SANDLANDERS & SUPPORTERS DIRECT - FIRST AFRICA FOOTBALL REPORT: CLUB STRUCTURES AND LICENSING - Football Supporters ...
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
SANDLANDERS & SUPPORTERS DIRECT FIRST AFRICA FOOTBALL REPORT: CLUB STRUCTURES AND LICENSING DURBAN, NOVEMBER 2014
3
Contents
Contact Us
1. FOREWORD – LINKING CLUB STRUCTURES AND CLUB LICENSING 4
SANDLANDERS
2. ACKNOWLEDGMENTS 5 For further information about Sandlanders, please
contact:
3. ABOUT 5 Paul Jones
Sandlanders Football
4. PART I - CLUB STRUCTURES 8 1st Floor CAN Mezzanine
49-51 East Road
London, N1 6AH
5. PART II - CLUB LICENSING 14 pjones@sandlanders.com
6. PART III - SD CASE STUDY: CLUB LICENSING IN GERMAN FOOTBALL 18 Facebook: facebook/sandlanders.com
Twitter: @sandlanders
7. PART IV - COUNTRY CASE STUDIES
SUPPORTERS DIRECT
7.1 EGYPT 24
For further information about Supporters Direct, please
contact:
7.2 NIGERIA 28
Antonia Hagemann
Head of Supporters Direct Europe
7.3 KENYA 32 1st Floor CAN Mezzanine
49-51 East Road
London, N1 6AH
7.4 SOUTH AFRICA 36 Antonia.Hagemann@supporters-direct.coop
James Mathie
8. PART V - CONCLUSIONS AND RECOMMENDATIONS 40 SD Club Development Manager
1st Floor CAN Mezzanine
49-51 East Road
9. REFERENCES 42 London, N1 6AH
James.Mathie@supporters-direct.coop
SANDLANDERS & SUPPORTERS DIRECT SANDLANDERS & SUPPORTERS DIRECT ©
FIRST AFRICA REPORT: CLUB STRUCTURES & LICENSING FIRST AFRICA REPORT: CLUB STRUCTURES & LICENSING
4 5
“This report will provide an insight
into how African football clubs are
Foreword - Linking Club Structures and Licensing currently organised.”
are often asked but the answers, despite ABOUT SANDLANDERS
NOTE ON METHODOLOGY
being crucial to understanding how
Sandlanders works with African
African football operates, are difficult The four countries featured as case
football clubs, supporters’ groups
to find. We have therefore provided an studies represent a geographical spread
and associations. We focus on the
overview of existing ownership structures (respresenting the largest economy in
development of sustainable clubs,
across the continent with some analysis each of the four main regions of Africa)
league systems and infrastructure
of the merits of the respective structures. and a compromise between the goals of
and promote democratic community
This overview is supported by a more the project and the available resources.
ownership, transparency and good
detailed review of the markets in four key Whilst there has been some existing
governance in the administration of
jurisdictions - Egypt, Kenya, South Africa work on the economics and structures of
sports in Africa. Our assistance for clubs
and Nigeria. We conclude the report with sports clubs in Africa, there is no study
and associations includes advising on
a summary of conclusions and recom- such as this already in existence.
corporate structures and governance,
mendations for future practice.
Given the diversity of club structures league systems, licensing issues and
Based on our experience of involving and legal systems across the continent, sports infrastructure projects.
communities in the running of football the report is only able to give a brief
As well as developing our own network of
clubs, this report will also show, through a overview of each jurisdiction and
community-owned clubs and supporters’
combination of analysis and highlighting relevant club structure. Ownership and
groups (who are also our shareholders)
of best practice, the strength of the links financial details reported have largely
competing in domestic leagues in Ghana,
between community ownership and been obtained from public sources and
Liberia, Sierra Leone, Nigeria, Kenya,
community involvement in decision-mak- we welcome comments and corrections
Uganda, Zambia and Zanzibar, we work
ing at sports clubs and long-term financial from all stakeholders that would allow us
on a range of other projects. Our core
sustainability and good governance. We to develop this research further in future.”
areas of focus are club development;
“We believe that the believe that the sustainable success of
This is the first annual report to be Regulations across CAF’s 562 member policy, research and advisory and
sports clubs flows from the right choice
sustainable success of sports produced by Sandlanders and our associations (“MAs”). The Regulations project management. In conjunction
of structure, whilst a comprehensive
partners at Supporters Direct focusing on are based almost entirely on those ACKNOWLEDGMENTS with Architecture for Humanity, we have
clubs flows from the right club licensing system - on a national and
the business of football in Africa. Based established by FIFA in 2008 and establish developed designs for SoccerHub - an
continental level - creates a fair platform This report could not have been prepared
choice of structure.” on our experience working with clubs, sporting, infrastructure, personnel, integrated sports and community facility
for competition and rewards well-run without the valuable contributions of
associations and supporters’ groups in administrative, legal and financial criteria specifically for use in Africa.
clubs. a variety of African football industry
nine African countries over the last five to be met by clubs - all areas in much
stakeholders and experts including In addition to market-specific knowledge
years, we have observed that weak need of improvement across Africa. Community ownership is already a big
fans, clubs, associations, journalists, obtained from our clubs, through a
football club structures and an absence part of sporting culture in many parts
corporate sponsors and lawyers. formal partnership agreement with
of effective licensing is at the core of To aid understanding of the challenges of Africa and clubs and supporters now
Supporters Direct we are able to draw
many of the key issues affecting football ahead, this report will provide an need to take steps to ensure that this In particular, we would like to thank
on their experience of working in
on the continent. insight into how African football clubs involvement translates into financial Adam Moustafa and Ahmed Assem (of
over 20 European countries assisting
are currently organised. In contrast to sustainability and good governance Egyptian football website kingfut.com),
While the adoption of the CAF1 Club local communities and clubs develop
football in Europe and elsewhere, there which has to-date not always been Nasr El Din Azzam (Sport Makers,
Licensing Regulations (the “Regulations”) democratic forms of governance.
is still a general lack of information demonstrated. Egypt); Oluwada Lotfi (Egypt), Claudia
in 2012 provides a foundation for change
relating to the administration of sports Ekai (Kenya), Omollo Arthur Omondi
in the African game, there remain Paul Jones, Director,
in Africa. Questions such as “Who owns (Kenya), Mdudzi Mdunge (South Africa),
challenges ahead to ensure effective Sandlanders Football
the club?” “Where does the money come Ayodeji Adegbenro (Nigeria) and Michael
monitoring and implementation of the
from?” and “Where does the money go?” Adebayo (Nigeria).
