ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Turkish Football Debt Crisis

Updated on August 24, 2018
Deniz Burunlu profile image

Deniz Burunlu currently lives in London. He has a BSc Hons in Biomedical Sciences and currently studying Medicine.

Four of Turkey’s biggest football teams have reached record highs with the amount of debt they are accumulated over the years.

The total debt of Fenerbahçe, Galatasaray, Beşiktaş, and Trabzonspor reached almost 10 billion Turkish Liras.

Source

Fenerbahçe are drowning in debt

The current debt champions, Fenerbahçe, recently announced that the club’s debts have far exceeded the previously disclosed figures, reaching a staggering 3.2 billion Turkish lira (621 million euros).

Ali Koc, the newly elected president of the club said:

“The debt had been disclosed as 400 million euros. As of May 31, our total debt is actually 621 million euros. The largest part of that is financial debt. There are also debts in our sporting activities, and to the state,”

during a Q&A on Fenerbahce’s television channel, FBTV.

The club’s main incomes come from ticket sales, corporate boxes, season tickets, television revenues, and competitions. However, nearly all of these streams of revenue have been tied up for years.

It also should be stated that Fenerbahçe has also been involved in the 2011 Turkish Sports corruption scandal, leading to a ban from European competitions in the following season, and cutting off major revenue.

Galatasaray

The current Turkish League champions Galatasaray revealed that the total debt the club has is 2.8 billion Turkish Lira.

In 2016 Galatasaray were hit with a 1+1 year ban for failing to meet UEFA’s FFP requirements.

In June 2018, the club was fined 6 million euros for not complying with UEFA’s breakeven requirement and a new agreement was made between UEFA and Galatasaray.

Under the new agreement, the club will be allowed to have a maximum deficit of 20 million euros in 2019 and 10 million euros in 2020. The club will need to reach full break-even compliance by 2021-2022.

The club will have to pay an additional 9 million euro fine if it fails to meet the requirement of the new agreement.

Beşiktaş

Coming in 3rd place in the debt league, Beşiktaş has reported to having a total debt of 2.1 billion Turkish Lira.

Under the leadership of Fikret Orman, current club president, the club has gone through a major change. The club won back to back titles and reaching the round of 16 in the UEFA champions league.

The club has employed a strict transfer policy resulting in the club making almost 480 million Turkish Lire. The biggest of which has been the sale of Cenk Tosun to Everton for 22.5 million euros in 2017.

How Did This Happen?

Years of mismanagement with high transfer fees and ridiculous wages have been the main driving forces for the ever-rising debt.

Recently the fall of the Turkish Lira against the Euro has made the situation much worst.

Clubs in Turkey make the majority of their income via Turkish Lira but pay transfer fees and wages (the main expenditure) in Euros.

This table shows an example of a player that has signed a 2.5 million euros a year contract and the amount the club has to pay in Turkish Lira over the period of the contract:

Year
Euro (million)
Turkish Lira (million)
2016
2.5
8.2
2017
2.5
10.3
2018
2.5
14.1
https://www.xe.com/

The cost of the said contract to the club at the time of signing would have been around 24.6 million Turkish Lira, but due to fall of the Turkish Lira, the contract would now cost the club 32.6 million Turkish Lira.

That’s a 32% increase.

Now considering that most of the contracts in the clubs are similar to this, it is not difficult to understand why club debt has risen to record levels.

Unique Problem to Turkey

One thing most foreigners don't know about Turkish clubs is that they are not exclusively football clubs, but rather they are sports clubs.

The three biggest clubs in Turkey (Galatasaray, Fenerbahce, and Beskitas) also compete in various other sports, such as basketball, volleyball, and athletics.

These other sports branches on there own don't make enough in terms of revenue to sport themselves. This means that the clubs have to fund the various branches with their earnings from football.

UEFA Financial Fair Play (FFP) Rule

Source

Due to UEFA's Financial Fair Play (FFP) rules, all clubs have no choice but to make improvements. Otherwise, they risk fines and even bans from all UEFA competitions.

UEFA competitions, specifically the UEFA Champions League, offers the clubs a major revenue source. Once qualified, a club could expect a minimum of 20-30 million Euros of revenue from the competition. Any ban from the competition will likely lead to the worsting of a clubs financial problems.


How to Balance the Books

There are a number of ways the clubs can improve their balance sheets.

  1. Make contracts in Turkish Lira instead of Euros
  2. Have a fixed exchange rate in the contract
  3. Increase sponsorship money
  4. Sale of players
  5. Have a tighter grip of transfer and contract negations

Update: U.S. Tariffs Effect on Football

With the recent introduction of steel tariffs by the United States President Donald Trump, the Turkish lira has accelerated in its decline against the major currencies.

1 euro was at one pointed equalled to 8TL. Using the example above, a player on a 2.5 million euro contract would now cost 20 million TL.

However, recently the Turkish lira has a made some small gain and at the time of writing 1 euro equalled 7TL.

© 2018 Deniz Burunlu

Comments

    0 of 8192 characters used
    Post Comment

    No comments yet.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://maven.io/company/pages/privacy

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
    ClickscoThis is a data management platform studying reader behavior (Privacy Policy)