יציבות פיננסית בכדורגל - דוח ספורטרס דייקט 2010
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דוח שסוקר את היציבות הפיננסית בכדורגל האירופאי לשנת 2012TRANSCRIPT
Financial Stabilityis Financial Fair PlaySupporters Direct Annual MeetingLondon, June 12th 2010
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Structure of this presentation
1. Bundesliga: very popular and economically sound
2. Two main reasons - strictly enforced licensing system- restricted ownership structure (fans = members = owners)
3. UEFA‘s Financial Fair play concept
4. Some learnings and implications for the English model
The Federation: German Football Association (DFB)
5 regional associationsare
ordinary members of the DFB
21 state associationsare
ordinary members of the DFB
36 professional clubs
constituting Bundesliga and Bundesliga 2
are members of the League Association
Die Liga Fussballverband e.V.
(league association) is the 27th ordinary
member of the DFB
Nearly 27,000 Clubs incorporated as
associations (“Vereine”)are ordinary members
of the respective regional and state associations
Structural Overview: Football in Germany04/10/23 3
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Booming Bundesliga... attracting big crowds
Average Attendance per Match Season 2008/09
Ligue 1*Primera División *
* Bundesliga 2: 15,550, thereof 52,5 % season ticket holders
Source: www.weltfussball.de
Premier League *
Serie A *Bundesliga
35,592 28,47
8 25,304 21,03
4
58,9% SeasonTicket Holders41,90
4
42,000
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Booming Bundesliga... affordable
Average Ticket price per Match in € Season 2008/09
Ligue 1 Primera División
* Bundesliga 2: 13,35 €
Source: Simon Kuchler & Partner
Premier League *
Serie ABundesliga
26,00 27,00
40,0043,00
20,79
21,89
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... facilitate fantastic football feeling!
• 11 of 34 stadia classified „elite“, UEFA's highest quality standard
• Average Bundesliga stadium capacity stands at 46,747 seats; highest in Europe
• Exploitation of capacity above 90% (42,000 spectators)
• High comfort, high security standard, excellent infrastructure
Booming Bundesliga... with State-of-the-art grounds
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Still growing popularitybeing reflected in increasing turnover
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2008/2009
€ 2,036
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Bundesliga‘ s well balanced Revenue Mix
Other,i.e. Merchandising
Transfer fees
Media rights
Sponsorships
Gate Receipts
59429%
57328%
42521%
1688%
27614%
1,71584%
32116%
Bundesliga
Bundesliga 2
2,036 bn €
come from
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Most clubs constantly profitably
Clubs exhibiting a post-tax profit for
BundesligaBundesliga 2Total out of 36
2008/09 season 11 5 16
2007/08 season 15 9 24
2006/07 season 18 12 30
2005/06 season 12 9 21
but the trend doesn‘ t remain friend ...
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ApparentlyReasonable Salaries
Payroll costs to Total Revenue
Ligue 1*
64%62
%
Primera División *
45%*
* Bundesliga 2: < 49%
Source: Deloitte & Touche 2008 – 2006/2007 season
63%
Premier League *
62%
Serie A *Bundesliga
Licensing Procedure
A Success Story for the Past 40 Years
• No Bundesliga Club ever went bankrupt during a running competition or was unable to complete the season
• Gives business partners additional appeal and security
• Fully supported and accepted by the clubs
• Guarantees the integrity of the competition
• Impetus for continuous professionalization
• Role model for UEFA’s licensing procedure
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Club
DFL (First Instance
Body)
Licensing Committee
( Appeal Body)
League Association
Court of Arbitration of BL / BL 2(Alternative to system of
ordinary courts)
Licensing AgreementApplicat
ion
Positive
Positive
Negative
Refusal of License
Negative
Licensing Committee
(Appeal Body)
How it worksHow it works
Positive
Negative
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Assessment of economic viability
1.Liquidity situation positive at the end of the season to be licensed
• Assets
• Receivables
• Cash and bank balances
• Liabilities/provisions
• Current account overdraft facilities
• Loan commitments
• Projected profit and loss statement
2.Net Equity positive (or sanction if further diminished)
3.Final verdict regarding economic viability
• Planned income from match operations
• Planned advertising income
• Planned income related to transfers
• Planned payroll costs for match operations
• Cash inflows and outflows from investing and financing activities
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It‘s all about...Liquidity
The applicant's liquidity forecast for 18 months must exhibit that
• payment obligations can be fulfilled at all times
• regular match operations are guaranteed at all times
• financial distress can be countered
For that examination we employ a liquidity calculation
• starting with the audited balance sheet as of December 31 t-1
• and taking into account the budgeted p&l statements for the periodsJanuary 1 t to June 30 t and July 1 t to June 30 t+1
• which must come up with a positive figure as of June 30 t+1
Sample liqidity calculation short form
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- Negotiations ongoing- Empirical evidence of planning bias
- Justification in doubt „Prudence“
Content of audit report i04/10/23 16
Balance sheet item
Desription of
receivable
Total on 31 Dec
08
Of which due by 30 Jun
09
Cash inflow since 31 Dec 08
Of which due 1 Jul 09 – 30 Jun 10
Of which due
after 30 Jun 10
Available
Assigments/pledges/other restraints on disposal as at
31 Dec 08
