FAI’s finances continue to look bleak post Euro 2012
Association’s target of debt repayment by 2020 appears to be hugely ambitious
Despite the upbeat assessment of the association’s financial situation in the directors’ report that accompanies them, the latest accounts for the FAI appear to suggest that the organisation’s revenues are under enormous pressure with the scale of the drop in last year’s turnover masked by exceptional payments relating to Euro 2012 from Uefa, which barely get a mention.
The accounts, which were sent to clubs and affiliates around the country this week ahead of the association’s agm in Wicklow, reveal that turnover for 2012 fell to €39.66 million from €45.13 million for the previous 12 months.
In the directors’ report that accompanies the document it is stated that “the decrease of revenue was driven by a lower number of home matches, we had only one competitive home match in 2012”.
This is certainly bound to have been a major factor with the senior national team having only played four games at the Aviva stadium during the calendar year, three of which were friendlies. The fact that the one competitive game was against Germany, however, should have ensured that that was comfortably the most lucrative game of Ireland’s two-year qualifying cycle with a higher than normal attendance and very substantial television rights revenue – whatever the timing of the payments relating to the latter.
Send off game
Another, meanwhile, was a pre-tournament send off game, in this instance against Bosnia Herzegovina, which would normally be expected to be a big, and fairly financially rewarding, occasion. The collapse in ticket sales for international games and the resulting drop in revenues is clearly a problem, however, although the flip side is that it means having less home games is not actually as significant as it might have been in better times when games routinely sold out and at higher prices.
A more interesting, or perhaps alarming, aspect of the accounts is that Euro 2012 barely gets a mention of any description with only a passing reference to the fact that Ireland qualified for a major championship for the first time in decade made in a paragraph relating to the association’s continued investment in youth development.
Sponsorship revenue, it is noted, was grown from €7.2 million in 2011 to €8.1 million last year “despite a very difficult economic environment” but no information is provided with regard to how much, if any, or all, of this relates to bonuses payable on the basis of qualification for Euro2012. It would be normal to expect that such clauses are built into the FAI’s commercial contracts and its chief executive, John Delaney, has certainly suggested in the past that its biggest deals do contain them.
Most starkly of all, however, there is no mention whatsoever of the €8 million that the association was due from Uefa as a result of its participation at Euro2012. The FAI cut back significantly on the amount of information contained in its published accounts several years ago and now reveals very little more to delegates than it is legally required to but as with sponsorship revenues, the larger Sports Council and other government grants do get a mention.
Uefa’s accounts for 2011/’12 strongly suggest, however, that this money has been paid along with a “one-off payment of €3 million for investment, social and grassroots projects”.
Every four years
The €3 million forms part of the HatTrick programme which provides a significant stream of income annually to associations with these larger payments made once every four years on the basis that Uefa’s turnover effectively doubles in the year of a European championship with last year’s tournament responsible for €1.39 billion of the organisation’s €2.8 billion revenue.
It is in relation to these payments that Uefa’s finance director, Josef Koller – who said that he had attended a meeting with the FAI’s largest creditor in order to provide reassurance regarding Uefa’s payments to the association here – was recently quoted as saying: “It is a really difficult situation, because of the economic crisis, and we said ‘Okay, we can advance certain solidarity payments’.”
Delaney did announce a grant of €3 million two years ago, ahead of the 2011 agm at a time when he was coming under particular pressure in relation to the size of his salary (then around €440,000, now €386,666). It was not made clear, however, when exactly the money would be paid.
In the event that both of the payments actually came last year, it would suggest that the underlying trend of the association’s turnover is more dramatically downward than the actual €6 million drop would suggest which in turn would call into further question the ability of the association to deliver on the directors’ latest statement that: “We remain on course to have all of our loans fully repaid by 2020.”
In support of this statement reference is made to the deal struck with Uefa in relation to centralised television rights which will yield around €10 million annually for the FAI between 2014 and 2018 although the association has consistently failed to clarify how much of this income is likely to be offset by the loss of existing contracts with RTÉ and Sky or how it might affect other existing commercial deals.
In the meantime, the association appears to be making little headway in relation to its debt with bank and other loans listed this year as €57.89 million compared to €58.87 12 months ago. It again paid out more than €4.2 million during the financial year, an amount that accounted for more than 10 per cent of turnover this time around, and while it argues that this figure will drop once it starts repaying the principal, the schedule of those repayments, as laid out in its latest accounts are, to say the least, daunting.
Signs of continued belt tightening are clear with average staff numbers dropping by 17 to 156 over the course of the year with wages and salaries falling from €11.34 million to €9.56 million.
Leading figures in the association have repeatedly suggested that actions like this combined with growing revenues would enable the organisation to clear a debt that it had originally anticipated would be cleared completely by its ill-fated Vantage Club 10-year ticket scheme without the need for the national team having to qualify for major championships.
There would, in the circumstances, appear to be plenty for delegates to question Dignam and Delaney on at next weekend’s event in Wicklow although the association’s finances, even at the height of the Vantage Club fiasco, have generated scarcely any debate at recent general meetings with delegates apparently happy to accept the assurances they are given.