Eircom League looks to the future

Sunday Business Post - Business of Sport page - Nov 23 2008

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Despite the downturn, the director of the League of Ireland believes that clubs are in a good position for the future, writes Dermot Corrigan.

Bohemians and Derry City take to the field at the RDS in Dublin today for the showpiece event of the Eircom League of Ireland calendar, the FAI Ford Cup final.

Bohemians enter the game as favourites, having easily secured the league title in an eventful season. In sporting terms, 2008 will be remembered as the year that Drogheda United almost toppled Dynamo Kiev in the Champions League, while Dundalk returned to the top division after securing promotion with the very last kick of the season. However, this year will also be remembered for less positive reasons.

Two clubs - last season’s champions Drogheda United and 2005 title winners Cork City - have gone into examinership in recent months, each with debts of about €750,000. More than half of the league’s clubs have been unable to pay their players in full or on time.

According to Fran Gavin, director of the League of Ireland, the problems faced by the clubs are not due to bad management, but are a very public example of how the downturn is affecting everyone in Irish society.

‘‘On the pitch, this has been a very good season,” said Gavin. ‘‘It has been one of the best ever years in Europe. Bohemians won the league in a record-breaking manner and the standard of play has been very high. ‘‘Off the pitch, it was not a good year for the league, but wage difficulties are not unique to the League of Ireland. Everybody running a business in Ireland today is seeing financial difficulties. Ours get highlighted on the back pages of newspapers, and the issues around Drogheda and Cork City have been well-documented.”

The ‘‘issues’’ have included Drogheda players threatening strike action after the club’s plan to sell its ground and move to a new €35 million, 10,000-seater stadium ran into planning difficulties. Cork’s problems arose after the club’s former owner - venture capital group Arkaga - withdrew its backing midway through the season.

Galway United was forced to sell key players in mid-season and imposed pay reductions on the players who remained.

Bohemians’ league win has also been overshadowed by a High Court case between the club and property developers over its relocation plans. Bohemian’s Dalymount Park site, in Phibsboro in Dublin, was valued at €60 million at the height of the property boom, but is now worth a lot less.

Gavin said that some clubs, like many other parts of Irish society, were over-reliant on the property and construction sectors. ‘‘The difficulties span not only the deals that were done with developers, but there were also sponsorship deals with developers and property companies,” he said.

‘‘Some clubs have then had difficulty receiving the sponsorship that was agreed. That was clearly due to the downturn in the economy, particularly in the building trade.”

However, many clubs faced difficulties even before the property bubble burst or the credit crunch hit. The 2005 Genesis Report stated that the league was ‘‘near to being economically bankrupt’’ and ‘‘unsustainable in its current format’’.

Gavin said that a lot had changed in the three years since that report. Two years ago, the FAI took over the running of the league from the member clubs. It has since imposed a licensing process, which includes a wage cap at 65 per cent of a club’s total income.

‘‘It was best practice last year, it is regulation this year,” said Gavin.

‘‘Clubs were paying 95 per cent of their income on players’ wages, which was the highest [percentage] in Europe. Now clubs that do not come under 65 per cent by the end of the season can be sanctioned. The sanctions can go as far as not receiving a licence for next year.”

Gavin said he was optimistic that all clubs would qualify for their 2009 league licences, despite the events of this year. ‘‘Everybody has learned a lot of lessons this year,” he said.

‘‘All 22 clubs have to go through the licensing procedure, and only when that is decided will we know the structure of the league. We will take it that the ten teams that qualified for the league next year will be there, unless we are told otherwise, and the fixtures will be set out accordingly.”

According to Gavin, the FAI is two years into a five-year plan to get the league onto a solid footing.

‘‘We are trying to make clubs more sustainable and community-based,” he said. ‘‘We will then have more credibility and attract more sponsors. It is a marathon, not a sprint, but we have changed the ethos of the league.”

Eliminating club debts had been a priority for the FAI, according to Gavin.

‘‘Last year, the total [debt] was €7 million. This year, that is projected for €3.5 million. Next year, the clubs will be debt-free. At the moment, money is being used by many clubs to service their old debt. If that is no longer needed, clubs can then invest in youth policies, facilities and in staff to make sure the club is run better.”

While Arkaga invested in Cork City as a business opportunity, Gavin did not think that Eircom league clubs were suited to being run for profit. ‘‘It is a difficult situation running a football club,” he said.

‘‘It is not something that you are going to get involved in to make a fortune. A break-even position for most clubs would be a successful season.”

Gavin cited links between Shamrock Rovers and South Dublin County Council as a more sustainable club ownership model. Rovers are due to take up residency in a new, local authority-funded stadium in Tallaght for the start of next season.

‘‘These relationships are like a public private partnership, where the county council recognises the social role played by the football club in communities,” he said.

‘‘There are similar partnerships in many Scandinavian countries.

‘‘There are several different setups within the league. St Patrick’s Athletic have a wealthy backer [property developer Garrett Kelleher] who sees a social responsibility to build up the club. Bohemians is a members-owned club. The most interesting one for us is the link between the club and the local authority.”

Gavin said that the FAI had shown its commitment to the domestic league by raising the prize money for winning the league to €250,000,up from€17,000 five years ago. The FAI Cup is worth another €100,000 to the victorious club.

‘‘Besides the prize money, we have also been working on issues like TV money, sponsorship and other commercial issues to try to help the clubs increase their revenue,” he said.

Another goal is to attract more people to games. Gavin said that attendances in 2007 were up 100,000 on the previous year, although the numbers going to games had levelled off in 2008.

‘‘For the last two years, premier league clubs have [had] a promotion officer working in schools and different parts of the local community, which we co-finance with the club,” he said.

‘‘Clubs that have these officers have seen their attendances increase, whereas clubs without them have not. Sligo Rovers are a fantastic example; their attendances are up 20 per cent this year.”

While Gavin said that it was inevitable that the best players would be attracted to play abroad, he said the priority was to ensure that Irish players were developed to the stage where they could be sold for a decent price.

In the past, players have been sold for small transfer fees - current Irish international Kevin Doyle was sold by Cork to Reading for €120,000 and three years later, is valued at more than €8 million. Cork last week sold their rights to 10 per cent of Doyle’s next transfer fee, to Reading for a sum thought to be in the region of €250,000.

‘‘We have invested heavily in getting our managers to have the UEFA pro licence, which is the top licence for managers in the world,” said Gavin. ‘‘That is reflected in their coaching abilities, and the players in the league have improved.

‘‘Players that are being looked at by English clubs are now a much better product, fitter and technically better, so you can command a higher fee for them."