Tuğrul Akşar- 6 February 2016  Indeed Turkish football is seriously ill today.  It has a lot of problems such as financial, economical and managerial  problems etc.

It has been badly effected by all of these problems for years. At the same time there are interactions between them. Namely they are continuosly effecting each other.

Many Turkish football clubs which don’t have enough money to pay for their operational costs have gone bankrupt. Because they weren't  able to make money from their activities. At the same time they couldn't pay players salaries because of dramatic salary increases. 

Turkish football’s broadcasting deals might be higher than ever, but the quality of the country’s favorite game is sinking in a morasscaused by growing indebtednessand a lack of transparency among all-powerful chairmen.

1. Turkey’s football is nothing more than a ‘financial black hole’ annual of the Turkish football industry has reached 700 millionEuros in the last fifteen years, which equates to growth of 300 percent. However, sportinghas decreased have risen in parallel with the revenue jump.
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3. Turkish football was badly effected by match-fixing scandal in 2012. Turkish football is facing a new crisis as its clubs – long beset by a lack of transparency – hesitate to enact the necessary measures to meet UEFA’s financial fair-play rules. 

Turkish teams need to get their financial revenues from UEFA. So, they want to be there. They can’t afford to be banned from European competition…They have to be in the Champions league and European League. But their financial structures are rotting away with poor transparency and a lack of corporate governance.

Financial problems that have seen increased spending result in increased indebtedness are growing like a snowball, and Turkish football will soon go over the cliff if necessary measures are not taken.

Galatasaray, last year’s league champion, received [only] 72 million liras from the revenues distributed by the [Turkish] football federation which is insufficient to cover costs.

When we look at the Super league clubs’ financial structures, the revenues are not sufficient to cover expenses. When we are talking about revenues, we are talking about match-day revenues, sponsorships, broadcasting rights and merchandizing, like the sale of brand-name merchandise. Some 34 percent of the total revenue is generated by the big three [Galatasaray, Fenerbahçe and Beşiktaş]. The rest of the clubs only get revenues that are generated by broadcasting rights. It is easy to increase spending, but it is very difficult to generate revenues with limited resources; therefore, in time, when revenues do not cover expenses, clubs resort to bank loans, which bring additional financial costs. The gap between the assets and liabilities grows in favor of liabilities, and the financial balances of the club are distorted, leading to a deterioration in sporting performance. This is true for all the clubs in the Super League.

Where is the Turkish football industry in comparison to Europe?

The volume of the football market in Europehas reached to 19.9 billion euros, according to Deloitte’s latest study. The volume of the Turkish football market is around 580 million euros (according to Deloitte’s. My figüre is 700 Million) Turkey’s volume is about 3 percent of the European volume, making us seventh, which is important, since there are 53 national federations in Europe. But approximately 58 percent of the European volume is produced by the big five leagues: England, Spain, Italy, France and Germany. Russia is ahead of us. When you divide the remaining 48 countries by 42 percent, each gets about 1 percent. Therefore our position is quite good at 3 percent. But when we look from the perspective of financial discipline and indebtedness, we are much worse than the leagues that are at a similar level with us. Our indebtedness is higher than Russiaand Portugal. In addition, we are way behind in our sporting performance. In other words, we have higher indebtedness but a worse sporting performance when compared to those we see as our rivals.

In 2000 the volume of Turkish football was 150 million euros; by 2015, this had reached nearly 700 million euros – a 366 percent increase. But in 2000, Turkey ranked seventh in UEFA [Europe] and 22nd in FIFA [the world]. Currently, our UEFA ranking is back down to 11th, nearly 12th, while our FIFA ranking is back down to 40th. At the moment our FIFA ranking has increased to 21st again because of the last sporting performance qualifying for Euro 2016. There is a big contradiction here between revenues and performance in sport. We have to debate this. 

What does this picture tell us?

It tells us that we have wasted our money; we did not spend it properly.

How did this increase happen?

First of all, this was a state-supported hike. This did not happen due to the internal dynamics of the industry. The bid in 2010 for live broadcasting ended with a 150 percent hike. There is obviously an anomaly here. The state [indirectly] told Digitürk to increase the amount by making Türk Telekom compete in the bid. 

When you look at it today, the broadcasting rights cost $450 million, and the broadcaster somehow needs to recoup this amount. Yet we can’t sell Super League anywhere in the world. The brand value of the league needs to be marketable. Yet the match-fixing incident has seriously pulled down the brand value. When you look at the sporting performance, there is an unbalanced competition, and this has made the big clubs bigger and the smaller ones even smaller. The unfair competition has automatically and negatively affected the quality of our football. As the quality went down, we were unable to succeed in European leagues. 

