Monday, May 20, 2024
SportEPL clubs continue to struggle financially

EPL clubs continue to struggle financially

Nowadays the success of football clubs at the national and international level is highly connected to financial muscle. On the flip side, some of the well-known football clubs at the international arena are in fact very profitable business entities in the business world. The performance of football clubs and their successes can be correlated with how much revenue a club can generate, helping them attract class players, and staff.

Commercial revenue streams pertinent to football include: retail, merchandising, sponsorships, ticket sells, TV broadcasting rights, prize money and players. According to several researches conducted, increase in commercial revenue continues to underpin the growth of many clubs around the world in recent years.

A recent report released by Deloitte’s Football Money League, well-recognized football club ranking by the amount of revenue they generate, Barcelona became the world’s richest football club in 2020, followed by its arch-rival: Real Madrid. Manchester United remains in third place, ranking the highest from all the English clubs.

From Africa, the top ten chart for Africa’s richest clubs, Al Ahly of Egypt is currently valued by Forbes at EUR 19.25 million, while Esperance Sportive de Tunis is placed second with EUR 12.75 million and Club Africain of Tunis make-up the top three, coming in third, worth EUR 11.8 million. However, attracting international spectators remains to be difficult unlike attracting sponsorship deals; with clubs focusing more on ticket sells rather than broadcasting rights.

Nonetheless, the Ethiopian Premier League (EPL) is on the 20th edition, with 16 clubs participating across the country. More than half of the clubs are based in regional states and are managed by City Administrations. Mainly funded by government coffers, clubs in Ethiopia hugely depend on the allotted budget the administrations have set.

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As the first round draws to a close, several club players have complained about their monthly salaries. Recently, many clubs are trying to convenience their players to hold-off on stating that there clubs are in a financial crisis. In this regard, Adama City, Jimma Aba Jiffar, Bahir Dar City, Hadiya Hossana and Welwalo Adigrat University players have raised salary issues; stating they have not been paid for a couple of months. It is to be recalled that, various club players had announced to stop training.

It can be remembered that clubs in the EPL have agreed to put a salary cap on players’ wages in mid-August, 2019, except for four clubs. 12 EPL club representatives have agreed to the salary cap. During that time, it was said that the decision came due to an improper financial flow going towards players. It is estimated that the EPL’s participating clubs have a budget of more than 50 million birr, annually. However, poor infrastructure and management has seen clubs plunge into a financial crisis.

Various clubs in the world have commercial revenue generating strategies which are mainly used to increase their income, to remain competitive. However, such practices are not realized in the EPL. Only specific clubs have sponsorship deals with domestic based companies. For many EPL clubs, only ticket sells is the source of revenue.

Bahir Dar City football club, in a bid to solve its financial problems, is going to hold a fundraising program on Saturday, February 22, 2020. Announced on Tuesday, by the secretary of the club, Abraham Assefa, several company owners and influential people are expected to attend. In the presser he said, it has planned to collect 50 – 60 million birr.

“Our first plan is to solve the current financial problem which we face right now with players. However, we have a plan to create sources of income which will solve our problems,” Abraham said.

Apart from the fundraising program, the club said mass running, bazars and diaspora memberships are also part of the revenue generating schemes. Furthermore, the club also has a plan to build a business center, training center, player’s camp and recruit grassroots players.

It is to be recalled that different sports analysts argued that, EPL clubs needed to modernize their marketing system. However, almost all of the EPL clubs do not have a marketing system to generate revenue.

“It is obvious that our clubs financial structure system is not modern. Even though, they are not structured in managing their annual budget,” Tewedros Takele, soccer Ethiopia sport journalist told The Reporter. According to Tewedors, most clubs are dependent on the government and are unable to balance their budget.

“There are many clubs who waste their annual budget without fulfilling their expenses,” He said.

Even though clubs are generating income from ticket sales, it is largely dictated by the size of the stadium, ticket prices and the following it has. Hence, for smaller clubs with smaller stadiums, remain largely dependent on budget allocated by city administrations. Even so, the lack of proper structure to manage and administer revenues, continue to be the plight of many clubs, hindering the development of clubs, as well as the whole league.

Many agree that the marketing system in Ethiopian football needs upgrades. Several researches suggest that bigger clubs have specialist councils advising them on commercial deals. In fact, the higher clubs finish on the league table, and are continuously successful, the bigger the commercial deal becomes, making the clubs increase the much needed revenue.

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