Fotbalnomics part 1

The football business in Romania

In my endless quest to find out what the hell is going on in Romanian football, I’ve been researching the financial side of things – which, let’s face it, is probably the dominant facet of the game. Certainly the actual ball-kicking element is not much to shout about as far as I can see. Anyway, to that end, besides bringing you a little piece about Liga 1 side Pandurii Targu Jiu, this week I have diligently skim-read two recent reports.

gheorghe-hagi
Picture neatly combining money and Romanian football. Source: colnect.net

One is UEFA’s club licensing benchmarking report for the 2015 financial year, called The European Club Footballing Landscape: it is a colourful and chartful illustration of where clubs get their money from and what they spend it on. It focuses on the biggest leagues, where most of the money is earned and spent, but there is plenty of info on lesser competitions too, such as San Marino and Romania. Some startling figures.

The second is the Global Employment Report, which is the outcome of a survey carried out by Fifpro, the federation of footballers’ unions, and describes working conditions for the vast majority of football players, who live on modest wages and sign short-term contracts. Some of its findings are particularly pertinent from a Romanian point of view.

Clubs and their money

According to the UEFA report, four of Romania’s fourteen top-flight clubs registered a profit in the 2015 financial year (FY2015). Of the ten which made a loss, seven had a loss margin of more than 20%. This sounds pretty bad, but it is comparable with the situation in Turkey, Poland and Russia.

  • Total revenue of all fourteen Liga 1 clubs combined, for FY2015 = €72 million. (Slightly less than Liverpool took in gate receipts alone that year. Also that’s what two years of Messi’s wages costs Barcelona.)
  • Liga 1 has the 21st-biggest revenue of any European top division. (Below Kazakhstan.)
    • Where does this money come from?
      • 33% (€24 million) came from domestic broadcast rights;
      • 14% sponsorship/commercial income;
      • 9% from UEFA;
      • 3% gate receipts
      • 41% from “other revenue”.
  • Liga 1 is the most TV-dependent league outside the top 20 highest-revenue leagues. If the ongoing saga with Steaua, Becali and the ministry of defence results in an enforced relegation for the country’s best-supported club, broadcast rights money could collapse, pitching pretty much every other club into ruin.
  • Total combined attendance for the 2015-16 league season: 896,000 across 268 Liga 1 matches, averaging 3,345 per game. The 19% decrease from 2014-15 is only partly attributable to a reduction in the number of teams in the division: over 306 games the average for that season was 3,620. (This is a continuation of a worrying downward trend. Compare 2013: average gate 5,180; 2003: 7,263.)
  • Gate receipts: Between them the Liga 1 clubs took around €2 million in gate receipts during FY2015. It’s not clear whether this figure is for the eighteen clubs of 2014-15 or the fourteen of 2015-16; either way it is a puny amount. This 3% contribution of gate receipts to revenue is well below the norm for most of the top 20 football economies (compare Italy 11%, Germany 20%), but Ukraine, Russia, Kazakhstan, Hungary and Bulgaria all show a pattern similar to Romania’s.
  • Of the leagues with higher revenue than Liga 1, only Kazakh league clubs get a higher proportion of their revenue from “other” sources; Ukraine is next in the list. The mark of an unsustainable funding model.
  • Total spend on wages for all fourteen Liga 1 clubs for FY2015 = €50 million.
    • This is less than half the wage bill of Aston Villa or Swansea or Zenit.
    • It averages out at €3.5 million per club (skewed upwards by Steaua paying far more than anyone else). Compare Greece €5.5m, Austria €8.7m, Germany €69.5m, England €134.5m.
    • Wages were worth 69% of Liga 1 revenue in FY2015, which is roughly the same as in Serie A. The report describes a figure of less than 70% as “comfortable”, while under 60% is “healthy”.

What all of this means is a matter for someone with a better grounding in economics than me, but it is fascinating to compare various aspects of the football economy in Romania with that in other countries.

afc-astra-giurgiu-fan-shop
This is what you can buy from the reigning champions’ official online shop. There is nothing else. [Source: afcastragiurgiu.ro

Footballers’ working conditions in Romania

The Fifpro global survey, to which 13,876 male professional footballers from 53 countries responded, included 511 players in Romania’s top two divisions. I don’t especially trust their data, however, because (a) the entire cohort of Romania-based players did not answer a question about contract length, and (b) apparently 1.8% of respondents in Romania earn more than US$100,000 a month. According to business website wallstreet.ro in 2015, Chipciu was the highest-earning footballer in Romania (before his move to Anderlecht), on €38,000 a month. Steaua supposedly now have a wage ceiling of €10,000 per month – although new striker Gnohere, “the Bison”, reportedly earned a €50,000 signing bonus. I don’t know whether I’m misunderstanding the figures or the nature of contracts and payment at the higher levels of football, or whether it just doesn’t add up.

