Football Funding and restructuring clubs in today s markets Buenos Aires

Transcription

1 Football Funding and restructuring clubs in today s markets Buenos Aires

2 Thilo Pachmann Pachmann Rechtsanwälte AG Zurich, Switzerland Christophe Héry Lmt Avocats Paris, France Jan Roliński WKB Wierciński, Kwieciński, Baehr Warsaw, Poland

3 UEFA Financial Fairplay Regulations European minimum standards for club licencing Requirements to enter UEFA competitions Clubs have to operate on their own revenues Professionalization UEFA Club Financial Control Body

4 Financial situation of football clubs in France

5 How is the financial situation of French clubs? (I) Global losses of 107 millions for the forty clubs of Ligue 1/Ligue 2 (loss of 60 millions for Ligue 1) in 2011/2012 Total turnover in 2011/2012 for Ligue 1 and Ligue 2 clubs: 1,135 billion Structure of revenues for club of Ligue 1: tv right (47%), sundry revenues including merchandising (18 %), sponsor (14% ), transfer (11%), match day revenues (9,5 %)

6 How is the financial situation of French clubs? (II) Only one major club is listed with on public stock exchange : Olympique Lyonnais The impact of rich benefactors as regards major clubs is important: Dimitri Rybolovlev (AS Monaco), Sheikh Tamim bin Hamad Al Thani (PSG), Famille Louis-Dreyfus (OM), François Pinault (Stade Rennais) Local and regional subsidies strongly decreased (- 30% over five years)

7 Financial situation of football clubs in Poland

8 Financial situation in Poland (I) 82,3 million euro total revenue of the highest league (Ekstraklasa, in clubs). 15,6 million euro - Legia Warszawa - the last year s winner of the Ekstraklasa had the biggest revenue amounting to approximately 20% of the total revenue. Real Madrid recently paid 100 million euro for the transfer of Gareth Bale from Tottenham Hotspur.

9 Financial situation in Poland (II) only 4 out of 17 clubs were profitable. 32 million euro total amount of deficit for all 13 clubs in the red. 2,5 million euro (average) deficit per club. If this tendency is maintained statistically, all clubs will fail to meet the break-even requirement.

10 Polish Highest League - Ekstraklasa Revenue structure Commercial (sponsoring and advertising) TV Transmissions Day of the match income Source: Deloitte Polska, Piłkarska Liga Finansowa 2013

11 Comparision

12 Revenue comparison of Polish Ekstraklasa with the Big Five Commercial TV Transmissions Day of the match income Source: Deloitte Polska, Piłkarska Liga Finansowa 2013

13 How have the Leagues and clubs tried to deal with these financial problems in the past?

14 France

15 How have the Leagues and clubs tried to deal with these financial problems in the past? A French financial controlling body (DNCG) has been set up years ago with a power of control and sanction: control: Not prevent clubs from contracting debts Prevent them from accumulating excessive debts The aim: to guarantee the clubs sound and durable management to ensure durability and fairness of competition sanction: Prohibition/limitation from hiring new players Administrative downgrading, etc. In case of financial difficulties: most of the time the clubs call the shareholders.

16 How have these regulations changed the situation of clubs in France? Ten clubs out of twenty showed net profit : from Lille: + 3,8 millions to Lyon: - 28 millions Bankrupted football clubs: RC Strasbourg Club in 2011, Sedan and Le Mans in 2013 The critical situation is for clubs of Ligue 2 But there is an increasing correlation between budget rankings and sport rankings.

17 Poland

18 How have the Leagues and clubs tried to deal with these financial problems in the past? Polish Football Association (PZPN) has been introducing similar rules relating to the financial requirements to those introduced by UEFA regulations. Season 2000/ first set of financial regulations of PZPN Along the development of financial regulations of UEFA, PZPN adjusted the national ones.

19 How have these regulations changed the situation of clubs in Poland? Clubs not fulfilling the national financial regulations: were excluded from national competitions exclusion from national competitions means the exclusion from UEFA competitions some examples of excluded clubs under the national financial regulations: Widzew Łódź, Pogoń Szczecin; Ruch Chorzów excluded but decision was reversed in the third instance

20 Are the UEFA Financial Fair Play Regulations in conflict with national law?

21 Are the UEFA Financial Fair Play Regulations in conflict with French law? The UEFA FFP is mainly for top clubs willing to play European competitions. The aim and rules of French controlling body are roughly the same.

22 Financial Fairplay Implementation in Poland Financial Fair Play Regulation is not in conflict with Polish law. The rules set forth in the Financial Fairplay Regulation have been implemented in the License Handbook of the Polish Football Association (PZPN). Two different types of licenses: 1. Allowing the club to play on the UEFA level (all requirements of FFP have to be met). 2. Allowing clubs to play on the national level (some requirements were left out).