SANDLANDERS & SUPPORTERS DIRECT © SANDLANDERS & SUPPORTERS DIRECT ©
FIRST AFRICA REPORT: CLUB STRUCTURES & LICENSING FIRST AFRICA REPORT: CLUB STRUCTURES & LICENSING
6
ABOUT SUPPORTERS DIRECT
Supporters Direct (“SD”) is an organisation that assists democratic football
supporter organisations in achieving formal structured involvement in their clubs and
associations and developing supporter community ownership of football clubs. SD
also advises clubs on their ownership and governance structures, and works with
football associations, leagues, UEFA, and other European institutions. Through our
SD Club Development consultancy we have the expertise to assist clubs in a variety
of situations. In respect of club licensing and supporter involvement, our work over
more than a decade has given us a recognised expertise in how decision-making
structures in football can be improved to encourage long-term sustainability.
SD currently operate in over 20 European countries, having been set up as a UK-based
organisation in 2000. On the initiative of the UK Presidency of the European Union, in
2005, José Luis Arnaut was commissioned to undertake what became known as the
Independent European Sport Review. One of his recommendations directed at the
football authorities was for them: “to examine the feasibility of a European Supporters
Direct body”. UEFA liaised with SD in the UK to address this recommendation and
funded a 12-month feasibility study, managed by an independent researcher that
commenced in July 20073. The resulting paper illustrated a clear desire amongst
supporters and supporter owned clubs for similar services to those offered by SD in
the UK, but with elements tailored to their national contexts.
ABOUT COMMUNITY OWNERSHIP
‘Community Club’ is a phrase that is becoming more and more popular when talking
about football and other sports globally. In Africa, the phrase is commonly used in a
variety of contexts when talking about a club with links to its community.
For the purpose of this report, we define ‘community ownership’ as meaning;
• A minimum of 50% +1 of the voting rights of the club are controlled
collectively by a democratic entity which has an open and inclusive
membership.
• ‘Democratic’ to mean the membership of the entity to work on a one member
one vote principle.
• ‘Inclusive’ to mean that there are no substantial barriers to participate as a
voting member, with membership open to all that are sympathetic to the
aims of the club.
• Any profits are reinvested back into the club as opposed to being distributed
to shareholders.
• The club is committed to running as a sustainable business.
A minimum of 50%
+1 of the voting
rights of the club are
controlled collectively
by a democratic entity
which has an open and
inclusive membership.
SANDLANDERS & SUPPORTERS DIRECT ©
FIRST AFRICA REPORT: CLUB STRUCTURES & LICENSING
8 9
“a recurring problem in African
PART I: CLUB STRUCTURES football is a lack of formality in
implementing these structures”
register, statutes and annual accounts form, list of authorized signatories and between clubs and their supporters,
of their club from the appropriate public type of required signature)“. Article 12 limiting potential long-term engagement.
registry but this is generally not the case further requires that regardless of the
To provide a high-level example of the
in Africa. applicant’s legal structure, clubs shall
split of club structures across Africa, we
prepare independently audited accounts.
This lack of formality is an issue FIFA have summarized below the structures of
and subsequently CAF has sought The Regulations are considered in the 2014 CAF Champions League group
to address through club licensing greater detail in Part II of this report but, phase participants which shows the
regulations. One of the stated objectives if implemented effectively, they will, at dominance of community-owned clubs
of CAF’s Club Licensing Regulations is the top level at least, address one of at the highest level of African football.
to improve the economic and financial the key issues impeding the commercial
TP Mazembe (World Club Cup finalists in
capacity of clubs through “proper development of African football - a lack of
2010) are the only fully private club in the
corporate governance and control”. corporate formality. Input received from
final eight clubs. Despite being privately-
Article 11 of the Regulations requires both sponsors and fans indicates that
owned, the club also exhibits some of
as a Grade A (mandatory) requirement (i) this lack of formality prevents clubs
the characteristics of community-owned
that license applicants provide “a copy of from accessing finance from commercial
clubs in terms of its commitment to
valid statutes” together with “an extract lenders and corporate sponsors alike;
developing infrastructure to benefit
from a public register (trade register, etc.) and (ii) the lack of transparency and
the community and build the profile of
containing information on the license accountability also puts a distance
Katanga Province4).
applicant (such as name, address, legal
TABLE 1 - 2014 CAF CHAMPIONS LEAGUE PARTICIPANTS - CLUB STRUCTURE OVERVIEW
CLUB COUNTRY STRUCTURE FOUNDED FACEBOOK5
“if implemented OVERVIEW There are some variations in the above
effectively, the forms from one jurisdiction to the next TP MAZEMBE Private limited liability 19397 111,552
Sports club structures evolve over Democratic Republic of Congo
and increasingly, boundaries between company 6
regulations, at the top time and develop differently from one
the forms have become blurred,
jurisdiction to the next, influenced by AS VITA CLUB Community-owned 19359 20,234
level at least, will address particularly where community-owned Democratic Republic of Congo
country-specific economic, social and multi-sport club 8
clubs have become subject to state or
one of the key issues political factors. AL-HILAL OMDURMAN10 Community-owned11 1930 277,544
private influence. Sudan
impeding the commercial The ownership of sports clubs in Africa
Common to each of the forms, a ZAMALEK SPORTING CLUB Community-owned 1911 2,744,504
can broadly be split into the following
recurring problem in African football is a Egpyt
development in African three forms: multi-sport club
lack of formality in implementing these
football - a lack of 1. Community ownership (via structures. Historically, many top tier CLUB SPORTIF SFAXIEN12
Tunisia
Community-owned 1928 234,935
a member-owned society or clubs have not operated via a formally multi-sport club13
corporate formality.”