Trade accounts receivable
Transfer receivables
Receivables from affiliated companies and other investors
Receivables from legal and/or natural persons with a direct or indirect affiliation with members of the applicant‘s executive bodies
Other receivables
Securities
Cash and bank balances
Prepaid expenses
Total 0 0 0 0 0 0
Receivables aging report
Content of audit report ii04/10/23 17
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Final Verdictrefering to economic viability
Possible decisions regarding financial criteria• Option A: The financial criteria have been fulfilled - no conditions or obligations
• Option B: The financial criteria have been fulfilled - no conditions but certain obligations apply
• Liquidity as of 30 June 2010 is expected to be positive but
• Equity as of 31 December 2008 is negative
• Option C: The financial criteria have been fulfilled - but conditions and certain obligations apply
• Liquidity as of 30 June 2010 is currently expected to be negative (a condition is imposed)
• Obligations will definitely be imposed
• Option D: The financial criteria have not been fulfilled - no licence
• The conditions have not been met - there are no signs that liquidity will be positive as of 30 June 2010
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Cornerstones ofCornerstones ofGerman licensing systemGerman licensing system
• licence regarded as seal for good governance
• Quality assurance for clubs
• Benchmarking as side effect
Goal:Sufficient liquidity
Goal:Positive equity capital
Goal:Ensuring the integrity of competition
Action:Fin. Forecast checked
Action:Capital requirements
Action:Submission of all essential contracts
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Implications for the Business modelImplications for the Business model04/10/23
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Restricted Ownership in Clubs„50+1“-Clause
• A football club (Verein) must hold the majority of voting rights of the attached football company (Kapitalgesellschaft), thus 50% + 1 voting rights in the General Assembly(in case of a GmbH & Co. KGaA, the football club must hold 100% of the GmbH shares). The football club’s determining influence on the course of business, especially the sportive competition, must be secured
• The issuing of non-voting shares remains unaffected; major contribution of capital is therewith permitted
• There are two exceptions (grandfathering rights)for Leverkusen - Bayer AG and Wolfsburg - Volkswagen AG
• Interlocking participations between clubs are prohibited
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Clubs incorporated as
Verein
• Schalke 04
• VfB Stuttgart
• Hamburger SV
• FSV Mainz 05
• SC Freiburg
• 1. FC Nürnberg
• 1. FC Kaiserslautern
• FC St. Pauli
Company (AG = plc; GmbH = Ltd.; GmbH & Co. KGaA = ?)
• FC Bayern AG
• Eintracht Frankfurt AG
• Borussia Mönchengladbach GmbH
• 1. FC Köln
• Werder Bremen
• Hannover 96
• Bayer Leverkusen GmbH
• VfL Wolfburg GmbH
• TSG Hoffenheim 1899 GmbH
• Borussia Dortmund (stock market listed )
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European FootballSome key figuresBig five leagues dominating European Football
Deloitte’s Football Money League exhibiting the turnover ranking 2008/09 withReal Madrid (401 mio €) ahead of Barcelona (366), ManU (327), Bayern (290)…7 English, 5 German, 4 Italian, 2 Spanish, 2 French Clubs in Top 20 (Newcastle 101)
…but Turnover doesn’t necessarily mean financial soundnessUEFA’s Benchmarking Report findings
Total Revenues of of 732 First League Clubs in 53 member associations 12 bn €but 47% of these clubs disclosing losses in their annual financial statements and, even worse, 22% of these clubs disclosing significant losses (>20% of total revenues)
According to the most recent, 2008-09 accounts, 14 of the 20 Premier League clubs made substantial losses. In Spain, La Liga clubs have recently posted €3bn annual debts, and Italy's top clubs, have long been addicted to financial fixes from owners
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UEFA‘s Fair Play Concept Objectives
As approved by UEFA’s ExCo End of May and supported by key stakeholders, the new requirements aim principally to
• Introduce more discipline and rationality in club football finances• Decrease pressure on players’ salaries and transfer fees• Encourage clubs to operate on the basis of their own revenues• Protect the integrity and smooth running of the competitions • Encourage investment for the long-term benefit of clubs• Ensure clubs settle their liabilities on a timely basis• Protect the long term viability and sustainability of European
club football
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General Principlesof Licensing and Monitoring
UEFA and licensors
To observe the principle of subsidiarity between UEFA and assoc./leaguesTo ensure equal treatment of all licenseesTo guarantee full confidentiality of all information provided
License Applicants/Licensees
to meet deadlinesto submit complete and correct information in coherence with previous doc.to promptly notify subsequent events that constitute significant changes
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Club Licencing and Club Monitoring An integrated approach
Club submits information to licensor
Licensing decision by the licensor
Some clubs qualify on sporting merit, enter UEFA competitions
Risk-based approach for club monitoring
Club monitoring requirements assessed
during the season by the CFCP
Club submits information to CFCP via licensor
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Principlesof Licensing and Monitoring
Since 2002, all participants in UEFA’s club competitions must undergo anational licensing procedure according to UEFA’s Licensing Regulations often extended voluntarily to all first league clubs and even more leagues
