Turkish football’s big four set for COVID-19 hit despite mixed financial fortunes

Financial data released this week for Turkish football’s ‘big four’, whose shares are traded on the Istanbul stock exchange, more or less covers the nine months before the COVID-19 outbreak and reveals a mixed financial picture for Turkey’s biggest clubs.

But a deeper look suggests they all face a parlous situation as they brace for an inevitable hit from COVID-19 and its economic fallout. 

Turkish football’s so-called ‘big four’ of Beşiktaş, Fenerbahçe, Galatasaray, and Trabzonspor are by far the best supported Turkish teams. Between them they have won the vast majority of silverware over the history of the country’s top league, and they have the biggest financial structures in Turkish football.

According to reports delivered to the Turkey’s Public Disclosure Platform (KAP), Trabzonspor posted the best income statement results among the big four over the nine-month period from June 1, 2019 to February 29, 2020, with Beşiktaş posting the worst results. 

Trabzonspor - which reported losses of 63 million liras (currently worth $9.9 million) in the previous period of June 1, 2018 to February 28, 2019 - reported a profit of 23 million liras ($3.3 million) in the most recent period. Beşiktaş’s losses increased by 40 million liras ($5.74 million) compared to the previous period to reach 246.175 million liras ($35.34 million).

Galatasaray reported a profit of 3.973 million liras ($0.57 million) down from a profit of 80.984 million liras ($11.63 million) in the previous period. Fenerbahçe reported a reduction in its reported losses from 102 million liras ($14.64 million) in the previous period to 36 million liras ($5.17 million).

Income statement (June 1, 2019 to February 29, 2020):

Trabzonspor:    + 23.228 million liras
Galatasaray:    + 3.973 million liras
Fenerbahçe:    - 36.709 million liras
Beşiktaş:    - 246.175 million liras

Previous period:

Galatasaray:    + 80.984 million liras
Trabzonspor:    - 63.212 million liras
Fenerbahce:    - 102.604 million liras
Beşiktaş:    - 206.359 million liras

Total year-on-year change:

Trabzonspor:    + 86.440 million liras
Fenerbahçe:     + 65.895 million liras
Beşiktaş:    - 39.816 million liras
Galatasaray:    - 77.11 million liras

On the face of it, the year-on-year trends are encouraging for Trabzonspor and Fenerbahçe, and alarming for Beşiktaş and Galatasaray – although Galatasaray still posted a profit, and Fenerbahçe still posted a loss. 

But while the data might give some vague idea of the shape of the four clubs heading into the pandemic, it is hard to build a complete picture around the full economic health of the clubs.

Turkish football has limited transparency and the clubs have much incentive towards massaging figures and creative accountancy that can be spread between the clubs themselves – which are membership-based associations, that are not subject to full economic oversight in the way that companies are - and the separate companies that are floated on the stock market. 

In reality, all of the clubs are in varying degrees of dire financial trouble heading into the coronavirus outbreak. 

The Turkish Super League’s revenues are dwarfed by its debts, which are the third highest debt in European football – accumulated through years of overspending on transfers and wages under limited regulation – and it is the only European league in which club debts and liabilities are bigger than club assets. 

Much of this debt is owed by the four big clubs, and the weakening lira is compounding their problems as much of their debt is in foreign currencies – many clubs were already struggling just to service the interest on their debts before COVID-19. The pandemic is also sure to hit their revenues streams hard.

Data for 2018 suggested that Fenerbahçe was the club with the sixth highest debt in Europe, at 334 million euros, almost three times its annual income. The same data showed that Beşiktaş was 15th in Europe’s indebtedness table with a debt of 183 million euros, and Galatasaray was 17th with 175 million euros.

The situation was so dire by early 2019 that the Turkish authorities announced what effectively amounted to a huge bailout package, with $2 billion worth of debt restructuring, and tighter rules imposed to try to regulate their behaviour.

While their share prices surged in response to this news, and restructuring may have eased immediate pressures for some clubs, the football economist Tuğrul Akşar said in March that the Turkish game’s fundamental structural issues have not been addressed, and that the COVID-19 pandemic has struck Turkish football after its immune system had been compromised by longstanding, ongoing financial and administrative problems. 

"Our football caught the coronavirus while it was sick,” he wrote.

Akşar has estimated that Super League losses in match day and commercial revenues during the coronavirus outbreak could be between 25 and 30 percent of the Super League’s total income.

A report in late April by Aktif Bank, which runs the Passolig electronic ticketing card, said that Turkish football clubs could lose up to 1 billion Turkish liras ($143.2 million) in revenues - including broadcasting revenues worth 172.8 million liras ($24.75 million) - if the remaining 72 matches in the Super League this season are not completed. 

The fallout from COVID-19 is already starting to bite since Turkish football was suspended on March 19. 

In April, the Super League’s official broadcaster, BeIn Sports, informed the Turkish Football Federation (TFF) that it would be withholding payments, amounting to at least a 30 percent loss in incomes. 

In response, the Turkish Union of Clubs, which consists of the 18 Super League clubs, urged its members to seek mutual agreement with their players, coaches and staff to enact pay cuts of 30 percent.

Many Turkish football clubs already had frequent problems paying their players even when they were not in the midst of a pandemic, and a Turkish sports lawyer Anıl Gürsoy Artan told the LawInSport hub in May that Turkish football club salaries have now likely been suspended. 

“Even though there has not been any official declaration from any club, we know that nearly all of them suspended payments. Since it is unofficial, we have no knowledge how long it will take,” Artan said.

The German goalkeeper Loris Karius terminated his loan contract with Beşiktaş in April after he reported the club to FIFA over unpaid wages.

While Turkey’s basketball and volleyball seasons have now been cancelled due to the coronavirus outbreak, football could not afford that luxury. Last week, Nihat Özdemir, the president of the Turkish Football Federation, announced that Turkey’s Super League would resume behind closed doors in June.

The Turkish football writer Arda Alan Işık told Xinhua news agency this month that the authorities are eager to resume play due to financial concerns, despite possible risks to the health of players and staff. 

"The main reason for the resumption decision is financial. Clubs were already very vulnerable before the coronavirus, now it could become a matter of life and death. The economic loss that the club are witnessing is irreversible," he told Xinhua.

Over more than a decade the Turkish government has repeatedly leveraged credit to the biggest clubs; written off, deferred and restructured debt; built new stadiums; and sourced sponsors to keep the entire sport from collapsing – while failing to properly regulate their finances. 

But with the Turkish economy heading into crisis due to the COVID-19 pandemic, the Turkish government will now struggle more than ever to prop up the ailing big clubs, although it will still be desperate to stave off their collapse. 

In the end, while the big Turkish clubs owe the most debt, it will probably be the medium and smaller clubs that are most at risk from collapse. Many well-supported and historic teams such as Kocaelispor, Gaziantepspor, and Eskişehirspor have effectively collapsed due to financial crises in recent years. 

Smaller Turkish clubs also find themselves in huge debt through overspending, though they lack the means to generate significant revenues or the clout to draw on the same political capital. Clubs that rely on match day revenues will be particularly hard hit, with the resumed games set to be played behind closed doors.

Every European league is set to take a massive hit from the pandemic, but Turkish football looks particularly vulnerable. This crisis could be a wake-up call to implement a more sustainable financial structure, or the clubs’ death drives can continue to be indulged, beckoning disaster.

Whatever happens, when this pandemic passes it will not be a return to business as usual.