EuroLeague prepares for austerity in the COVID-19 era

2020-05-11T13:15:16+00:00 2020-05-14T14:44:07+00:00.

Aris Barkas

11/May/20 13:15

Eurohoops.net

The top clubs of Europe are bracing for the financial consequences, but thanks to the intricacies of the sport in the old continent, they will be able to sustain the league.

By Aris Barkas/ barkas@eurohoops.net

The Turkish Airlines EuroLeague will announce by the 24th of May if the season will end with a summer tournament or not.

Many teams have already started individual player practices. However, it will take quite some time to return to business as usual, both on the court and on the financial affairs of the clubs.

Still, despite the apparent low revenues, which are expected for next season, and the big financial losses of the 2019-20 season, the EuroLeague clubs can adapt to the new reality with their well-chronicled flawed business model being on this occasion their saving grace.

An average 30% loss and the Maccabi case

The consensus is that the average loss of revenue this season for EuroLeague clubs will be around 30%. The club which is estimated to have the biggest loss of revenues is Maccabi FOX Tel Aviv.

Maccabi, in general, has the highest ticketing revenues in European basketball, which are estimated at around 10 million euros per season. Also, Israel has one of the biggest television rights deals, from which Maccabi gets the lion’s share, in comparison to the same revenues of the Spanish and the Greek clubs, which also have lucrative television deals.

According to Israeli media, Maccabi has presented a report to the Israeli treasury department,  claiming that the damage caused to them by COVID is estimated at around 80 million sheqels, almost 21 million euros. The number more than holds up if there are no fans allowed to games for next season.

Clubs with high ticketing revenues, like Zalgiris Kaunas, Baskonia, Panathinaikos, and ALBA Berlin, are in obvious trouble. Also, the clubs that are closely following the best practices of the EuroLeague financial fair play, trying to build their rosters with the least possible financial input from the pockets of their owners, might be at a dead-end.

Owners are used to losses

With that being said, many EuroLeague clubs are operating at a loss for years. While there’s no official announcement yet, Anadolu Efes, which is practically owned by the Anadolu Group, initially didn’t have the intention to cut the salaries of their players due to the pandemic, however, according to newer information, some of them have accepted the 20% off in their contracts which was announced in the deal between ELPA and the EuroLeague. On the contrary Valencia Basket, which is owned by Spanish billionaire Juan Roig Alfonso, announced just a 4% cut to players’ salaries.

Real Madrid initially also was not willing to make a pay cut, but ultimately announced a cut between 10% to 20% depending on the restart of the Spanish football league. Yes, that’s not a typo. Real Madrid practically admitted that the football section also feeds the basketball team, something that’s a fact almost in every basketball section, which is linked to a big football brand.

However, that doesn’t mean that things will not change. There are estimations for 50% losses of revenues made by the GM of Olympiacos Nikos Lepeniotis. And CSKA Moscow president Andrey Vatutin talked directly about a 30% cut of budgets.

Still, most owners – including those of Maccabi – are ready to cover a big portion of the lost revenues and keep the competition at a high level.

The landscape will change, but EuroLeague clubs will survive, even if that means loosening up the financial Fairplay rules for the immediate future or summer contract offers that are much lower than usual, especially for the middle class of players.

In most cases, clubs have owners with the financial ability to help them survive. So, the real question should be, how and if this crisis can help create in the future a more sustainable EuroLeague reality when revenues return to the pre-COVID pandemic levels.