Clubs must expand capital base

Prompted by domestic soccer’s chronic condition of financial disarray and the national team’s phenomenal triumph at Euro 2004, the Development Ministry has delivered a series of proposals aimed at restructuring Greek club-level soccer. The proposals, made public by the Development Ministry yesterday, warned clubs, some of which are currently struggling to survive, that their operating licenses would ultimately be revoked if the terms were not met. If ratified, the Development Ministry’s series of proposals would require clubs to meet strict financial criteria to assure their solid standing. The maintenance of these rigid standards, the Development Ministry said, would, besides safeguarding clubs from financial chaos, also distance corrupt officials from the sport. The measures would «attract better administrators to soccer and prompt figures that revolve in soccer parasitically to sell and go,» the ministry said in a statement, referring to current club officials who appear to be more interested in protecting and promoting their own business interests through the clubs they run, rather than the well-being of soccer itself. One of the ministry’s proposals would require all professional clubs to maintain an own capital figure amounting to at least 10 percent of existing equity capital. If they do not, the difference would have to be injected into the club’s coffers over two equal installments raised by equity capital increases. The first of the two installments would face a December 31 deadline this year, and the second a June 30 deadline next year. Clubs failing to meet the first of these two deadlines would be barred from the transfer market. Moreover, should next year’s second deadline not be met, offenders’ operating licenses will be revoked by the Development Ministry, it said. Another measure would require loss-incurring clubs in the 2003-2004 season to inject sufficient capital for a break-even figure by the aforementioned second of two deadlines, on June 30 next year. The Development Ministry’s list of proposals also includes implementing minimum equity capital figures. Under the proposals, first-division clubs would need to keep their respective equity capital figures at or above 2 million euros. Second-division clubs would need to maintain a 1-million-euro figure. The ministry also suggested that the market evaluation process of players be institutionalized in order to provide a more accurate picture of club assets on balance sheets. Besides the negative impact of bad management, professional Greek soccer clubs were also deprived of considerable broadcasting revenues last year following the collapse of an affiliated pay-TV station. The Development Ministry has submitted its list of proposals to Deputy Culture Minister Giorgos Orfanos, who holds the government’s sports portfolio. It is also preparing a similar-minded series of measures for the country’s professional basketball clubs.