Football Federation Facing Financial Distress

Shortage of finance is a common problem faced by Ethiopian football clubs, largely because of the hefty salaries paid to footballers and the declining revenues from tickets. Now, it is also time for the Ethiopian Football Federation to face a similar reality. While this is already portrayed by the tournaments and competitions that the Ethiopian National Team is missing, it is feared that this will be further exacerbated as clubs start to be more stringent in releasing finance to the governing body. EBR’s Abiy Wendifraw explores.

Recently, football clubs across the nation seem to be quietly suffering from financial distress. Hearing complaints from footballers of the country’s top divisions including the Ethiopian Premier League, whose salaries has not been paid for months, are now becoming common. A third of all Premier League clubs have 2 to 5 months’ of unpaid player salaries.

Weeks back, it was reported that Adama City FC players boycotted the club’s training sessions for two days in protest over late salary and incentive payments before club officials intervened to immediately sort it out. Similar reports from players in Wolkite City FC, Addis Ababa City FC, Jima Aba Jifar FC, and few others have forced the Ethiopian Football Federation (EFF) to commune with teams’ officials.

While pushing clubs to have healthy finances and live within their means, Ethiopian football’s governing body, EFF, itself seems to have a lot of work to fund its own tasks. The financial distress at the federation has never been as evident as last month when the Ethiopian national team withdrew from Regional Council of East and Central Africa Football Associations (CECAFA) Senior Challenge Cup, where the country was scheduled to play neighboring Eritrea after for the first time in decades. The federation tried to justify the decision by admitting that their limited budget has forced them to examine the benefits beyond mere participation in the competition.

“Mere participation” in competitions like the CECAFA Cup has always been an opportunity for the national team and coaches to build up form before competitive games. Considering the fact that financing and organizing separate friendly games is more expensive, the federation’s decision to withdraw from the Cup does not seem to be convincing. It rather prompts a serious question: is the federation under financial crises?

Bahiru Tilahun, Communications Head at the Federation, disagrees. “We have limited finance considering the massive tasks we are supposed to undertake to manage football in the nation. Some of the debts the federation is now financing have been inherited by the current leadership from the previous administration.”

The ban on alcohol advertisements and the planned additional taxes on the industry will affect Ethiopian football at every level, as sponsoring factories show no interest in keeping long term financing. So far, the Federation has managed to keep its major sponsor, Walia Beer, a product of Heineken Breweries. They even secured the additional four years sponsorship deal of ETB56 million which extends to 2022. Clarifying that on the agreement made in March 2019, EFF officials originally went for an ETB80 million deal (ETB20 million a year) but later settled on an annual ETB14 million.

Though keeping the main sponsor was listed at the top of the recent successes by the current administration, the officials seem to realize there is nothing they should take for granted.“What they (Heineken) get in return is something we should really work on. Some of the strategies would never work now (because of the alcohol ads prohibition). We are working on the other options to compensate,” says Bahiru.

This is not the only issue the federation has to deal with to keep its established sources of revenue. St. George FC and Ethiopian Coffee FC, two of the most supported teams in Addis are now blocking the 32Pct income share the federation had been taking from stadium ticket revenue for many years. These clubs are working with Dashen Bank and Amole digital banking to sell stadium match day tickets, giving them the full advantage over stadium revenue from the fans who attend the games.

The federation, which collected over ETB 20 million in 2018/19 from stadium attendance fee, is now battling not to let it slip through its fingers. EFF administers Addis Ababa Stadium, representing the Sport Commission, and is now mediating the conflict between the two parties. The federation argues that the clubs cannot claim the whole revenue since it covers the stadium operating, maintenance and personnel expenses. If the two clubs come out on top in this argument, it will be a blow to the already insecure finances of the federation.

The amount of revenue collected in the past two years indicates that the federation’s sources of money are not drying up. The total income of ETB201.5 million in 2018/19 saw a rise from the ETB112.5 million collected the previous year. Over half of the total income in 2018/19 was secured from the FIFA Forward Development Program football investment package that will continue until 2022 with a 20Pct increase. Sponsorships and clubs’ contribution for referees’ fee and stadium fees are the other major sources for the federation’s budget.

The amount of cash at bank for the year ended 7 July 2019—a little over ETB 6 million—was among the talking points after the general assembly held in early December. But the major headline was the justification given for failing to finalize the ownership documents of the office building purchased almost a year ago. The federation could not afford to pay the two percent authentication fee after investing close to ETB95 million on the G+7 building located around wello sefer to use it as its headquarters.

Mensur Abdulkeni, a football writer and radio host, suspects the federation’s financial struggles might not be as simple as the officials want to disclose. For months, his sport show, Bisrat Sport on Bisrat FM 101.1 was doing investigative reporting on the financial matters related to the federation. “There were hotels waiting for the federation to settle payments for services rendered for different events and the national team’s stays. But because they valued their loyalty, thereby to not destroy their potential future partnerships, most have preferred to keep quiet. But the federation keeps changing hotels as the debt is mounting everywhere. Their lack of transparency in this issue makes you suspicious on the other veiled matters,” Mensur warns.

9th Year • Jan.16 – Feb.15 2020 • No. 82