It seems that the more money was poured in, the more sporting performance declined.

Actually, there is a general anomaly in football: when revenues increase, so does the inefficiency.

When a club’s revenues increase, its indebtedness increases automatically because it starts spending its revenues without any discipline. When the revenues of the live broadcasting increased all of a sudden, the clubs received unexpected amounts of money and started to make abnormal spending decisions. They spent it on technical directors, made big transfers, sacrificed quality and conducted inefficient spending. When your revenues increase, your profitability decreases. There is an efficiency problem, but this is a financial situation. In Europe, they don’t do financially well, but they are successful in terms of sporting performance.

Why is that so?

First, our football quality is low; we have a problem with fair competition. The balance is set in favor of the three big clubs. It is not easy for clubs to enjoy sporting [success] and generate revenues in a league where you have a 33 percent chance of predicting the winner from the beginning. There is no investment in infrastructure. There is no corporate governance and there is no foreign investment in the Süper League. The Turkish League is on the periphery but is not doing as well as its peers such as Holland, Portugal and Russia. 

I’m claiming that the clubs should set themselves free of the rule of the chairmen.

Clubs where there is such huge turnover cannot be run by conventional methods. When there is a dictatorship of the chairman or when the clubs have the status of an association, then the mechanism of absolving debts is not working. They just say, “We’ll take care of it later.” There is then no accountability. The decisions are not being questioned.

So should clubs become companies?

Not necessarily. In Europe some clubs are also associations but their corporate governance works. There are also clubs that posted losses after becoming a company. The critical point here is the mentality. We need corporate governance, whether the clubs is an association or a company.

I’m talking about a black hole; I can elaborate this: 

First of all, we have a financial black hole because revenues are not covering expenditures, so financial discipline is a must.Turkish football is not transparent which is an essential problem. When there is no transparency, there is no accountability; so there is also an administrative hole as well.

It seems that the state also carries a responsibility by creating a situation where clubs received an unexpected amount of money.

The state succeeded in increasing the volume of the sector. This money went to the clubs, but as it was not inspected, inefficiency and wastefulness increased; then, at some point, the clubs started facing tax debts.

There is also a tax problem in Turkish football.

There is only a 15 percent tax on players wages in football. This ratio is nearly 50 percent in England and 40 percent in Italy. Turkish clubs not only don’t pay [many] taxes but ask for deferrals. At the same time, they spend tremendous amounts on transfers. While you have debts, you spend money on transfers, and you go looking for more debts; at some stage, all this becomes a growing snowball that disrupts the financial balance sheet of the clubs even further.

Is Turkish football about to hit the wall?

Definitely. We will be faced with UEFA’s financial fair-play rules, which will go into effect in the 2014-15 season. According to these rules, UEFAwill look at whether you abideby the 70 percent ratio on revenues-expenses and whether you have paid your debts to third parties. If these [conditions] are not met, they will bar clubs from participating in UEFAcompetitions. Clubs are going through a reorganization, but the old order is still there. It looks like they are leaving everything to the last minute. 

What I say is this: Let’s not leave everything to the last minute and start thinking about every penny we spend with these [financial fair-play rules] in mind.

Who is Tuğrul Akşar?

I was Born in 1962, I have been interested in Turkey specializing in football economy since 2000. I graduated from Ankara University’s Political Science Faculty, where I also conducted my postgraduate studies.

I have been working in the financial sector since 1989. I have also been researching the economic, financial, administrative and social dimension of football since 2000. I’m well a known football economist and have five published books in Turkish  and many articles about similar issues on the web and in the newspapers. At same time, I write weekly articles for Dunya, Turkey’s Daily financial newspaper…My first book, “Industrial Football,” was published in 2005. Football Economy was published in 2006.  The management of Football was published in 2008. Both of them were written by  me and Dr. Kutlu Merih. My fifth  book “The Economic Policy of Football,” was published in 2010. My last book “Football in the Crisis”, was published in 2012. I also gave a presantation to the Turkish Parlaiment in 2010 about all Turkish Football Clubs' financial and administrative problems and  solutions. This report was published on futbolekonomi.com ( http://www.futbolekonomi.com/Raporlar/futbol-ekonomisi.pdf)I continue to write on the football sector at www.futbolekonomi.com.{jcomments on}

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