So we should perhaps treat the findings of this survey with a pinch of salt. But it is interesting to see that 60% of respondents in Romania are on civil contracts, which means they are effectively denied many of the labour rights to which an employment contract would entitle them. Shockingly (or not!), a whopping 74% of respondents in Romania have experienced late payment of wages at some point in the last two years: this is the highest proportion in Europe after Malta and Turkey; the global average is 41%.*

As for the moolah itself, 72% report their own salary as between $2,000 and $8,000 per month. The 14% who say they earn more than this includes the unlikely dollar millionaires mentioned above, but also one in ten respondents report a salary of between eight and fifteen thousand dollars a month. This leaves more than a quarter of respondents who earn less than $2,000/month. And 9.5% say they earn less than $1,000/month (compare Poland 24%, Bulgaria 72%!). Read on for more money shenanigans…

*It’s worth noting that the survey does not feature data from England, Germany, Spain or the Netherlands. Or Asia. 

Pandurii-monium (geddit?)

This winter Pandurii Târgu Jiu, a small club from a small town in the mining region of south-western Romania (the childhood home of world-renowned sculptor Constantin Brâncuși), have experienced a little upheaval. The team, run as a not-for-profit association between the town council, a state energy company, a local rubber goods manufacturer and a syndicate of miners’ unions, have been in Liga I for over a decade, finishing as runners-up in 2012-13 and third last season. Romania regulars Mihai Pintilii, Alex Maxim and Vlad Chiricheș have played for the club in recent years. However, since at least early 2014 the club has been in dire financial straits and threatened with bankruptcy.

pandurii-mine-visit
The Pandurii squad enjoys a visit to a local mine in 2011. Chiriches wears 21. [Source: pandurii-tg-jiu.ro]
Last summer, to replace experienced (and presumably expensive) internationals such as Cristian Săpunaru, and top scorer Ioan Hora, they recruited experienced (and presumably expensive) internationals Ovidiu Herea and Lucian Sânmărtean and hoped to qualify for Europe for a third time, or even have a tilt at the league title. This did not seem out of the question.

However, it hasn’t panned out too well. The reason they sold the league’s top scorer Hora to Turkey in the summer was in order to pay debts and thus continue to avoid going bust. But the club has still not been paying its employees this year, and the footballing staff were given a choice in November: to accept a massive pay cut, or be released from their contracts in the winter break. Sânmărtean has gone back to Saudi. Long-serving coach Petre Grigoraș has resigned, having not been paid for a year. His replacement, former Shakhtar Donetsk full-back Flavius Stoican, has accepted the job – on a salary of 1,500 euros a month. In the autumn the club escaped a six-point deduction by convincing two players, who had already left and sued the club for their unpaid wages, that they would get their money. (How this could happen is not clear to me.) Now the management is offering players contracts with a monthly salary of 1,000 euros, plus a win bonus of 300 euros.

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Big signings, summer 2016. [Source:gorjeanul.ro] 
Pandurii were formed in 1962 but did not reach the top flight until 2005. Twice in their early years in Divizia A (as Liga 1 was then known) they finished the season in the relegation places but avoided the drop thanks to administrative shenanigans, i.e. other teams being demoted for financial reasons.

The team are playing their home games 80km from Targu Jiu, in Drobeta Turnu-Severin, while the council is building a new 15,000-capacity municipal stadium, at a projected cost of 4.5 million euros. Attendances, never big even in Targu Jiu, have plummeted to an average of under a thousand in Drobeta (a figure seriously skewed by the 5,500 who showed up when Steaua came to town). At half time in the last game before the winter break, away at Targu Mures, the team refused to continue to play on a dangerously frozen pitch, and forfeited the match. The club has just been deducted three points for failure to pay debts, too, although they are still unlikely to be relegated as Targu Mures below them have also been docked another three for the same reason. Pandurii leave for their training camp in Turkey this week with 24 players: 9 remain from the pre-Christmas squad, and the 15 new players have 222 minutes of Liga 1 experience between them.

The controller of the club, Marin Condescu, insists that Pandurii will not be wound up. Maybe not yet, if they manage to stay up (again) due to other clubs being even more shambolically-run. But in a year’s time, paying such low wages, they could well go down to whence there is no return for a club like this (I refer to Liga 2). Then who will use the lovely new stadium?

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