Turkey Plans New Soccer Laws to Curb Excessive Spending
Turkey Plans New Soccer Laws to Curb Excessive Spending
(Bloomberg) -- Turkey is planning new laws to make senior soccer executives personally responsible for any borrowing that exceeds the revenue of their clubs, according to a government official with direct knowledge of the draft bill.
The proposal will likely be submitted to Turkey’s parliament next month, the person said, asking not to be identified discussing plans by the ruling AK Party. The push is part of efforts to rein in a surge in spending by clubs, the person said.
The legislation would force Turkish teams to reduce reliance on bank loans, making it difficult for them to sign the likes of Mesut Ozil, the former Arsenal star and World Cup winner who has just inked a contract with Fenerbahce.
The Istanbul-based club and its archrivals Galatasaray and Besiktas paid millions of dollars in the past to stars like Didier Drogba, Roberto Carlos and Robin van Persie. But teams have failed to grow revenues at the same pace and racked up around 2 billion euros ($2.43 billion) in debt, mostly to banks, according to Saffet Sancakli, a lawmaker from the nationalist MHP party, the governing AKP’s main ally in parliament.
“Holding boards of directors responsible for their clubs’ debt is a vital move,” said Sancakli, a former professional soccer player, who is familiar with parts of the proposed legislation. The bill could also make it easier for foreign investors to own shares in local clubs, he said.
The ruling party declined to comment.
Big Four
“This is far from being a long-term sustainable fiscal solution to the clubs from their vicious circle,” Tugrul Askar, a sports economist, said in in email. “It will rather punish the soccer clubs and pave the way for more political intervention through federations.”
The main problem to be solved in Turkish soccer is the lack of governance, transparency and organizational structures, Aksar said.
All of Turkey’s major soccer clubs are already in negotiations with lenders to restructure their outstanding loans. The four listed clubs -- Fenerbahce, Galatasaray, Besiktas and Trabzonspor -- owe a total of $893 million, about three times their annual revenues.
The club associations, which also have basketball and other branches, behind these biggest four soccer companies have a total debt of 13 billion liras ($1.8 billion) in 2020, according to data compiled by Deloitte.
Fenerbahce, the biggest local soccer club by market value, fell as much as 3.3% to 36.74 liras in Istanbul, the lowest level since Jan. 14. Galatasaray fell as much as 1.3%, Besiktas 3.1% and Trabzonspor 1.6%.
The national soccer authority has put a cap on how much teams can spend on players in an attempt to bring some financial discipline to the industry after consistent lack of progress in European competitions resulted in growing mismatches between revenues and outlays.
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