registered/unregistered association) registered legal entity and where entities ENTENTE SPORTIVE DE SETIF Community-owned14 1958 103,846
Algeria
are registered, there remains a lack
2. State ownership (via a state-owned
of transparency and accountability to ESPERANCE SPORTIVE DE Community-owned 1919 226,047
authority/agency or company) Tunisia
supporters in the way that the clubs TUNIS multi-sport club15
3. Private ownership (via a private are run. Across Europe for instance,
AL-AHLY BENGHAZI SPORTS Community-owned16 1947 29,493
limited company or unregistered a supporter may obtain the ownership Libya
CULTURAL AND SOCIAL CLUB multi-sport club
structure)
SANDLANDERS & SUPPORTERS DIRECT © SANDLANDERS & SUPPORTERS DIRECT ©
FIRST AFRICA REPORT: CLUB STRUCTURES & LICENSING FIRST AFRICA REPORT: CLUB STRUCTURES & LICENSING
10 11
COMMUNITY OWNERSHIP ACROSS AFRICA -
BRINGING COLOUR TO THE BEAUTIFUL GAME
1. COMMUNITY OWNERSHIP
The establishment of sports clubs as community or member owned associations or Al Ahly
Entente Sportive de Sétif
societies has deep roots in various parts of Africa. Club Sportif Sfaxien Zamalek
JS Kabylie
Espérance Sportive de Tunis Smouha
In North Africa in particular, many of the region’s most successful clubs are
ES Sahel Al Masry
established as multi-sports associations based on the same model used throughout
Raja Casablanca Ismaily
German football (where all clubs were founded as members’ associations) or at the Al-Ahly Benghazi Sports
Ittihad of Alexandria
Spanish socio-owned clubs such as Real Madrid and Barcelona. Cultural and Social Club
Heliopolis
The map below indicates the penetration of community ownership of sports clubs Gezira
across Africa (indicating clubs which are currently community-owned or have a Al Tersana
AC Djoliba
history of community ownership). The map is not intended to be definitive and we Al Zohour
would welcome additional contributions.
Al-Hilal
Algeria - Entente Sportive de Sétif, JS Kabylie
Al-Merrikh
Democratic Republic of Congo - AS Vita Club
Egypt - Al Ahly, Zamalek, Smouha, Al Masry, Ismaily, Ittihad of Alexandria, St. George
Heliopolis, Gezira, Al Tersana and Al Zohour Ethiopia Coffee Gor Mahia
AFC Leopards
Ethiopia - St. George, Ethiopia Coffee
Mathare United
Ghana - Keta Sandlanders Thika United
Muhoroni Youth
Ivory Coast - ASEC Mimosas
Ligi Ndogo
Kenya - Gor Mahia, AFC Leopards, Mathare United, Thika United, Muhoroni Youth,
Ligi Ndog Shining Stars
Liberia - VOA FC
VOA
Libya - Al-Ahly Benghazi Sports Cultural and Social Club
Mali - AC Djoliba
Morocco - Raja Casablanca ASEC Mimosas Mutundwe Lions
Sierra Leone - Shining Stars FC Keta Sandlanders
Sudan - Al-Hilal, Al-Merrikh AS Vita Club Kilimani City
Tanzania - Young Africans, Simba SC, Coastal Union
Young Africans
“many of the region’s
Tunisia - Club Sportif Sfaxien, Espérance Sportive de Tunis, ES Sahel Simba
most successful clubs Coastal Union
Uganda - Mutundwe Lions
are established as
Zambia - Kalingalinga on the Ball
multi-sports associations
Zanzibar - Kilimani City SOUTH
based on the same Kalingalinga on
ATLANTIC the Ball
model used throughout
OCEAN
German football “
INDIAN
= Sandlanders Network Clubs OCEAN
ANALYSIS – KEY FEATURES OF COMMUNITY-OWNED CLUBS
SANDLANDERS & SUPPORTERS DIRECT © SANDLANDERS & SUPPORTERS DIRECT ©
FIRST AFRICA REPORT: CLUB STRUCTURES & LICENSING FIRST AFRICA REPORT: CLUB STRUCTURES & LICENSING
12 13
and national level. Decision-making structures of football state governments but the recent Nigerian Club Licensing
clubs and governing bodies need to be improved in order to Regulations impose a rule ultimately requiring all clubs
FORM
encourage long-term sustainability. The German case study to establish themselves as commercial entities in which
• We have reviewed structures that include registered and unregistered set out in this report offers best practice in this area. no single party can own more than 30% of the shares. If
‘societies’, ‘associations’ and co-operatives. The form varies from country-to- implemented in full, the regulations will have a transformative
African sports clubs have had varying success in establishing
country based on local enabling legislation. In Tunisia for instance, clubs are effect on Nigerian football and reduce state involvement in
community ownership. In the worst cases, community-owned
unable to establish more formal ‘Societies’ and only non-profit-making the game.
clubs are vulnerable to corruption, undue influence and over-
associations are permitted (e.g. Esperance).
politicization and no longer satisfy the definition of community
• Members generally exercise their control by electing a President in elections ownership set-out in this report.
3. PRIVATE OWNERSHIP
held every 4 years and otherwise being able to attend annual and special
general meetings of the club. Private ownership of sports clubs in Africa is on the rise
2. STATE OWNERSHIP as additional commercial sponsorship and other corporate
• In general, little financial information is provided to members and their powers
involvement (in some countries at least) makes investment a
are limited. State ownership of sports clubs is a reflection of a ‘big’ state
more viable proposition.
but also of an economic reality that in some cases only the
• The origins and evolution of community-owend clubs are complicated (often
state has available funds to provide effective support to African football has long been home to clubs privately owned
tied closely with in-country social and political developments) and should not
clubs. These factors have combined across Africa in recent by wealthy individuals (e.g. TP Mazembe, Kaizer Chiefs
be over-simplified.
decades to result in widespread state involvement in sports and Mamelodi Sundowns) or corporate groups looking to
clubs. promote a brand or provide a social outlet for employees
SUCCESSES (e.g. East Africa Breweries’ Tusker FC in Kenya or Azam FC
State clubs typically represent major state instructions such
in Tanzania). It is likely that the level of sophistication of this
• LONGEVITY - many of the most successful community-owned clubs were as the army, revenue authority or city councils. Successful
model will increase as economies develop resulting in better
established in the first part of the twentieth century. examples include APR (the Rwandan military); URA (Uganda
equipped owners and more money in the game.
