Ethiopia’s Giant Football Clubs Struggle for Survival
As the 2023/24 Ethiopian Premier League kicks off, dark clouds loom over two of the country’s biggest football clubs: St. George and Ethiopia Bunna FC. Both teams are facing significant financial challenges that threaten their very existence. While football, in theory, should be self-sustaining through revenue streams like membership payments, commercial deals, matchday income, merchandise sales, and television deals, this ideal scenario seems far-fetched in the current Ethiopian football landscape. EBR’s Brook Genene delves deeper into the financial quagmire engulfing these two clubs, analyzing the root causes and exploring potential solutions to safeguard the future of Ethiopian football.
Samson Tamiru, a dedicated St. George fan since 1997, fondly remembers how he fell in love with the club as a 12-year-old. It was when the national team lost players as a result of immigration. This happened during an away trip for an international fixture. St. George was in a difficult situation then because most players were part of the squad. When the Ethiopian Premier League was launched in its current format in 1997, replacing the former first division, established in 1944, Addis Ababa was allowed to have four representatives. St. George wasn’t part of the quartet but quickly secured promotion.
Samson barely afforded the two-birr required to sit behind the northern stand, known as ‘Daff Track’. But he kept on following the team and enjoyed the glory days. For years, the most dominant clubs in Ethiopia in terms of competitiveness and fan base have been St. George and Ethiopia Bunna. Ethio Electric and Hawassa Ketema managed to win titles but needed to be more consistent in their performances.
Dedebit, a club that gained promotion to the league in 2009, quickly became a competitor. In the 2012/13 season, only in their fourth promotion season did Dedebit win the league title. How they managed to achieve that, however, would pose a problem for them and the league in general.
Dedebit spent a considerable amount of money to recruit their title-winning squad. It was a star-studded roster from goalkeeper Sisay Bacha to midfielder Addis Hintsa and striker duo Getaneh Kebede and Dawit Fekadu. The other clubs emulated this approach of signing the best players for expensive fees to stay competitive.
Things escalated even further when the likes of Fasil Kenema, Jimma Abba Jifar, and Mekelle Seba Enderta joined the league. These clubs get their finances from their city administration.
St. George’s Premier League dominance stopped in 2018 after a record four consecutive league titles. Gebremedhin Haile’s Jimma Abba Jifar snatched the title on the last match day. Gebremedhin moved to Mekelle Seba Enderta the following season and repeated his success. The 2019/20 season was cut short in March because of COVID-19, so there wasn’t a winner.
When the 2020/21 season started with a new format, The league agreed on broadcasting rights with DSTV for five years. The deal was worth USD 68 million, with USD 22 million in naming rights. The clubs had the advantage of acquiring TV money. The positive side was part of the whole story. Clubs were forced to play in a competitive format because of the Covid-19 threat. This resulted in a lack of home advantage, loss of match-day revenue from ticket sales, and increased costs for hotel expenses.
These changes remained the same way clubs operated in the transfer market. The transfer fee and salary of players kept rising. Players also tend to sign short contracts with huge benefits and jump ship to the highest bidder.
The new trend made it difficult for St. George and Ethiopia Bunna to keep competing at the top of the table. Fasil Kenema won the title in 2021, meaning St. George went four years without a trophy. This was something fans like Samson needed to be more familiar with.
The horse riders managed to reclaim their throne and win back-to-back league titles in the past two seasons. This was mainly because the team could excel in tactical aspects, not because it managed to catch up financially.
When clubs that get funding from city administration spend large sums for transfers, it harms them, too. They often struggle to pay those salaries. Over the past few years, the league has been filled with disagreements regarding unpaid player salaries. Players have sent letters to the Ethiopian Football Federation and FIFA Pro through their association.
For St. George and Ethiopia Bunna, it is no longer about winning titles or staying at the top. It is about survival. “If things continue in the same manner, I doubt we will even see Ethiopia Bunna play football next season,” says Natnael Teklu, who is a fan of Bunna and has previously been part of the board. Natnael states that he has seen this problem coming as far back as 2016 and says the way to save the club is by creating a way for fan ownership.
Ethiopia Bunna’s primary income is 30 birr for every quintal coffee exporter shipped out. Natnael stresses that it is not strictly being monitored. The fact that there are also regional clubs named Bunna makes things complicated, as the exporters in the community will be asked to fund their regional teams.
One of the steps these two clubs are taking to handle the issue is making sponsorship deals with different organizations. St. George signed a five-year sponsorship deal with Tsehay Bank in September. The bank has agreed to pay five million birr which will increase by 10Pct annually. There will also be a loan of about 40 million birr for developing the training facility. In addition to that, club members will pay fees through the bank. “It’s a deal that woke us up from our slumber; [I am sure this will lead to additional partnership arrangements in the future].” The club’s president, Abinet G/Meskel, said during the announcement. “We need different sources of income. We are still not free from handouts. We hope it is the start of something new.” said Neway Beyene, the club’s board member. St. George also made a deal with a betting company called Winner that lasted for three years.
