IT has, in relative terms, been a quiet summer in the Turkish transfer market. The country’s major clubs, usually active traders, are less able to flex their wallets due to Financial Fair Play and the Turkish Football Federation’s ruling over holding clubs and their owners accountable for over-spending. At the last count, around € 23 million had been spent in the market. Clubs have, instead, been relying on better scouting and also signing young, potential-rich players.
There’s a big worry, however, for everyone in Turkey as the local currency, the Lira, continues to suffer a tailspin and to date, its value has slumped 45% in 2018. Although Turkey’s relationship with the US, deteriorating due to President Trump’s tariffs on steel and aluminium, has been a contributory factor, analysts believe the country was heading for a downturn. Over the past five years, Turkey’s economic growth was virtually keeping up with the likes of China and India.
Turkey’s top division, the Süper Lig, is the biggest revenue generator in Europe outside the “big five” leagues (England, Spain, Germany, Italy and France). Total revenues reached € 734 million in 2017, but half of that is dependent on TV fees. The average revenue level per club is € 41 million, but wages represent 71% of income, a high figure versus Turkey’s peer group.
Turkey’s big three, Galatasaray, Fenerbahçe and Beşiktaş, have been heavily in debt for some years. Recently, Fenerbahçe’s new chairman, Ali Koç, the youngest son of Turkey’s wealthiest family, revealed that the club was in debt to the tune of € 621 million. The big issue is that a large slice of that debt is short-term, which means it has to be paid back within a year or so. With Turkey mired in a possible economic crisis, it is not inconceivable that the debt will need rescheduling with maturities extended. Much will depend on how the crisis develops and if it does become contagious.
Fenerbahce are not alone – Galatasaray have 2.9 billion Lira of debt (€ 591 million), but as they are playing in the UEFA Champions League in 2018-19 (Group stage qualifier), they should be able to make some inroads in that deficit. Fenerbahçe are also in the Champions League, but they have to get through the qualifiers to earn that lucrative money.
Galatasaray are Turkey’s best supported club, with gates in 2017-18, a season in which they won the Süper Lig for the 21sttime, up by 91% to 41,000. The club’s vice president, Abdurrahim Albayrah, has spoken out about the current problems in Turkey and how it has prevented a spate of new signings by the champions. “There is a man in America…God damn him…he ruined us,” he said, referring, of course, to Donald Trump. The result of the ongoing currency crisis is that Galatasaray’s debt has increased by 25%. One assumes this is a moving target as the Lira continues to lose value.
Galatasaray have consistently fallen foul of Financial Fair Play rules. In 2014, they were fined € 200,000 by UEFA and were told to break even on football-related trading over a three-year period. In 2015-16, they still hadn’t balanced their budget and were banned from European competition in 2016-17.
Beşiktaş, who have also breached FFP in the past, are still being monitored by UEFA, hence they have been unable to spend big in the summer. Their debt level amounts to € 418 million. They have been in selling mode for some time, but transfer activity seems to be flowing one way. Nevertheless, the club has been acting more prudently since a financial crisis threatened to engulf it a few years back. A new stadium, a couple of league titles and an ambitious strategy of extending the Beşiktaş brand on a global basis all bode well for the future. Fikret Orman, the club’s president, is taking a long-term view: “Becoming a global club is not going to happen overnight but everything has a beginning. He who dares wins. We have a long-term vision and the steps being taking today will lay a foundation for the future.”
More immediately, Turkish clubs have to monitor the country’s currency issues. Servicing high levels of debt that starts to grow could become a major problem for football clubs, no matter how big they are. A lot will also hang on the measures the government takes to combat a growing problem.