Revenue Authority); Zesco (the Zambia Electricity Authority)
• SUPPORTERS - the biggest community-owned clubs generally have large fan
and most notably Nigeria’s Enyimba (backed by the Abia As the most successful league in Africa both administratively
bases. Clubs may have a potential fan base of millions with thousands of
State Government) who are all regular champions of their and financially, South Africa’s PSL best illustrates this trend.
registered members e.g. Yanga and Simba in Tanzania - millions of supporters
domestic leagues. The league operates on a freely tradable ‘franchise’ basis
across the country and around 12-13,000 registered members. In Egypt,
(similar to America’s MLS), which has resulted in a diverse
between 10,000-20,000 members vote in club elections17. Zamalek’s current While these clubs have helped to fill a gap in funding in
portfolio of investors but, as we consider in our South Africa
membership stands at around 54,000 and since membership is one per family, recent years, they are usually entirely reliant on state
case study, the model brings its own challenges in terms
there are many more individual members. support for revenue in the absence of a significant fan base
of developing an effective fan base and diverse revenue
to contribute gate receipts or a more developed commercial
• ON FIELD SUCCESS - Africa’s most decorated clubs are community-owned. Four streams.
strategy. With this in mind, it is likely that such clubs will play
of the five clubs with the most CAF titles (Al Ahly, Zamalek, ES Sahel, TP
less of a prominent role in future as the game is increasingly
Mazembe and JS Kabylie) are community-owned to some extent (TP Mazembe
privatised.
being the exception).
Nigeria provides a good example of this trend. Currently,
almost all Nigerian Premier League clubs are owned by
FAILURES
• ADMINISTRATION - despite their large fan bases and on-pitch success, the larger
“benefits will only member-owned clubs face complicated and deep-rooted administrative
difficulties. Such is the influence of the clubs amongst their supporters and the
be realized if the wider population that, if unprotected by robust regulation, the institutions are
community ownership vulnerable to over-politicization. In such cases, the principles of democracy,
transparency and accountability may be compromised.
model is implemented
• FINANCIAL ISSUES - in a number of cases, community-owned clubs have become
in accordance with its over-dependent on state support and do not otherwise run as financially
core principles which sustainable businesses. The lack of a stable financial base contributes further
to over-politicization of the clubs.
include democracy,
transparency and
THE VALUE OF COMMUNITY OWNERSHIP
accountability.”
Supporters Direct have conducted extensive research into the benefits of community
ownership of sports clubs in Europe. Their research concluded that supporter community
ownership creates “long-term, deep and sustainable partnerships with key strategic
partners”18.
However, these benefits will only be realized if the community ownership model
is implemented in accordance with its core principles which include democracy,
transparency and accountability. Furthermore, for community ownership of clubs to fully
deliver these benefits, comprehensive regulation of clubs is required - at a continental
SANDLANDERS & SUPPORTERS DIRECT ©
FIRST AFRICA REPORT: CLUB STRUCTURES & LICENSING
14 15
“The regulations require clubs
to provide evidence of their
incorporation and public
PART II: CLUB LICENSING registration and also to prepare
independently audited accounts.”
capacity, governance and control and • Creation of decision-making • Nigeria has created the relevant
infrastructure) are in urgent need of bodies i.e. First Instance Body decision-making bodies and also
improvement and the Regulations and Appeal Body. adopted a set of comprehensive
provide a clear basis for improved licensing regulations which shall
• Organisation of a seminar for
regulation in African football if be effective from 30 November
premier league clubs.
implemented, monitored and enforced 2014.
effectively on an on-going basis.
From a club structuring perspective, the PHASE 2: Expiring 30 November 2014:
CHALLENGES
Regulations require clubs to provide
• National club licensing
evidence of their incorporation and Implementing and enforcing the
regulations to become fully
public registration and also to prepare Regulations to strengthen the
operational. This includles the
independently audited accounts. As administration of football in Africa will
organisation of national seminars,
well as addressing issues such as face the following challenges:
rendering the decision-making
transparency and accountability, an
bodies operational and undertaking
increase in corporate confidence should
the necessary work to permit the
result from clubs being committed • Certain MAs (some will be
issuance of licenses to clubs.
to legally binding statutes, rules and better prepared than others) will
regulations. Under the Regulations, CAF shall carry struggle with the additional
out spot checks within the MAs to ensure administrative burden imposed
that licences have been correctly issued by the need to develop and enforce
IMPLEMENTATION to clubs under the national licensing national regulations.
regulations and may sanction the
Following slow initial implementation of • In many cases (particularly at lower
relevant MA for breach.
the Regulations by MAs and the missing league level) clubs will lack both
“corporate confidence CAF CLUB LICENSING REGULATIONS 2012 • Adapting and improving club of various deadlines for implementation, As at October 2014, a number of MAs the funds and expertise required
should result from clubs sporting infrastructure CAF has most recently mandated are still in default in their implementation to make the necessary changes to
The Regulations were approved by the
MAs to implement the Regulations in of the Regulations. Of the countries comply with the national licensing
being committed to Executive Committee of African football’s • Improving the economic and
two phases from January 2014 to 30 considered in our case studies: regulations.
governing body on 19 January 2012, financial capacity of clubs,
legally binding statutes, November 2014 (with non-compliant
coming into force on 1 March 2012. through proper corporate • Egypt has approved national club • Certain problems (e.g. over-politici-
countries risking exclusion from the CAF
rules and regulations.” governance and control licensing regulations and nominated sation and a lack of administrative
The Regulations contain the following Club Competitions for the 2015 season):
the relevant decision-making accountability) will remain unless
overarching objectives, which mirror • Ensuring and guaranteeing the
bodies. EPL clubs have submitted MAs implement above the basic
those set out by FIFA in their 2008 Club continuity of international
their files to the EFA for approval by requirements set out by CAF (e.g.
Licensing Regulations: competitions during the season PHASE 1: Comprising four steps to be
the First Instance Body. by introducing further requirements
completed by 31 January 2014:
• Promoting and improving the quality • Allowing parallel development relating to qualifications for
• Kenya is yet to adopt national club
and level of all football aspects in and comparison amongst clubs by • Insertion of statutory clauses ownership - a ‘fit and proper person’
licensing regulations.
Africa. ensuring necessary compliance in adopting the club licensing test – and supporter representation
terms of financial, sporting, legal, system in MA statutes. • South Africa created relevant at shareholder and board level).