Ethiopia Bunna has renewed its deal with Habesha breweries and Betika. Habesha Beer has extended its contract for three years. There will be a 22,100,000 birr annual payment. The company will also buy a team bus for more than ETB 20 million. Five million birr will be assigned to different projects, and there will be a 10 million birr bonus if the club wins the league title.
The deal with Betika was already in place, but the two parties agreed to renew it for another two years. The betting company will make a six million payment for one year, which can increase based on the team’s success and the inflation rate in the country.
Before this season, BetKing was the league’s title sponsor, which was feared would threaten the deal with Ethiopian Bunna. Gezahegn Wolde, club manager, stated that they lost some benefits because of Betking but is working now to discuss with the Premier League share company. “Our sponsors have their questions. The clubs formed the share company so that nothing can be forced on us,” he said.
Answering questions about another possible conflict of interest would come when the league company gives a financial partner naming right, which is expected to be announced in the coming few weeks, Gezahegn still maintained his stance. “I can refuse not to use the sponsor when I am the home team. If it doesn’t honor our interest then we will not be part of it.”
Gezahegn believes the way forward is more comprehensive than making sponsorship agreements and using youth players from the B teams. “We need to invest in our youth players by giving four-to-five-year contracts. Otherwise, we won’t be able to survive as a club.”
Nowadays, Samson feels ‘anxious and worried’ when he thinks about the future of his club. The team, once the wealthiest in the league, is in a financial crisis.
The main problem regarding the financial situation is the need for more transparency over the years and the failure of the board to start working on the solutions early on. For this reason, Samson doesn’t consider the newest sponsorship deals to be a step forward. “I don’t believe in the board. I don’t even think it is a legal board. It has been six or seven years since a meeting was held,” he said.
MIDROC investment group, which has been sponsoring St. George for the past 20 years, has ceased its partnership. The reason is the public disagreement between the group and St. George president Abinet G/Meskel. According to club officials, Ethiopia Bunna has also lost around 33 million dollars in sponsorship deals in recent years. The two giant clubs of the country are at a critical stage.
One thing that can level the playing field is club licensing by the Ethiopian Football Federation (EFF) which can monitor player salaries and transfer fees. The Federation plans to have this in place by next year.
The Root of the Problem
Limited Financial Support from EFF: The Ethiopian Football Federation, responsible for distributing funds to clubs, needs more resources to distribute to the clubs so that they can finance their activities. Unfortunately, its meagre resources are either mismanaged or spent on less productive ventures due to corruption, mismanagement, and inadequate support from the government and other stakeholders. It’s beleaguered for not having innovative resource mobilization tactics in place.
Inadequate Revenue Generation Schemes: Ethiopian clubs need to generate more income from traditional sources. Reasons for this include weak fan engagement, lack of attractive sponsorship opportunities, and limited infrastructure development. They haven’t also pursued new and innovative resource mobilization schemes because most depend on government budget allocations.
Poor Financial Management: Reports suggest inefficient financial management practices within many clubs, further exacerbating their financial woes. Solving this requires improving their governance structures and installing a more transparent and accountable system. In the present-day scenario, it’s even possible to find football clubs that don’t have a functioning board and management that regularly meet, plan and monitor their performances. There is also no accountability and transparency in several high-volume finance involving decision-making processes in the clubs.
These financial issues have a detrimental impact on the clubs’ ability to:
Attract and retain top players: Low salaries and unpaid dues drive talent away, hindering competitiveness.
Maintain infrastructure: Lack of funds impedes proper stadium maintenance and training facilities development.
Invest in youth development: Insufficient resources limit investment in youth academies, jeopardizing the future of the sport. Invest in youth academies to develop future talent and create a sustainable competitive advantage. This will create the chance to sell promising young players to generate revenue and attract future investment. Perhapse develop partnerships with universities and educational institutions for talent identification and development.
Increased EFF Support and Intervention: The EFF needs to secure additional funding from the government and explore new revenue streams to provide stronger financial backing to clubs. It should also engage in monitoring the clubs so that they have a functioning board or directors and that the clubs have also installed proper governance structure and all compliance issues are adhered.
Enhanced Revenue Generation: Clubs should focus on improving fan engagement, attracting sponsors, and developing lucrative commercial strategies. In the competitive world of professional football, securing financial resources is crucial for a club’s survival and success. To thrive, clubs need to adopt various resource mobilization strategies
Improved Financial Management: Implementing transparent and efficient financial management practices is crucial to ensure optimal resource allocation. Implementing sound financial planning and budgeting is crucial.
Government Intervention: The Ethiopian government can play a crucial role by reducing taxes on football clubs, providing land for stadium development, and investing in youth development programs.
Youth Development: Investing resources in youth academies is crucial for developing young talent. This is crucial to creating a sustainable competitive advantage for football clubs. This strategic approach helps to sell more promising young players to generate revenue and attract future investment. Developing partnerships with universities and educational institutions can be helpful in talent identification and development.
By implementing these strategies, football clubs, including the St. George and Ethiopia Bunna FC can effectively mobilize resources, achieve financial stability, and compete successfully in the ever-evolving landscape of professional football. EBR
12th Year • December 16 2023 – January 15 2024 • No. 124