08 Nick Nicolaou-Cyprus New Licensing System.pdf

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FIFPro CONGRESS
CYPRUS NEW CLUB LICENSING SYSTEM
Amsterdam, 1 October 2014
Nick Nicolaou- CFA Vice President
Nick Nicolaou
• CFA Licensing Manager (since 2001)
• CFA Vice President
• Member of UEFA Financial Working Group for CL
FFP (since 2003)
Agenda
• To provide you with an analysis on how Cyprus club
Football has developed over the last 5 years as the
financial situation is concerned and what this meant
for our clubs
• Measures taken by CFA and new rules on Club
Licensing
• To provide picture of the financial state of club
football today
Where Cyprus Football stands compared to other
countries
CYP Clubs presentation
UEFA Benchmarking
Financially comparable European leagues
PEER
GROUP
Peer group members – by divisions
TOP
ENG ESP
LARGE
FRA
GER
GRE NED
BEL
BLR
BUL CRO CYP CZE FIN
ISR KAZ
MICRO
ALB
IRL
5
€50m +
63
12
€5m - €50m
156
13
€1.25 - €5m
126
10
€350’000€1.25m
109
12
< €350’000
132
POL SRB ROU SVK SVN
SMALL
HUN
PG
Size
NOR POR RUS SCO SUI SWE TUR UKR
MED
BIH
by clubs
ITA
AUT
AZE
PG
Size
ISL
LVA
LIE
LTU
LUX
NIR
AND ARM EST FRO GEO MDA MLT MKD MNE SMR WAL
KEY FIGURES
• TOTAL INCOME
45 m
• AVERAGE ATTENTANCE AT MATCHES
4.000 per game.
Top clubs : 8.000 per game
How much income did Cypriot clubs report last year?
€3.2m
€8.6m
€13.5m
€20.8m
€46.1m
7%
19%
29%
45%
Commercial
Gate Receipts
Advertising & Sponsorship
Broadcasting and other
How do income levels differ?
• Clubs in the 5 largest leagues represent 13% of the top
division clubs but generate 69% of the total European income
How many fans attended domestic championship matches
across Europe?
•
An estimated 101 million people watched 11’500 top division club matches during 2009/10 representing just over
8’800 spectators per match
•
However, this is a decrease of 3 million since 2008/09 where ENG, SCO, RUS, TUR and POL experienced the
most significant impact
•
GER maintains the highest average match-day league attendance and for the first time overtook ENG in terms of
total attendance
Nicos Nicolaou
How are Cypriot European club rankings looking?
• Generally improving with
APOEL highest
achievement but also
many other clubs
reaching group stages of
uefa competitions
• Contributes to CYP
country coefficient and
ranking and access lists;
Source: UEFA Research
Nicos Nicolaou
How are Cypriot clubs performing on the pitch in Europe?
• Clear improvement in
UEFA club ranking since
2008 from 28th to 15th in
2013;
Source: UEFA Research – Included within “The European Club
Footballing Landscape benchmarking report”
Club Licensing
CYP Clubs presentation
Club licensing overview
Operation of licensing across Europe
ISL
FRO
FIN
RUS
NOR
SWE
SCO
NIR
EST
LVA
DEN
IRL
LTU
WAL
ENG
BLR
NED
BEL
KAZ
POL
GER
LUX
UKR
CZE
FRA
LIE
SUI
ITA
POR
ESP
AND
SVK
MDA
AUT
HUN
SVN
CRO
BIH
SMR
ROU
GEO
SRB
MNE
ARM
BUL
MKD
ALB
TUR
GRE
MLT
CYP
One licensing system domestic / UEFA
14x
No domestic licensing – Only UEFA
15x
Two parallel systems domestic / UEFA
24x
ISR
AZE
CYPRUS CLUB LICENSING
• Since 2002
• 2006 Domestic license
• 2009 stronger rules and sanctions than UEFA
• 2013 Monthly overdue payables checks
Notion of ‘overdue payables’ (Annex VIII)
• Overdue payables = not paid according to the agreed terms
• At the assessment date, payables are not considered as overdue if:
1. Relevant amount paid in full; or
2. Written agreement to extend deadline for payment; or
3.
Admissible legal claims and/or relevant proceedings opened; the club must prove that it is
not just buying time and that there is an actual dispute.
4. A claim or proceedings against the club are contested and demonstrated to be
manifestly unfounded.
The Financial development of Cyprus clubs
Situation and key figures of Cyprus clubs back in 2009
• Uncontrolable spending
• No long term planning
• No balance of success on the pitch and off the pitch
As a result:
• Total debt : 80 m Euros
• Total income 45 m Euros
• Total expenses 60 m Euros
• Total payables to employees : over 10 m Euros
Other signs of financial distress
•
Bad relationship between club-players
•
Nearly all top division clubs loss making
•
Average employee costs to revenue ratio near 100%
•
Most cases employee cost to sales ratio 150%
•
Nearly all clubs auditors expressed a qualification or emphasis of matter regarding going
concern.
•
Ranked number 1 in number of cases in front of FIFA
•
Many clubs suspended football activities or declared bankrupt
•
(Pafos, ALKI, APOP Peyia etc)
How many Cypriot clubs were loss making?
