By Aris Barkas/ firstname.lastname@example.org
Among the chaos that is practically the European basketball and its structure, a non-profit network named European Basketball Advisory Group is trying to chart the current situation, using solid numbers – where available – which usually produce solid reports.
This is not the first time that the European Basketball Advisory Group is presenting a study about the future of the sport in Europe. Τhe first major paper was published by the group back in 2017 and focused on the need for EuroLeague and FIBA to work together.
This time around, the study is much more detailed, providing a unique insight as the EuroLeague is about to change CEO and the questions about the future are bigger than ever.
The paper, prepared by Cem Karamursel, who is also collaborating with the EuroLeague Head Coaches Board, illustrates the financial woes of the EuroLeague clubs and the governance issues that must be addressed in a very complex company structure.
The key takeaways from the paper are the following:
- Τhe league revenues are rising evert year. However all EuroLeague clubs are losing a lot of money, the exact numbers in most cases are unknown and the only exception according to public data is currently ALBA Berlin which is totally self-sustainable.
- By moving to the Basketball Champions League, Brose Bamberg managed to get profitable in 2018-19 and 2019-20. However, this is directly linked to the fact that the team spent less on players’ salaries, and ultimately that led to Bamberg not being a contender even in the German League.
- The EuroLeague governance model is more than complicated, the financial model for the clubs is not yet sustainable and rules like Financial Fair Play are still pretty flexible, accommodating the owners who want to put money out of their own pockets. Per the study’s conclusion: “In the 2022-23 season, the FPSFP regulations will (still) allow up to 50% shareholder contributions. This implies that there are still clubs that are currently above this threshold, i.e. essentially generating losses every year which are equal to or even more than half of their entire budget. Under these (economically irrational) circumstances, a “normal” enterprise would go out of business after a relatively short period of time”.
- Per IMG’s data, the collaboration with the EuroLeague is profitable for IMG, despite the fact that the joint venture with the EuroLeague has presented so far a total of 7 million euros losses. Per the report: “From IMG’s perspective, and based on the interpretation of publicly available information, it can be concluded that the partnership with Euroleague appears to be overall profitable for IMG/Endeavor, since IMG generated a total net income of $ 54.1 million from the provision of technical and production services as well as representation to Euroleague since from the inception of the partnership back in 2016. IMG’s equity investment in Euroleague Ventures also does not seem to have generated any losses from IMG’s perspective”.
Still, the outlook for basketball in general and European basketball, in particular, is more than encouraging with the sport being globally the undisputed second in popularity behind football (soccer for the US readers) even in markets where there’s competition from other team sports, like Germany for example.
However, for the EuroLeague to capitalize on those data, changes must be made which are not only about names and faces but about practices and structure.
As the report concludes: “Tackling the governance challenges as explained above should have the absolute highest priority for all stakeholders within the Euroleague system, especially for the new CEO who will be succeeding Mr. Bertomeu. Especially, reaching an agreement with FIBA and shedding light on the past, both in financial and management terms, should be among the first action items in order to re-establish trust and alignment. Transparency, accountability, and integrity should become the leading principles in all matters. All necessary changes in the structure of the entities, decision-making bodies, as well as regulations, should be made urgently”.
And there’s a huge pitfall that must be avoided: “If the key executives and decision-makers in European basketball fail to see the necessity of acting together and putting personal egos and agendas aside, then it is likely that the current crisis will evolve into further crises, and European basketball will continue to lose traction”.
You can read in the following link the full study which includes financial data for the EuroLeague in general and also a detailed financial outlook for Real Madrid, Barcelona, Fenerbahce, Bayern Munich, ALBA Berlin, and Brose Baskets.