Turkish Lira Slide Puts Soccer Season Broadcast in Jeopardy

(Bloomberg) -- BeIN Media Group’s Turkish unit is considering walking away from a contract to show the country’s top soccer league unless the broadcaster can negotiate some relief from the slump in the lira, according to two people familiar with the matter.

Digiturk, as the Qatari broadcaster’s Turkish unit is known, has held a dozen meetings over the past two months with the Turkish Football Federation and soccer clubs over the exchange rate clause in its 2016 agreement, said the people, who asked not to be named because the deliberations are confidential.

The deal was signed when the lira was around 3 per dollar, and the currency has since lost more than a third of its value against the greenback. Digiturk is proposing its $500 million annual payments be fixed at closer to 5 lira per dollar, the people said.

The dispute throws into question the 2019-2020 Super Lig season, which starts Aug. 16. The parties are considering meeting this week to try to resolve the matter, the people said. The broadcaster has withheld a $125 million pre-season down payment as part of its annual fee, and the talks affect the rate that will apply to this and the next two seasons.

BeIN and TFF declined to comment on the content of the talks. The lira’s drop has “decimated” the value of the TFF broadcast rights, BeIN said in emailed comments in response to questions.

Nihat Ozdemir, head of TFF, said in a phone interview: “We are working to reach an agreement and our talks are continuing in a positive direction.”

The two sides are battling to rework a clause setting the formula for payments to the federation, something that its cash-strapped soccer clubs badly need. Digiturk has said a September presidential decree to accommodate exchange rate fluctuations in state contracts allows it to offer an adjustment to the formula that governs its payments, but TFF and the clubs have rejected its suggested changes, the people said.

The current contract requires half of Digiturk’s fee to be paid in dollars and is subject to the exchange rate on the date of payment, currently 5.6 lira, the people said. The other $250 million is paid in lira at a rate of 3.26 lira per dollar, as at the date of the original agreement, and is adjusted for consumer and producer price inflation at every subsequent payment date, they said. Soaring prices have caused the cost of this payment to surge -- CPI reached 25.2% in October, though has since cooled to 15.7% in July.

BeIN won the rights to broadcast Turkish Super Lig rights for five years from 2017-18 season. It will continue with its other broadcast rights in Turkey, such as UEFA Champions League and La Liga, even if the Super Lig negotiations fall apart.

Soccer is among Turkish industries seeking a total of $28 billion of debt restructuring from lenders faced with a growing pile of bad loans after the currency’s plunge last year stoked inflation and raised funding costs. Turkey’s four listed soccer clubs -- Fenerbahce, Galatasaray, Besiktas and Trabzonspor -- are counting on the payments from Digiturk: all have either restructured their debt already or are in talks with banks to do so.

To contact the reporters on this story: Ercan Ersoy in Istanbul at eersoy@bloomberg.net;David Hellier in London at dhellier@bloomberg.net

To contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, Jennifer Ryan, Paul Abelsky

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