23 The impact of the UEFA Financial Fair Play Regulations

24 Situation in Poland before the Financial Fair Play Many clubs were afraid of non-equal treatment of small clubs in comparison with the big clubs from Western Europe. The fact, that certain big European clubs were excluded from UEFA competitions shows that the clubs are in fact treated equally.

25 Situation in Poland after the Financial Fair Play (I) Clubs in Poland undergo cut expenses: virtually no transfers (lack of transfers is also caused by a big number of players without contracts) termination of contracts with the expensive players healthier financing would mean reaching a balance point allowing a club to meet UEFA requirements, through e.g. new ways of obtaining capital

26 Situation in Poland after the Financial Fair Play (II) FFP as an encouragement for investing in youth teams and infrastructure Such investments are still a great cost for clubs (in comparison with the big European Clubs) A year-after-year improvement (e.g. new training facilities of Wisła Kraków)

27 Situation in Poland after the Financial Fair Play (III) Ruch Chorzów amongst clubs that in 2012 had their bonus suspended for competitions from UEFA not submitting the financial statements; fulfilled the requirements in the extra time Lech Poznań proceedings initiated but subsequently terminated. Both teams failed to prove lack of overdue paymants towards other clubs, players and/or authorities.

28 What will be the impact of the UEFA Financial Fair Play regulations in France? Not a revolution but an evolution. Top French clubs are already under the control of the DNCG. Focus on PSG s special sponsoring from Qatar Tourism Authority. Focus on AS Monaco s specific tax status (no tax on players wages).

29 Advantages and disadvantages of the UEFA Financial Fair Play Regulations

30 The Polish view

31 Financial Fair Play positive aspects Possible achievement of the Financial Fairplay objectives restoring financial health of football in Europe Reducing pressure on salaries and transfer fees Monitoring the clubs Protection of long term viability of clubs Long term investments in youth academies

32 Financial Fair Play negative aspects Possible strengthening of the so-called big clubs. Potential risk that as clubs become desperate to raise allowable revenue which would positively affect their balance sheet. Actual and possible loopholes in the legislation itself; e.g. up until the end of the season, clubs are allowed to exclude the wages of players signed before June 2010 from the FFP calculation, as long as they can show an improvement in their accounts. Widely differing tax rates and social security costs in Europe some clubs have to pay their players much higher gross wages in order for them to be left with the same net salary as if he was a member of a club in another country.

33 The French view

34 What are the advantages and disadvantages of the UEFA Financial Fair Play Regulations? Advantages: avoid global bankruptcy of the system and which could jeopardize the sporting competition Sports business vs. entertainment industry

35 What are the advantages and disadvantages of the UEFA Financial Fair Play Regulations? Disadvantages: Power of the current richest clubs will be kept Difficult to control at the European level, especially regarding the complexity of the funding schemes Could be against free European competition rules Must find new resources (increase of ticket price?)

36 How could the football clubs be financed healthier in the future?

37 How could the football clubs be financed healthier in the future? Structure of the championship: Less clubs for more fun and cash? Less movements between Ligue 1 and Ligue 2 to be more predictable? Towards a close circuit championship? New resources: Development of online betting versus online sporting fraud? Sponsoring: less for more? More fans and better fans: New stadium and naming Better merchandising to improve the Match Day

38 How could the football clubs be financed healthier in the future? Costs limitation: Salary cap Social contributions : collective image rights specific tax of 75% over 1 m salary Wise management: Stop to increase expenses and betting on future sporting success Being businessmen of an activity which is not 100% business.

39 New ways of obtaining capital

40 New ways of obtaining capital (I) Stock market in Poland for example New Connect i.e. alternative market: Ruch Chorzów (earned approximately 420 thousand euro) GKS GieKSa Katowice S.A. (earned approximately 370 thousand euro)

41 New ways of obtaining capital(ii) More local government help, e.g.: Local governments subsidies (e.g. Piast Gliwice received 1 million euro in 2011). GKS Katowice, listed on the stock market its shares have been recently bought by the local government (1,2 million euro). Local government loans e.g. Śląsk Wrocław was granted a 3 million euro loan.

42 New ways of obtaining capital (III) Sale of rights to stadiums names Still not popular in Poland. However there are some examples in relation to Ekstraklasa clubs: PGE Arena in Gdańsk Pepsi Arena in Warsaw INEA Stadion in Poznań

43 Thank you Thilo Pachmann Pachmann Rechtsanwälte AG Zurich, Switzerland Christophe Héry Lmt Avocats Paris, France Jan Roliński WKB Wierciński, Kwieciński, Baehr Warsaw, Poland