• Ensuring that all clubs have
administrative and infrastructure decision-making bodies and
the appropriate infrastructure, • Establishment of national club
criteria. adopted a set of comprehensive
knowledge and application licensing regulations.
licensing regulations in 2012. RECOMMENDATIONS
in respect of management and The areas identified for development
organisation. (most notably economic and financial
SANDLANDERS & SUPPORTERS DIRECT © SANDLANDERS & SUPPORTERS DIRECT ©
FIRST AFRICA REPORT: CLUB STRUCTURES & LICENSING FIRST AFRICA REPORT: CLUB STRUCTURES & LICENSING
16
Overall, the Regulations certainly provide a foundation for change but will need to
be implemented carefully with attention paid to the circumstances of MAs and clubs.
In 2011, a research thesis completed for the International Centre for Sports Studies
(CIES) entitled ‘African Football Realities: Moving towards a Club Licensing System’
, which included case study assessment of Kaizer Chiefs (South Africa); Kumasi
Asante Kotoko (Ghana); Paradou AC (Algeria); Mathare United (Kenya) and Stade
Malien (Mali), highlighted that African clubs and national associations “evolve in
intrinsic football realities based on different socio-economic, political and sporting
histories.”
Based on the research carried out in the thesis, four major needs and priorities of
African clubs and national associations were identified as follows:
1. EDUCATION (need for trained sport managers & administrators and special
training on the club licensing system)
2. FINANCE (need to increase financial incentives for participation in CAF
inter-club competitions – or greater travel/accommodation subsidies – and
financial support for club licensing implementation)
3. YOUTH DEVELOPMENT AND PROTECTION (need to promote structured youth
development systems and strengthen the protection of African youth
players)
4. INFRASTRUCTURE (need for consistent accessibility and safety/security for
players and fans)
A report from the African Sports Law and Business Bulletin entitled “Club Licensing
in African Football - Are we there Yet?”20 also highlighted the reality that some
regulations will be more easily enforceable in certain countries rather than others
and the need for education and information for the concerned MAs and clubs.
Based on the above and our own review of the licensing process to date we
recommend that:
1. The priorities identified in the CIES research thesis and the associated
recommendations (such as a special fund to assist with the implementation
of the licensing process, educational seminars and a digital knowledge
exchange tool) should be contemplated by CAF and MAs as part of the
implementation process.
2. CAF establish a division with a focus on club development that will be
“The Regulations responsible for the on-going education of MAs to enable those MAs to
certainly provide a in turn educate and support their clubs to assist with compliance of the
national regulations.
foundation for change
3. MAs consider additional regulations that would assist to address some
but will need to be of the core issues impeding the development of football in their jurisdiction
implemented carefully e.g. regulations to more tightly regulate corporate governance; ownership
(as the Nigerian regulations have done) and provide for the involvement
with attention paid to of supporters at both board and shareholder level.
the circumstances of 4. Clubs establish working groups with their interested stakeholders (both
MAs and clubs.” public and private and including supporters, local authorities and corporate
sponsors) to consider how best to manage the increased regulatory
requirements particularly those related to infrastructure, youth systems and
other areas requiring significant investment.
SANDLANDERS & SUPPORTERS DIRECT ©
FIRST AFRICA REPORT: CLUB STRUCTURES & LICENSING
18 19
“Clubs that are run with a view to the long term
interests of their key stakeholders, rather than
PART III: the short term interest of shareholders are more
SD EUROPE CASE STUDY: CLUB LICENSING IN likely to prosper.….”
GERMAN FOOTBALL
Business benefits of supporter company (AG), or a limited partnership However, this does not mean that the
ownership22 include: with one general partner that is liable twelve other clubs competing in the
without limitation (KGaA). Bundesliga this season are not in the
• Longer term and more sustainable
control of private investors – thanks to
partnerships with key strategic However, as well as conventional
the rule which has become known as ‘50
partners. businesses, Germany also has a strong
+ 1’. Under German Football Association
tradition of members’ associations,
• A range of business and funding (DFB) statutes, the parent club (i.e. the
based on community and social values.
opportunities, from help with members’ association) must retain the
These are known as eingetragener
development of new facilities, to majority shareholding of the separated
Verein (e.V), and around 550,000 exist
innovative finance, to attracting limited company, which means the
in Germany today.
sponsors keen to be associated with majority of votes – 50% plus one. The
‘ethical’ football clubs. This tradition of cooperation has exerted rule has two main intentions:
a powerful influence on the development
• Greater supporter resilience and • To safeguard the influence of the
of German football. Prior to 1998, all
higher satisfaction, strengthening parent club in the decision-making
football clubs were structured as e.Vs,
the long-term organisation. process; and
owned by their members and managed
The introduction of comprehensive, by democratically elected representa- • To prevent a distortion of sporting
over-arching club licensing systems on tives. Any revenue generated by e.Vs competition.
the domestic level, provides the ideal has to, by law, be invested back into
There are two exceptions to this rule:
method of ensuring these benefits the organisation (in this case, the
Bayer Leverkusen, and VFL Wolfsburg.
stand a better chance of being realised. football club). As well as a tradition of
In both cases, the clubs are 100%
In terms of best practice, the system cooperation, many German football
subsidiaries of industrial groups (Bayer,
employed by Germany’s football stands teams were established as ‘sections’ of
a chemical corporation, and Volkswagen,
out from the rest. multi-sport clubs, as is the case in many
“Clubs that a car manufacturer). In 2011 it was
INTRODUCTION supporter involvement and ownership European countries. In the 2014/15
ruled that sponsors with over 20 years’
constitutionally have include: Bundesliga, six clubs (1. FSV Mainz
Decision-making structures of football involvement in a club could take majority
CONTEXT – THE ‘50+1’ RULE 05, FC Augsburg, FC Schalke 04, SC
to reinvest profit clubs need to be improved to encourage • Clubs that are run with a view to shareholdings – though only with the
Freiburg, SC Paderborn 07, and VfB
long-term sustainability. Current the long term interests of their key As a starting point, it is important to consent of the members, of course.
into their activities Stuttgart 1893) are structured as e.Vs.
