With the League Management Company (LMC) of Nigeria exploring various options, including the stock exchange and private placement, to access funds and ensure that clubs in the local league are run professionally in line with global standards, analysts have given the thumbs up to the move but maintain, however, that there are conditions that need to be met before this idea can fly.
“What they (LMC) are trying to do is to make the clubs profitable, to make them attractive to investors so that they can run on their own by seeking government divestment. That is a good thing,” says Sewa Wusu, head of research, investment and advisory, Sterling Capital Marketing.
“But to do that, there are certain things that must be in place. First, the clubs must have clear-cut autonomy and structures must be on ground; issues of credibility and transparency must be addressed. That is when they can go to the stock market to access funds. Investors are after profitability and if all these issues are not sorted out, investors will not be attracted.”
The LMC, the body charged with running the league in Nigeria, recently directed clubs in the country to divest 30 percent holding in the first instance. The league body, which has already written letters in this regard to state governments (which own most of the teams), wants such divestment to increase to 50 percent next season before a complete hands-off is achieved down the road.
Other conditions the LMC has listed for the clubs to meet in its quest to see the league run properly include: a bank guarantee of N100 million from the clubs, N150,000 minimum monthly payment to each player, a ban on sign-on fees, among others.
Clubs have been known to owe players sign-on fees for several years, and the LMC feels that rather than overburden themselves with unreasonable sign-on fees that are almost always not paid, clubs should concentrate on paying their players living wages.
Felix Awogu, general manager, Supersport West Africa, commends the LMC move, saying it is logical to seek other avenues to help the league develop since what obtains now is not working. He affirms that government ownership has not helped the development of clubs and as such, it is time drastic measures were taken to turn around the fortunes of the clubs.
He, however, argues that governments should not be completely thrown out of the equation as they have the right to aspire to own clubs, but that “it has to be partial, not controlling shares”.
“What we have now is not working, so if there are other ways to make it work, why not? If the LMC has done its homework, and I hope it has, and has come out with this proposal, then it deserves some support. We don’t expect our players to be running around to places like Sudan to earn $1,000. In a country of over 160 million people, that shouldn’t happen; we have the biggest market, so we should be able to pay our players as well, if not better than South Africa,” Awogu says.
“In another year the Nigerian economy will be bigger than South Africa’s, but will that translate into more money for the players, more money for people on the streets? Do they have enough disposable income to buy shares, to go to the stadiums? These are some of the fundamental issues that need to be addressed. It is not about football alone, it is a systemic problem arising since the military era,” he adds.
But Oyiuki Obaseki, who was chairman of the Nigeria Premier League in 2006, thinks this is not the right way to go. His position is that it is too early to insist that governments divest from the clubs.
“The Nigeria Premier League is just eight years old and two of those years were mired in crisis. So you can’t expect it to be like the English Premier League or the German Bundesliga. You are asking the government to divest, but most of the governors use football to divert money,” Obaseki says.
“It is not time yet because none of the clubs is financially strong; how many of them have club houses that they built? So if an investor is thinking of buying a club, the only assets he will see are vehicles and most of them are rickety.”
Obaseki adds that when he visited Egypt as chairman, he saw what Arab Contractors was doing there. “They had estates, running a club with top grade facilities. I was so annoyed that when I got back I went to them to demand that they must buy into a club in Nigeria. They agreed and said they were interested in 3SC. But the governor then said they (Arab Contractors) should bring N300 million. N300 million for what? The only assets 3SC had then were rickety vehicles. That was how that deal fell through.”
Speaking further on the conditions that need to be met before the LMC idea can fly, Wusu of Sterling Capital Marketing says that given that the capital market is a highly-regulated environment where nothing is hidden, those managing the clubs must be credible managers.
“The clubs’ financials, audited reports for five years must be up to date and available. How many clubs in Nigeria can provide that? Again, the modus operandi of the league and clubs must be fine-tuned in such a way to inspire investor confidence. Otherwise, no serious-minded investor will put money down,” he says.
“Today, clubs are running about searching for sponsorship, but the truth is that if they put all the structures in place and go to the market, people will begin to see what is happening: clubs professionally run, players coming from outside to play in the Nigerian league, salaries paid, etc. Then they won’t need to be casting about looking for funds.”
By: Vincent Eboigbe