Eircom League posts poor results
18 February 2007
It has tackled one crisis after another with little public support and even less cash, writes Ian Kehoe.
Two years ago, the Football Association of Ireland (FAI) hired Scottish sports consultants Genesis to take a hard look at the Eircom League.
Genesis had previously recommended a root-and-branch review of the FAI itself, and the association was hoping it could work some more magic on Ireland’s ailing domestic soccer league.
For the 22 clubs in the league, the Genesis report made for some uncomfortable reading. It concluded that the league was a financial train wreck. If major changes did not happen, Genesis predicted that the league would go out of business.
‘‘Over the last 20 years,” the report stated, ‘‘the Eircom League and its member clubs have struggled to survive.
‘‘By any rational analysis of financial performance, attendances and sponsorship, it is clear that the Eircom League is near to being economically bankrupt and is unsustainable in its current format and incapable of sustaining herself in the future’’. Genesis said the league was trapped in a ‘‘downward spiral’’. It had a poor product, unattractive facilities, lack of support, minimal sponsorship and low levels of income. Genesis made 11 recommendations, including capping wages at 65 per cent of club turnover and creating an elite league of ten teams. Most significantly, it proposed merging the league with the FAI. Up until then, the league was run by the 22 clubs themselves and was independent of Irish football’s governing body.
This season, for the first time, the league is under the remit of the FAI. The 65 per cent wage cap has been adopted by many clubs and will be formally enforced from the beginning of next season.
However, questions remain about the long-term viability of a semi-professional league in Ireland. Mick Wallace, the multi-millionaire businessman who has just been awarded a licence to operate a new Eircom League side, Wexford Youths, has already stated that he will not pay his players a salary. Instead, he plans to recruit players from the Wexford area and create a community-based club. The players will get expenses, but little else. This is in stark contrast to the top clubs in the Eircom League, which have a wages bill of more than €25,000 a week.
The figures for such salaries simply do not add up.With English clubs poaching the best talent from Ireland, the top Irish teams have struggled to attract any sort of loyal following.
The average attendance at a Premier League game is just 1,500,while as few as 500 pay to see a First Division match.
‘‘One of our top priorities is to increase the number of bums on seats,” said Fran Gavin, the FAI director of the Eircom League.
‘‘We have started to market and promote the games properly in an effort to draw crowds. We are spending upwards of €500,000 on marketing this year - much more than ever before.
‘‘We have 16 club promotion officers out there trying to raise the public profile of the clubs and help them grow their fan base and generate better attendances.” The FAI has swelled the prize pool. The winner of the league will receive €225,000 in prize money, while the runner up will receive €100,000. A few years ago, the champions got a cheque for just €18,000.
‘‘We are investing in the product,” said Gavin. ‘‘We are showing our commitment to developing the league. The increase in prize money is a testament to that. Likewise, we are trying to get the clubs to develop their business model so that they are sustainable in the long run.”
As things stand, the league is far from sustainable. According to Genesis, the 22 clubs have a combined annual turnover of just €14 million, while the cost of running them is more than €17 million, meaning that most clubs are operating with significant losses.
In recent weeks, Shelbourne, the current Eircom League champions and the biggest outfit in the country, has been struggling just to stay afloat. Just days after winning the league, the majority of its staff and players left the club claiming that they had not been paid in months.
The club has since been summoned to a high-ranking FAI committee to answer a series of questions on its financial position. Most crucially, the club must respond to contentions that it lied about its financial status in order to get an Eircom League licence.
Shelbourne has been in trouble for some time. In the past year alone, the Revenue Commissioners have brought three petitions to wind up companies connected to the club after they fell behind in paying their taxes.
In recent weeks, it seemed possible that the club would go under. However, it has since emerged that multi-millionaire accountant Ossie Kilkenny has agreed to commit money to keep Shelbourne afloat for one more season. In return, Kilkenny will retain an option to buy the club’s ground in north Dublin, Tolka Park.
Shelbourne is not the only club in trouble. Cork City has been served with a High Court petition from the taxman, while Dublin City Football Club was wound up last year with debts of €1.5 million.
The club was called Dublin City to tap into a Dublin fan base but struggled to attract people to games and was unable to generate sufficient revenues. In the end, the club was losing between €15,000 and €20,000 a week. The club had competed in the Eircom League for five years, but had an average attendance of just 200.
The Revenue Commissioners have been targeting the league, identifying it as an ‘‘area of specific risk’’ and has notified 21 of the 22 clubs (Derry City is not within its jurisdiction) that it intends to carry out intensive audits on the league. The Revenue is concerned about financial transparency in a number of clubs, particularly concerning tax liabilities on players’ wages.
Players have regularly complained that they have not been receiving payslips, or that the amount on their slips does not match their actual income. ‘‘We have a lot of historic things to overcome,” said Gavin.
‘‘In many ways, we are dealing with the sins of our fathers. What happened, happened. We have to move on and make sure it does not happen again. We have worked hard and we have installed better structures and safeguards.”
The FAI is recruiting a compliance auditor, who will monitor the accounts of the league clubs on a monthly basis. The aim, according to Gavin, is to stop clubs running up debts and to force them to manage their cash prudently.
As a consequence of the improved structures, Limerick FC recently had its licence revoked by the FAI. Limerick subsequently lost a High Court challenge to the FAI’s decision. Indeed, while the case was going on, Limerick was served with a winding-up petition after it fell behind on its tax payments. The winding up petition will be heard in the High Court, on Monday week.
Not all clubs are on their last legs, however. Teams such as Longford Town and Sligo have managed to be competitive while also remaining financially viable. About four clubs turned a profit last year.
A prime example is Shamrock Rovers. In early 2005, the company was forced to go into examinership after running up a Revenue bill of more than €1.5 million. A consortium of supporters, Club 400, cobbled together a rescue package to save the company and it emerged from examinership 70 days later.
‘‘Two years ago, our club was deep in crisis with debts of €3 million and losing around €20,000 a week on an annual turnover of less than a million,” said John Byrne of Shamrock Rovers.
‘‘So the fans took it upon themselves to end the days of financial recklessness and bring some sensible planning to the table. Indeed, our fans were probably the first in football history to demand its board cut wages and off-load players, rather than buy some success.”
Each year, the members of the club come together and elect a board of management. It is a policy more akin to a small provincial club than an Eircom League outfit, but Byrne said it was working well.
‘‘Not only have we stabilised the club financially and made it profitable, we have also re-established the club in the Eircom League and developed an identity as a community-based football club though our ‘Football in the Community’ initiatives,” he said.
‘‘I wouldn’t dream of claiming that we have all the answers, or that our way offers a panacea for Irish football, but it is clear that there is an alternative to boom-and-bust.”
With the new season of the Eircom League due to kick off in the coming weeks, the FAI will be hoping more clubs can follow Rovers’ example. Otherwise, the FAI might have to call in Genesis for a third time.
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Originally Posted by Paddyfield
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