Financial requirements- no concern about going concern- Financial statements for the interim period (half of current season)- no overdue payables towards employees and social/tax authorities as of 31 Dec on March 31- no overdue payables towards football clubs as of 31 Dec on March 31
All licensees having qualified for UEFA’s club competitions now must comply with new monitoring requirements- break-even rule- enhanced overdue payables rules - Submission of Future Financial Information
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Break-Even RequirementsCore Principles
• Cornerstone of the Financial Fair Play concept
• A club must not repeatedly spend more than its revenues
• Stabilize and rationalize club’s spending in Europe
• Club to « break-even » on a yearly basis, means that football relevant expenses < football relevant income
• A tailored approach with exemptions for small clubs and more relaxed requirements for clubs not exhibiting warning signs
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The concept of RelevanceBreak-even calculation RELEVANT EXPENSES • Cost of Sales• Employee benefits expenses• Other operating expenses• Player transfer fee
amortisation• Finance costs
RELEVANT INCOME
• Gate receipts• Broadcasting rights• Sponsorship & advertising• Commercial activities• Other operating income• Player transfer income• Finance income• Excess proceeds on disposal
of tangible fixed assetsNO LIMIT for
• Infrastructure costs• Youth development activities• Community scheme expenses
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• The Break-even calculation is prepared for each reporting period
• Calculation is primarily based on a club’s profit and loss account (as contained in the club’s audited annual financial statements)
• Risk-based approach (indicators: going concern, negative equity, break-even deficit in either/both preceding seasons, overdue payables in June)
• Multi-year assessment of three reporting periods (T-2, T-1 and T)
• Introduction of an ‘acceptable deviation’ over three years (€45 mio for the first two monitoring periods and then €30 mio)
• CFC Panel’s Discretion: Assessment of other factors (quantum, trend, budgets, debts)
• A web-based IT tool to be developed for use by clubs, licensors and CFC Panel
Break-even analysisKey Features
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• Monitoring Period3 reporting periods (last season and the two preceding seasons)Except first period assessed in 2013/14 which refers to financial statementswith closing dates June 30, 2013 and June 30, 2012
• Aggregate break-even resultaddition of all “relevant” results within the monitoring period
• Acceptable DeviationMaximum aggregate break-even deficit possible to be deemed in compliancewith the break-even requirement- is € 5 mio (materiality!)- can be exceeded to € 45 mio (2013/14 and 2014/15), than € 30 mio only if such excess is entirely covered by contributions from equity participants
Key Facts
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In support to the break-even rule will be implemented earlier
• Enhanced overdue payables rule (backward mechanism)no overdue payables as of Dec 31, Jun 30 and Sept 30• To ensure that clubs have honoured their
commitments when these were due
• Enhanced Future Financial Information (forward looking mechanism)• To monitor clubs’ projected results;• To monitor that clubs will dispose of sufficient liquidity
to continue servicing their commitments in the future.
UEFA‘s Fair Play ConceptFurther components
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May 2010 May 2011 May 2012 May 2013
• Creation of CFC Panel
• Development of enhanced requirements
• Consultation process
• EXCO approve new Regs
• Implementation improved licensing criteria (except supporter liaison officer)
• Implementation of break even requirement
• Implementation enhanced overdue payables, enhanced future financial information, duty to update subsequent events and supporter liaison officer
Next StepsGradual Implementation
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To Resume
Platini expressed alarm at the "danger to football" of debt,
overspending and "rampant commercialism“
Approval of UEFA’s "financial fair play" regulations meansthere is an alternative to the game being just a plaything of the free market
from 2014/15, clubs who wish to play in European competitions must not spend more than they earn
ends clubs spending on players' wages beyond their income to chase the dream of success,
An individual club must pay their players and other costs out of the money they earn, from TV, sponsorships – and incresasing ticket prices – not from "benefactor" owners.
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1.The principle to cut/ limit owner donations will decrease expenditures for players and thus clubs‘ losses
2.Living within its means is a sound and stringent concept which fully fits in sporting rules because a club‘s drawing potential to generate revenues (not to raise equity!) results mainly from sporting merit in the past
3.Football is and should be seen as a primarily public good. Even if clubs have been privatisated or always were private, at least in cases where economic failure occurs they should be partly resocialised again, i.e. an obligation by league statues to broaden ownership and to take new public owners (i.e. supporters trusts, communities) on board who are not required to inject equity
4.So you give „voice“ to the stakeholders who don‘t dispose of a „exit“ and who are the most affected (can‘t switch the supplier) by poor club managemement
To put this long storyBriefly