- Title: Debt-laden Turkish soccer clubs pay the price of ambition
- Date: 2nd February 2016
- Summary: ISTANBUL, TURKEY (JANUARY 28, 2016) (REUTERS) (SOUNDBITE) (Turkish) CHAIRMAN OF GALATASARAY, DURSUN OZBEK, SAYING: "UEFA evaluates this in two criteria. They were predicting the loss would be around maximum 30 million euros for three seasons between 2012 and 2015. Our loss is around 164 million euros over the last three seasons. We have overshot the UEFA limit by more than 130 million euros. We are trying to cut annual loss to 10 million euros by the end of 2016 and working on a road map. We will unveil it in a week." VARIOUS OF EXTERIORS OF TURK TELEKOM ARENA
- Embargoed: 17th February 2016 12:19
- Keywords: Turkey soccer debt clubs
- Location: ISTANBUL, TURKEY
- City: ISTANBUL, TURKEY
- Country: Turkey
- Topics: Soccer,Sport
- Reuters ID: LVA00442SSG1R
- Aspect Ratio: 16:9
- Story Text: Ambitions to secure a place at international soccer's top table have come at a high cost for Turkish soccer clubs, some of which are struggling to navigate a course in a sea of debt after years of high spending.
One of the "Big Three" Istanbul clubs Galatasaray is facing a looming ban from Europe's ruling body UEFA over its failure to meet its financial fair play criteria, and other clubs have been warned over their debt levels.
A ban would deal a fresh blow to Turkish soccer's image, which was hit by a match-fixing scandal in 2011 and has failed to build on successes such as Galatasaray's 2000 UEFA Cup win and semi-final appearances in the 2002 World Cup and Euro 2008.
Pressure is now growing for the government to step in and support and monitor clubs in a country fanatical about the game, led by a president, Tayyip Erdogan, who was a semi-professional player in his youth and who still follows the game closely.
"After about six months of work, a 4.2 billion Turkish liras debt has been formed. About 2.3 billion of this is bank debt. Of course these clubs have high incomes but there's a financial indiscipline. We have to enable Turkish football to flourish by creating a new funding mechanism with the help of both private and state banks and seek ways to hike revenues. This is our duty and we're working on it." Goksel Gumusdag, head of the Soccer Clubs' Association, told Reuters.
At the club level, a lack of fiscal discipline, opaque ownership structures and the sacrifice of long-term success to short-term interests has left the 18 teams in Turkey's top league saddled with 4.2 billion lira ($1.4 billion) in debt, around half of which is owed to banks.
UEFA said last month Galatasaray had failed to comply with its break-even requirement, opening the way for a potential ban from European competition with UEFA's Club Financial Control Body (CFCB) set to make a final ruling by the end of February.
"UEFA evaluates this in two criteria. They were predicting the loss would be around maximum 30 million euros for three seasons between 2012 and 2015. Our loss is around 164 million euros over the last three seasons. We have overshot the UEFA limit by more than 130 million euros. We are trying to cut annual loss to 10 million euros by the end of 2016 and working on a road map. We will unveil it in a week," Galatasaray Chairman Dursun Ozbek told Reuters last week.
UEFA's financial fair play rules went into effect in the 2014-2015 season and include a ban on cash inflows from club chairmen, borrowing limits and more transparency in bookkeeping. The rules imposed a 45 million euro ceiling on club losses for 2014-15, falling to 30 million euro in the three following seasons.
A ban would be a heavy blow for 20-times domestic league champion Galatasaray, which appeared three years in a row among the top 20 clubs in Deloitte's Money League report of highest earning clubs, before falling out of the list this year.
It had been the only club outside the "big five" leagues of Spain, England, Germany, Italy and France to make the list, boosted by strong match-day revenues at its Turk Telekom Arena stadium, with a capacity of more than 50,000 people.
According to the Deloitte reports, its revenues fell to 159.1 million euros in 2015 from 161.9 million a year earlier.
Despite high losses, the club has kept spending with a $4.5 million deal for new coach Mustafa Denizli and signing two new players for a total 4.5 million euros.
Their arch rivals Fenerbahce, based across the Bosphorus in the Asian side of Istanbul, spent high last summer with big-name signings, Dutchman Robin van Persie for 4.9 million euro annually and Portuguese star Nani for 3.6 million euro.
Given the financial challenges faced by Galatasaray and the other top clubs, pressure is growing for the government and banks to step in and provide support.
"The clubs have no dice to roll. They threw all the dices. They can no longer roll 15 or 16. So what will happen now? The government will review their debt and they will take an important step for one-off tax remission. From now on the clubs will start from the zero in terms of financial fairplay and tax delinquencies," sports editor of Dogan news agency Faik Gurses said.
Galatasaray reported a net loss of 87.5 million lira in the fiscal year ending May 31, 2015 and stock exchange filings of the other three listed Turkish clubs also showed a bleak picture.
Fenerbahce's losses were 181.2 million lira, while Besiktas' and Trabzonspor's were 140.5 million and 104 million lira respectively. Shareholders' equity for each is negative.
Galatasaray's short term liabilities stood at 527 million lira, Fenerbahce's at 477.5 million lira, Besiktas's 338 million lira and Trabzonspor's at 220 million lira at end May 2015.
UEFA has already warned Fenerbahce, Besiktas and Trabzonspor and asked for reduction of their debt to comply with financial fair play rules.
The chairman of Besiktas, Fikret Orman, identified the source of the problem at the clubs as being the personal ambitions of people at the helm and said a new model should be discussed.
"We need to create a unique model for Turkey. And I think this model should be based on ethical values, the quality of relations between the clubs. We should try to improve this sport without doing any harm. We should sit around the same table with common interests. We should compete on the pitch rather than on newspapers," he said.
Despite the financial concerns, there have been recent encouraging signs for Turkish soccer, by far the country's most popular sport, with great potential for development with a large, youthful population of 79 million.
The match-fixing cloud which hung over football in recent years lifted lsat year when a Turkish court acquitted all defendants in a retrial after leading club officials had previously been convicted and Fenerbahce and Besiktas banned for European competition.
Also, after years without success the fortunes of the national team have perked up with Turkey winning a place in Euro 2016, qualifying as best third-placed team in the group stages. - Copyright Holder: REUTERS
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