governance frameworks disadvantage stakeholders, rather than the short recognise the wider cultural norms that This was in response to the Chairman of
are more financially clubs that operate sustainable, long-term term interest of shareholders are have led to the establishment of what can Since 1998, clubs have been permitted Hannover 96, Martin Kind, who submitted
financial policies. Despite the severity more likely to prosper21. broadly be referred to as the ‘German to incorporate their professional football a motion to abolish the ‘50+1’ rule – he
sustainable. ” of the problem, it is solvable. It is a model.’ Over the last half-century, sections into external limited companies, was unsuccessful. Thus, democratic
• There is increased accountability
governance crisis that causes an Germany has been characterised as separated from the ‘parent club’. The supporter ownership or at the very least
and scrutiny associated with
economic one. The financial resources a society that values cooperation and League Association (DFL, of which all 36 supporter control remains enshrined in
stakeholder involvement and
are available to redress the situation consensus, something that extends to its professional clubs in the Bundesliga and the regulatory fabric of German football.
ownership.
through a more holistic approach. typical system of corporate governance. 2. Bundesliga are members) decided
• Clubs that constitutionally have to The concept of a supervisory and to permit this with both commercial and
reinvest profit into their activities are a management board (which exist competitive reasons in mind.
Ultimately, ensuring financial
more financially sustainable. independently of one another) is a
sustainability and probity in football
cornerstone of the German corporation,
requires better regulation hand in hand
whether it is a private limited liability
with formalised supporter involvement.
company (GmbH), a public limited
Structured benefits of formalised
SANDLANDERS & SUPPORTERS DIRECT © SANDLANDERS & SUPPORTERS DIRECT ©
FIRST AFRICA REPORT: CLUB STRUCTURES & LICENSING FIRST AFRICA REPORT: CLUB STRUCTURES & LICENSING20 21
PROCESS – CLUB LICENSING IN THE 1. BUNDESLIGA AND 2. BUNDESLIGA Following the liquidity forecast and Should a gap be found, clubs: a close examination of the Bundesliga’s
assessment of the criteria listed above, licensing procedure, as well as its
• Are given a month to secure new
four scenarios are possible: protection of member ownership.
income streams
Whilst the ‘50+1’ rule underpins this regulatory fabric, a comprehensive club licensing
• Positive liquidity at the end of the We believe that the involvement of
system takes care of the day-to-day operations of clubs. The fundamental aim of the • Are barred from acting in the
season where a license is being supporters in governance at club and
licensing system is to safeguard the operations of all league members during the January transfer window without
applied for is proved; financial national governing body levels can
season and to ensure stability, integrity and continuity of the competition(s)23. ‘50 + 1’ DFL approval
criteria are fulfilled = a license is provide a greater level of scrutiny,
is the bedrock of the system, but there are also a number of specific criteria, which
granted unconditionally, with no • Face fines for late submission of independence, accountability and
address the competence of the management team and, crucially, the financial state
further obligations documents, and; transparency than is evident at present,
of the club. The licensing system also sets out guidelines for transparent corporate
and will lead to better and more balanced
governance. • Positive liquidity could only been • Could have points deductions
decision making in the best long term
proven after the fulfilment of certain imposed should the month-long
Under the terms of the licensing procedure, clubs are requested to produce economic interests of the sport, and the institutions
conditions; financial criteria are window elapse.
data for examination by the relevant authorities. The rationale behind this is a desire (clubs) that play such an important
fulfilled = a license is granted with
to prevent/reduce club overspending through specified planning, and an annual role in the life of supporters and their
certain obligations for the season in
license application. Clubs are required to apply to the German Football League communities.
question BENEFITS: A SUSTAINABLE SYSTEM WITH
(DFL), which assesses the application and issues the license.
STRUCTURED SUPPORTER INVOLVEMENT However, only a robust regulatory
• Positive liquidity at the end of the
Applications are assessed by examining “…a range of criteria covering sporting, environment can help to protect clubs
season is proven, but the balance By receiving a license, all clubs also
legal, staffing, administrative, infrastructural, security, media-technical and above all who apply sustainable financing methods
sheet as of December 31st reveals enter into an agreement to (if requested)
financial competence.”24 from being outmuscled by clubs that
net debt (i.e. negative equity); provide clubs in financial difficulties with
simply live above their financial capacity.
Financial competence must be demonstrated by proof of solvency and positive financial criteria are fulfilled = a aid from the income received as part of
Domestic leagues need a ‘multi-faceted
liquidity, taking into account the following key factors: license is granted, but with the the collective television rights agreement.
approach’ to increase sustainability
obligation to improve the club’s Of course, this would have the effect of
and competitive balance: (a) sound
equity position as of December 31st well-run clubs receiving less TV income
regulatory environment, (b) supported by
• ASSETS by a certain percentage than they are entitled to, simply in order
distribution model that avoids creation of
to plug the gaps of others. However, the
• RECEIVABLES • Positive liquidity is not proven; major wealth gaps that cause systematic
reality is that the potential support is
financial criteria are not fulfilled = no and behavioral problems.
• CASH AND BANK BALANCES capped at two months’ salary costs, and
license is awarded
is accompanied by a point deduction.
• LIABILITIES/PROVISIONS
Should a club be refused a license, they Indeed, no club has requested aid of this
• CURRENT OVERDRAFT ACCOUNT FACILITIES can appeal to the licensing committee, kind since 2004, when it was introduced.
and if the appeal is unsuccessful the
• LOAN COMMITMENTS Furthermore, this aid was introduced
Court of Arbitration for the appropriate
based on the collective understanding
• PROJECTED PROFIT AND LOSS STATEMENTS division (1. Bundesliga or 2. Bundesliga).
within German football that financial
Should their appeal be successful
“The current success • PLANNED INCOME FROM MATCH OPERATIONS
there the application is returned to the
difficulties of any one club will inevitably
have an impact on the day-to-day
and long-term stability • PLANNED ADVERTISING INCOME licensing committee and, finally, the
functioning of others – in essence: clubs
League Association. If, after all these
of the Bundesliga can • PLANNED TRANSFER-RELATED INCOME
avenues are exhausted a club has still
accept the fact that they depend on
one another, and financial sustainability
be directly attributed to • PLANNED PAYROLL COSTS FOR MATCH OPERATIONS not received a license, they are banned
benefits everyone. Taking the historical
from competing in the forthcoming
its structure of member • CASH INFLOWS/OUTFLOWS FROM INVESTING AND FINANCING ACTIVITIES.
season.
