaap Stam to figure in a frightening defence with Alessandro Nesta, Cafu and the forever-young Paolo Maldini, while Inter have signed Edgar Davids from Barcelona and Juan Sebastian Veron, who is expected to perform rather more effectively in Italy than he managed in England.

The Parliamentary commission into the crisis called on clubs to return to collective selling and distribute the income more evenly between themselves, to cap wages at around 60 per cent of turnover, train executives to manage clubs sanely, and introduce a governing body to regulate the game.

Lest the Italian meltdown tempts the Premier League to smugness - and Italian clubs do look enviously at the Premiership's merchandising and commercial "diversifications" - some of the lessons are uncomfortably close to home. The Premiership may have fought hard to retain collective selling, but it still distributes the cash in favour of the already rich, leading to a very un-English concentration of playing power in Manchester United, Arsenal and the Russian freak show at Chelsea, which still tantalises other clubs to gamble. Shrewder Italian observers, including Mr Giraudo at Juventus, understand that the Premiership is itself a breakaway league, and that the inequality underlies the Football League's huge recent problems.

In Italy, somehow, the game goes on. Claudio Ranieri, now managing Valencia, has raided Lazio to sign Stefano Fiore and Bernardo Corradi, and also signed Marco Di Vaio from Juventus, but there has been no big exodus of Italian stars, despite wage cuts. The South American superstars still choose Italy and Spain. (Hernan Crespo returning to Milan, with Roman Abramovich picking up his wages, bemoaned his failure to settle in pallid old England.) Francesco Totti, Italy's Beckham-equivalent, will still line up tomorrow behind the front two at Roma. Even Parma held on to Alberto Gilardino, last season's leading Serie A goalscorer with 23 strikes, alongside Massimo Maccarone, whose wages are being considerably topped up, still, by Middlesbrough.

Italian football still has huge appeal and class, if not enough for Channel 4. As Totti, Inzaghi, Del Piero, Cafu and the rest take the field this weekend, Serie A will be broadcast in about 120 countries. The game is strong but the clubs are weak, and they have a lot more to do before the crisis is over.