Clubs overspending puts future of football at risk

Cypriot clubs overspending in recent years puts future of the game at risk, with a number of clubs close to bankruptcy or being sanctioned by European football governing body UEFA.

Cyprus football clubs in total lost a combined €23 mln in 2019 as big spenders failed to yield profits as 13 out of the 14 teams playing in next season’s First Division closed their books in the red.

Only Nea Salamina was able to record a profit of €358,000 on a club budget of around €800,000.

Cypriot teams strive to acquire one of four tickets to a major European tournament, namely the UEFA Champions League and the Europa League which can generate income of up to €20 mln.

While Cypriot teams are spending big for a European spot, sanctions for violating UEFA’s Financial Fair Play rules could see them banned from competition.

This could spell disaster for topflight Cypriot clubs who rely on income from European matches.

Cyprus Football Association’s latest report on club finances revealed that all but one team, have recorded losses ranging from a few hundred thousand to €6.6 €mln.

The total amount of losses recorded in 2019 reached €22.98 mln.

Commenting on team finances in 2019, CFA’s Vice President Nick Nicolaou told the Financial Mirror that half of the losses were made by just two teams, while 80% of losses are attributed to 4-5 clubs.

“This is a record amount for losses with the number of teams in the red, also a record on its own,” commented Nicolaou.

The biggest losers were ‘champions’ Omonia FC with staggering losses of €6,585,981, followed by Paphos FC with €5,516,352 and Apollon Limassol’s €4,246,440.

Omonia FC was taken over by New York-based millionaire Stavros Papastavrou in 2018, with big hopes of reviving the club’s former glory.

After a failed 2018-19 campaign, Papastavrou’s side managed to obtain a ticket for the Champions League after finishing top when the season ended abruptly due to COVID-19.

Success in Europe could see Omonia make a profit for the first time in years.

The team’s budget alone is believed to have been some €6 mln.

Paphos FC was recently taken over by Russian Investors, headed by Russian-Hungarian Businessman Roman Dubov.

Topflight Anorthosis Famagusta recorded losses of €2,566,938 and AEL Limassol €1,909,583.

Anorthosis had also injected serious cash into its 2019-20 campaign, with a budget of €4 to €5 mln.

APOEL FC recorded the smallest losses as they were just €147,383 in the red.

However, APOEL, as last season’s champions, had an income of €20 mln, mainly from its performances in the Champions League and the Europa League.

APOEL had reached the play-off stages of the Champions League, a step before the group stage where the club was knocked out by Ajax.

APOEL then moved on to the Group Stage of UEFA’s less profitable Europa League, where the club finished the group second to Spain’s Sevilla FC.

As a result, the club advanced to the last-32 knockout phase, where the Nicosia team was knocked out by Swiss Basel FC.

Asked to comment on what would these record losses mean for the future of the clubs and the game Nicolaou said: “Each club has its own issues. Some clubs have accumulated debt which may endanger their future.

Others are in a better position as the shock wave caused by the damages has been absorbed by investors who have taken over the clubs”.

Financial Fair Play

However, as he added, according to UEFA’s Financial Fair Play rules, there is a ceiling on how much money investors can inject into a team.

“Being in the red for a period of three years will definitely draw UEFA’s attention who will impose sanctions on teams spending a lot more than they earn.”

Being sanctioned by UEFA for violating Financial Fair Play rules would mean that the club would be banned from European tournaments for a few years according to the violation.

Meanwhile, as Nicolaou said, the coronavirus outbreak gave clubs another nasty shock, as it cost them millions in losses, which could mean that a number of them will be in the red again in 2020.

“Clubs have lost out on a few million due to the outbreak, as they lost their income from ticket sales, TV rights and sponsorships.”

The top-flight football season was disrupted on 15 March with 45 fixtures to be played for the championship and five for the cup.

The crisis will see clubs lose out on proceeds from these games, with each match expected to see between 5-12,000 fans, while payments for TV rights have been put on hold.

Tickets for Cyprus games range from €10 to €20.

“It is not yet clear how games will be played next season. Will fans be allowed to occupy 33% of seats? Will they even be allowed in? It’s all still not clear,” said Nicolaou.

He said that Cyprus football will need to be supported by the state “just like all sectors of the economy have”.

“We will not be asking for money and grants. We are asking for indirect measures such as tax relief and facilitating clubs to pay money owed to the state over a longer period of time.”

Cyprus football was called off on 13 March, following the first COVID-19 cases in the country.

When this season’s championship was abruptly brought to an end due to the coronavirus outbreak Omonia FC were top.

They were awarded the Champions League spot, while Anorthosis, Apollon and APOEL were given the three Europa League births.

Club losses for 2019

Omonia FC €6,585,981

Paphos FC €5,516,352

Apollon €4,246,440

Anorthosis €2,566,938

AEL Limassol €1,909,583

AEK Larnaca €816,316

Paralimni €737,684

Olympiakos €206,159