In the last five years, despite the lack of infrastructure and absence of professionalism, footballers in India have got high salaries from their clubs. When Mohun Bagan signed Nigerian Odafa Okolie for a reported fee of 2 crore in June 2011, it was the highest-ever deal in Indian football.

While the game may still be at a development stage in the country, with both Fédération Internationale de Football Association (Fifa) and Asian Football Confederation (AFC) often criticizing Indian football for its lack of infrastructure, several clubs, like Pune FC and Prayag United, have made substantial investments in their teams.

But there are hints of trouble ahead of the next season after the chit-fund scam came to the fore in West Bengal in April. Speculation is rife that clubs now may face a scarcity of funds, a large portion of which came from chit-fund companies.

The Saradha group, a consortium of companies that is believed to have run a variety of collective investment schemes, collapsed, causing an estimated loss of 20,000 crore, according to media reports. The company had invested in Mohun Bagan ( 1.8 crore in 2010-11) and East Bengal ( 3.5 crore since 2010)—both teams had a three-year (2010-13) deal with the company as co-sponsors, according to the officials of the two clubs.

Multiple agencies have launched a probe to investigate the scam and other similar chit-fund companies which have been sponsoring Kolkata clubs, big or small, over the last few years.

Both Bagan and East Bengal, however, will still have the financial support of United Breweries—McDowell and Kingfisher are the official sponsors of these clubs.

Every year, the liquor company gives out approximately 12 crore each to these clubs. But owing to the chit-fund companies, Bagan’s total budget in the 2012-13 season was estimated at around 17 crore, while East Bengal’s was 15 crore, according to club officials.

Prayag United SC, the third big club from the city, is expected to suffer the most. Media reports have indicated that their title sponsor, Prayag, is one of the 70 chit-fund companies under the scanner of the ministry of corporate affairs. Last season, the club uncorked a surprise and overtook both Bagan and East Bengal in terms of investment—Prayag reportedly pumped in more than 17 crore. The big-spending team lived up to expectations by winning its maiden IFA Shield this season and finished a creditable fourth in the I-League, behind champions Churchill Brothers, Pune FC and East Bengal.

Now, the club may have to settle for an average squad as the inter-club and inter-state transfers begin this month (the first transfer window opened on 9 June and will go on till 31 August, the second transfer window is next year, from 16 January-15 February).

Last year, Nigerian striker Ranti Martins quit Dempo SC after eight seasons and joined Prayag for an estimated 1.8 crore. The club also signed Costa Rican World Cup player Carlos Hernandez for 1.25 crore. Both Martins and Hernandez got perks like accommodation, reimbursement of children’s tuition fees and a Mercedes S-Class car. The club also recruited a host of top India players, including goalkeeper Subrata Paul ( 1.1 crore) and defender Gouramangi Singh ( 1.05 crore), who have now signed up with IMG-Reliance for the new city-based league starting next January.

Things may no longer be the same. “It will be difficult for us to build a strong team next season," admits Nabab Bhattacharya, director of the club.

Besides Prayag, Rose Valley, another chit-fund company, is also reportedly under the government lens. They are one of the co-sponsors of East Bengal.

Shanti Ranjan Dasgupta, vice-president of the East Bengal club, says: “Recruiting big players will be a major problem for us. Small clubs will suffer more."

Last month in Delhi at the launch of “Kick for Hope", a joint initiative by PepsiCo and the Asian Football Development Project (AFDP) which supports the non-governmental organization Magic Bus India Foundation, Bhaichung Bhutia, the recently appointed chairman of the All India Football Federation (Aiff) technical committee, hoped that players’ salaries would now become realistic. At Aiff’s annual general meeting in January, the federation top bosses called on the clubs to adopt the Asian Football Federation’s (AFC’s) club licensing requirements. According to the guidelines, every I-League club should have its own stadium, be a private legal entity, focus on youth development and put a salary cap on players.

“After the chit-fund controversy, some Kolkata teams have said that all clubs should have a cap on salaries. We might also cut down our budget," says R.A.J. Gomes, secretary, Salgaocar Sports Club, which finished seventh in the I-League that ended last month.

Teams like Kolkata’s Pailan Arrows are maintained by Aiff, so they will not be affected.

In fact, Aiff had mooted the idea of a salary cap in 2011. But it couldn’t be implemented because almost all the I-League clubs had refused to accept it. But with limited budgets, to ensure that the clubs do not spend their entire revenue on the players, many clubs may invest in infrastructure and youth development as well.

“Six months ago, we had proposed a gradation of salaries of the players. We were also ready to accept them but some clubs refused to comply with the guidelines," adds Dasgupta.

Interestingly, the scam in Kolkata has also indirectly hit Goan clubs, which have decided to take the precautionary measure of cutting their budgets. All the top clubs, including Churchill Brothers, Dempo Sports Club and Salgaocar Sports Club, are ready to cut down their budgets in the 2013-14 season.

“What’s the use of spending so much on the foreigners?" asks Armando Colaco, whose 13-year stint as Dempo SC coach ended in May.

The return of investment from the I-League is negligible as India’s premier football tournament doesn’t offer much to clubs. Aiff doesn’t share the gains earned from League sponsorship and TV rights with the clubs, which has angered them in the past. They are only entitled to gate collections—the subject of a long-standing argument between the clubs and Aiff.

“I-League winners get 75 lakh and we spend 14-15 crore on the team every year? There’s no return from the League. Isn’t it better to cut down the budget and concentrate on developing our own players?" says Colaco.

Though both Dempo and Salgaocar are funded by their home companies, the Dempo Group and Salgaocar Group of Companies, respectively, Churchill Brothers are financed by personal contributions from Goa’s Alemao family (Churchill Alemao is a former member of Parliament). At the beginning of the 2012-13 season, the newly-crowned League champions entered into a three-year sponsorship deal with NVD Solar Ltd, a Kolkata-based company that deals in solar energy.

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