view underlines this point: no Bundesliga
club has experienced an insolvency
ownership of clubs, and event since the league was established
the implementation As well as these listed criteria, a liquidity forecast is undertaken as part of the
WHAT HAPPENS DURING THE SEASON?
in 196325.
assessment process, based on figures provided by each club, with commentary from
of a strict licensing their auditors. These figures must cover an eighteen-month period from the previous As well as the close season licensing
system that imposes December 31st – and crucially, anything that cannot be evidenced on paper (i.e. in process, the German system also CONCLUSION: WHAT CAN BE LEARNED?
the form of a contract) is ineligible for submission. includes monitoring during the course of
financial sustainability a season, with a similar aim of proving
The current success and long-term
he DFL are allowed to reduce projected income, or indeed increase projected stability of the Bundesliga can be
on those clubs that expenditures based on the figures provided – a scenario which sometimes occurs
economic capacity. All clubs are required
directly attributed to its structure of
to submit revised and fully audited
wish to participate in when considering intended cost-cutting through player salary reduction, or budgeted
accounts up to June 30th, a revised
member ownership of clubs, and the
income from ticket sales. implementation of a strict licensing system
the German football budget for the upcoming season, as well
that imposes financial sustainability on
as an auditor’s report covering the period
pyramid“ up until October 31st. The DFL are
those clubs that wish to participate in
the German football pyramid. Clearly,
thus able to detect any gaps in positive
the socio-cultural context outlined above
liquidity, and act accordingly.
cannot be transplanted onto other
countries, but the building blocks of a
more sustainable system are provided by
SANDLANDERS & SUPPORTERS DIRECT © SANDLANDERS & SUPPORTERS DIRECT ©
FIRST AFRICA REPORT: CLUB STRUCTURES & LICENSING FIRST AFRICA REPORT: CLUB STRUCTURES & LICENSING22 SANDLANDERS & SUPPORTERS DIRECT © FIRST AFRICA REPORT: CLUB STRUCTURES & LICENSING
24 25
OVERVIEW
GOVERNING BODY: . Founded 1921, FIFA affiliated 1923
PART IV: RELEVANT GOVERNMENT BODIES: Ministry of Youth and Sports, National Sports Council
RELEVANT LAWS: Constitution of the Arab Republic of Egypt (2014); Sports Law (1975), new Sports Law in development
CAF RANKING: 13
COUNTRY CASE STUDIES FIFA RANKING: 61
LEAGUES: Egyptian Premier League (EPL - 20 teams); Second Division (3 groups of 16 teams); Third Division, Fourth Division.
EGYPT EPL organised by the EFA.
STATUS OF CLUB LICENSING REGULATIONS: EFA national club licensing regulations in force
1. COMMUNITY CLUBS 3. PRIVATE CLUBS The founding dates in the table below
indicate how structures have evolved
• Registered as associations. All • Usually via a private company
over time. In general, the big community
sports entities established pre-1975
• e.g. Wadi Degla (part of the Wadi clubs were incorporated first, with state
were reregistered under the sports
Degla investment group, who also teams to follow and some private clubs
law of that year (either as private
own Lierse SK in Belgium) now developing.
authorities or ‘public interest’
entities)
TABLE 2 - EGYPTIAN PREMIER LEAGUE CLUB STRUCTURES26
• Includes both big teams with large
fan-bases run by members who
democratically elect a president CLUB STRUCTURE FOUNDED MEMBERS/OWNERS FACEBOOK
for four-year terms (as per the
club’s statues) and smaller clubs AL AHLY Community 1907 Registered members 5,721,620
(e.g. Heliopolis and Gezira) which
ZAMALEK SC 1911 c. 54,000 registered 2,744,504
operate on the same basis and Community members
where supporter involvement is key
EL DAKHLEYA FC State 2005 Egyptian Army -
and members are obliged to attend
SMOUHA SC Community 1949 Registered members -
elections. Under the association
structure, no profits are distributed AL MASRY SC Community 1920 Registered members 264,056
to the board or the members. MISR EL-MAQASSA SC State 1937 - -
• Clubs are considered as sporting HARAS EL-HODOOD SC State 1950 - -
and social clubs and their boards AL-RAGAA - - - -
are responsible for providing ISMAILY SC Community 1924 Registered members 5,024
“The fall-out from Port non-sporting social services for
BACKGROUND return to stadia well over two years after ITTIHAD OF ALEXANDRIA Community 1914 Registered members 9,615
members (e.g. Zamalek recently
Said and other events the ban was introduced. ITTIHAD EL-SHORTA State 1980 Egyptian Police -
Historically one of Africa’s strongest opened a seaside resort) and
over the last few years has footballing nations, both in terms of The fall-out from Port Said and other funding the football, handball, futsal, TALA’A EL-GAISH SC 1995 Egyptian Army/Interior -
State Ministry
its national side and its local league, events over the last few years has drawn tennis and volleyball operations of
drawn attention to the Egyptian football has endured a torrid attention to the links between Egyptian the club. ENPPI 1985 ENPPI (state-owned -
State engineering company)
links between Egyptian few years since the 2011 Revolution. politics and sports clubs and reform
2. STATE CLUBS
of the country’s sports laws is high on WADI DEGLA SC 2002 Wadi Degla Investment 37,557
politics and sports clubs” After the nadir of the Port Said stadium Private Group
the agenda of international observers. • Owned and funded by state-owned
disaster in which 74 fans lost their
However, separating Egyptian sports companies, Ministries or agencies EL-GOUNA FC Private 2003 - 55,313
lives on 2 February 2012 following a
and politics (as mandated by both the ARAB CONTRACTORS 1972 El-Mokawloon El-Arab -
match between Al Masry and Al Ahly, • Limited numbers of fans, no
IOC and FIFA) will be a complex task. State (state-owned construction
the Egyptian Premier League was members and usually run by a company)
suspended for over a year. CLUB STRUCTURES delegate of the Ministry involved
PETROJET 1980 Petrojet (state-owned -
in the club e.g. El Geish and the State petroleum company)
The 2013/14 and on-going 2014/15 Egyptian sports club structures may
Interior Ministry
seasons have been played behind broadly be broken down into the following DAMANHOUR - - - -
closed doors with the security situation three categories: ASSIOUTY SPORT Private - Assiouty Sport Resort 115,448
still deemed too sensitive for fans to
AL-NASR - - - -
SANDLANDERS & SUPPORTERS DIRECT © SANDLANDERS & SUPPORTERS DIRECT ©
FIRST AFRICA REPORT: CLUB STRUCTURES & LICENSING FIRST AFRICA REPORT: CLUB STRUCTURES & LICENSING26
INFRASTRUCTURE -owned clubs in particular which have regional matches during the upcoming (Cairo clubs with millions of fans and 13 CAF Champions This mandate appears not to have been adhered to however
developed deep social and cultural period of anticipated protests. League titles between them) have national prominence and when in February this year, FIFA intervened to call for the
In common with other aspects of sport
relationships with their fans. Supporters the fans of both clubs have been significant actors in the reinstatement of all Egyptian football club boards that had
in Egypt, the state plays a big role and Egyptian clubs themselves have
have always had a strong voice in Egypt ever-changing political landscape over the last few years. been deposed by Sports Ministry officials, reiterating the
almost all clubs are tenants of govern- significant revenue generating ability.