• Cypriot clubs made
losses over €4m in
FY10 and over €10m
in FY11 of which 6
clubs had losses
equivalent to more
than 20% of revenue
50%
20%
-10%
-40%
-70%
-100%
-130%
-160%
-190%
-220%
-250%
Club 1 Club 2 Club 3 Club 4 Club 5 Club 6 Club 7 Club 8 Club 9 Club 10 Club 11 Club 12 Club 13 Club 14
What type of liabilities have Cypriot clubs reported?
• Cypriot clubs reported
nearly €45m in
liabilities in FY09
€11m
25%
• Of these 25%(€11m)
were in bank and other
commercial loans
€22m
49%
€8m
19%
• Outstanding amounts
payable on transferred
totalled €1.5m and
account for 3% of total
liabilities
€1.5
3%
Bank & commercial loans
Group & related parties
Other LT Liabilities
Taxes & Social charges
Transfers
Other ST liabilities
• 2% (€1m) were tax and
social charge liabilities
€1m €0.6
2% 2%
How many clubs have liabilities larger than reported assets?
• Only 5 Cypriot clubs
reported positive
equity
• Most clubs had
negative net equity
more than 20% of
their asset base and
two reported
negative net equity
more than 500% of
their asset base
• Total net equity for
Cypriot clubs in
FY10 amounted to
€-4.8m
Measures taken by CFA
CFA Objectives
As approved by CFA Executive Committee and key stakeholders, the
new requirements aim principally to:
• Introduce more discipline and rationality in club football finances;
• Encourage clubs to operate on the basis of their own revenues;
• Protect the integrity and smooth running of the competitions;
• Encourage investment for the long-term benefit of clubs;
• Ensure clubs settle their liabilities on a timely basis;
• Protect the long term viability and sustainability of European club football.
Approach for developing the new requirements
• Financial situation of European club football - stakeholders calling for
change;
• Consultation with stakeholders (Local Player Union FIFPro );
• New financial rules to be built on top and integrated with existing club
licensing regulations in effect since 2004;
• New regulations approved by CFA EXCO
• Now focus on the challenges of robustly implementing the new
requirements.
The new CFA Club Licensing and financial fair play
rules
rules)
•(Monitoring
2011- Introduced
30 June and 30 September audit on overdue
payables on top and second division clubs (6 point deduction)
• 2012 Encourage clubs to operate on the basis of their own revenues
by introducing break even- lowering the 5m UEFA max loss (9 point
deduction)
• 2013 Monthly check on clubs on overdue payables to current
employees (2 point deduction)
• Higher point deduction and ban on transfers introduced as a sanction
on above.
• Stricter Budget controls and scrutiny
What new rules clubs had/have to meet?
National
Licensor
and Club
Financial
Control
Panel
National
Licensor
Licensed
clubs in
UEFA
competitions
Break-even
No overdue
payables –
during season
Future
financial
information liquidity
Guidance:
- debt level
- salaries &
transfers
Monitoring process
All Licence
applicants
Audited
annual
financial
statements
Interim
financial
statements
No overdue
payables
Written
representations
Licensing decision
Future
financial
information
Break-even calculation - simulations
Scenario 2: Aggregate break-even surplus for monitoring period
Reporting period
T-2
T-1
T
Annual break-even result (€M)
+2
-1
+3
Aggregate break-even result
in monitoring period (€m)
Conclusion
+4
Break-even deficit in T-1, so must look
at aggregate break-even result over 3
year monitoring period.
Break-even surplus over monitoring
period of +4, so requirement fulfilled
Break-even calculation - simulations
Scenario 3: Break-even result within acceptable deviation
Reporting period
T-2
T-1
T
Annual break-even result (€M)
-8
-1
+5
Aggregate break-even result
in monitoring period (€m)
Conclusion
-4
Break-even deficit in both (T-2) and
(T-1), but
aggregate break-even result over the monitoring
period is -4, which is outside acceptable deviation
(2), so requirements are fulfilled.
Results and situation today
1. Total debts reduced to near 60 million (from 80 million)
2. Employee debts reduced by 20% (around 6 million)
3. In 2013 total losses reduced substantially and better forecast in 2014
4. Salaries to revenue ratio reduced
5. FIFA cases reduced substantially
6. Many of our clubs have improved their financial capability
7. Generally a better picture and out look.
Reasons for improvement
•
New FFP rules encouraged reduced and feasible budgets
•
New monitoring requirements (monthly checks on Overdues) exerted big
pressure on clubs to reduce salary levels and made a massive favourable
difference
•
Clubs are now constantly monitored
Role of the Cyprus Professional Footballers Association (PASP)
•
Significant role
•
Consider PASP as a partner rather than a third party
•
Constant (daily) communication
•
Constructive input (deferral agreements, player contracts etc)
Summary and conclusion
•
Stricter monitoring rules (checks on overdues and FFP) gave positive
results and provides us with a positive outlook
•
Constant monitoring protects the clubs
•
Good cooperation and communication with local player Union
Our aim and duty:
•
TO PROTECT THE PLAYERS, CLUBS AND FOOTBALL AS A WHOLE
Thank You!
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