and have the right to participate in the Politicians have long been drawn to sports clubs with such position that Egypt’s government must not interfere with
ment-owned stadia. Zamalek does own In 2011, the newspaper Al Ahram was
running of community-owned clubs levels of influence and this is a status supported by the internal football affairs. A letter sent by FIFA required Al
the Helmy Zamora Stadium which at reported to have agreed to pay EUR
through elections. country’s 1975 Sports Law. Ahly, Zamalek, Smouha, Ittihad of Alexandria, Tersana and
20,000 capacity is insufficient for match 15m to Al Ahly over 3 seasons28. Also
Zohour to organise general assemblies to elect new boards
use but is still used as a training facility. In his ‘Turbulent World of Middle in 2011, Etisalat ousted rival Vodafone This level of political influence is of course inconsistent with
“without interference from the authorities.”31 The letter also
Both Al Ahly and Zamalek own various East Soccer’ blog, James M. Dorsey to become Al Ahly’s new shirt sponsor the rules of international sports and in November 2013, the
stipulated that the elections must not take place before the
club facilities for use by members. documents the origins of both Al Ahly and paying a reported US$22.6 million for the International Olympic Committee (IOC) imposed a six-month
new sports law had been implemented in line with the IOC
Zamalek and also the rise of the ‘ultra’ three-year deal. Etisalat Egypt chairman, deadline30 on Egypt to produce draft legislation updating
timetable. Until then, the clubs whose boards have been
fan groups which were formed in 2007 as Gamal El-Sadat, told reporters at the and revising the 1975 law to make it fully compatible with
disbanded must reinstall their former ones, FIFA specified.
SUPPORTERS a non-political, non-religious group which time “We are honoured to sponsor the the basic standards of the Olympic Movement. As part of
became increasingly politicised following shirt of such a big club, and have our this revision process, the status of sports clubs in Egypt Egypt’s new 2014 Constitution provides in Article 75 that
North African football in general has
regular police confrontations27”. name associated with Ahly.”29 was required to be reviewed and clarified. Completion of “All citizens shall have the right to form non-governmental
proved much more resistant to the
the whole process, including the formal adoption of the new associations and foundations on democratic basis, which
influence of European football than the
sports legislation by the competent authorities in the country, shall acquire legal personality upon notification. Such
rest of the continent and Egypt is a clear
PREMIER LEAGUE CLUB LICENSING was required within one year. In the meantime, the Egyptian associations and foundations shall have the right to practice
example of this. Until the stadium ban of
government was mandated not interfere in any manner their activities freely, and administrative agencies may not
the last 2 years, attendances at Egyptian Prior to the tragic events of 2012, the EPL The EFA has approved national club
whatsoever with the internal operations of the national interfere in their affairs or dissolve. them, or dissolve their
games remained high at the community was an undoubted commercial success. licensing regulations and nominated the
sports federations and the sports clubs, and the current boards of directors or boards of trustees save by a court
Strong commercial and TV revenues relevant decision-making bodies. EPL
sports regulations/”standard statutes” issued by the Sports judgment”.
combined with revenue from healthy clubs have submitted their files to the EFA
Ministry should not be implemented.
attendances enabled the biggest clubs to for approval by the First Instance Body.
keep hold of their best players, keeping
the quality of the on-field product high
and fans coming to the stadia. The fact
ISSUES
that almost all of Egypt’s national team
played in Egypt (the reverse is usually 1. The security of supporters at football
true for most African nations) was long stadia should be a paramount
regarded as fundamental to their success concern and Egyptian football
as they won three successive African needs to be rebuilt around this.
Nations Cup titles from 2006-2010. Effective club licensing needs to be
implemented to address this issue
Assisted by the country’s ability to
as well as others linked to club
market its games to both Egyptian and
organisation.
Arabic television networks, in 2011 the
EFA sold broadcasting rights for the EPL 2. Over-politicization of community-
to Qatar-based Al Jazeera Sport for $2.6 owned clubs in breach of IOC
million, making it the first international and FIFA regulations (please see
TV network to show the league. Egyptian below). State-owned clubs are also
channels Modern Sport, Modern Kora, inherently politically influenced.
Channel 2, Alhayat 2, Dream, Nile
3. A lack of formality in the registration
Sport, Almasriya, Channel 3 and Alahly
of legal structures for each of the
TV have all shown matches from the
three forms of ownership. This lack
domestic league.
of formality contributes to a lack of
The spectator ban, however, created transparency and accountability.
a financial crisis for the EPL. In April
4. Lack of supporter engagement by
2013, the EFA aimed to raise at least
state and private clubs – absence
$17.3 million from auctioning off EPL
of community roots and genuine
television broadcast rights for the next
supporters.
three years. This auction was open to
Egyptian and foreign broadcasters, as
well as marketing companies. However,
COMMUNITY-OWNED CLUBS AND
on 27 June 2013, the 2012/2013 season
POLITICAL INTERFERENCE
was cancelled before the final round
when the Ministry of Interior announced Egypt’s football clubs have proven to be
that it would be unable to secure local or powerful and resilient social institutions.
Al Ahly and Zamalek in particular
SANDLANDERS & SUPPORTERS DIRECT ©
FIRST AFRICA REPORT: CLUB STRUCTURES & LICENSINGYou can also read
