By Aris Barkas/ barkas@eurohoops.net
With Luka Doncic turning heads in the States and being “the best EuroLeague advertisement ever“, the interest in European basketball is on an all-time high. At the start of the season, we presented a simple guide for the EuroLeague, aimed mainly to overseas readers.
However, one of the most interesting topics about European basketball that almost never gets discussed is money. Information about financial data in European basketball remains limited and most of the numbers are not public.
With the notable exceptions of the VTB United League and the French LNB, there are no official announcements from any authority about the team budgets and in most cases, the teams all over Europe can’t be considered business, since they are losing money. Yes, they are losing money from top to bottom and the best case scenario is breaking even. There are very few exceptions that can make a marginal profit, usually by selling a player’s rights and pretty much that’s it.
The “football” clubs
So let’s speak about numbers. CSKA Moscow is widely considered the bigger spender in Europe, officially having a €36.5M budget last season. However, there have been reports about Real Madrid, last season’s EuroLeague champions, spending even more. To be exact a total of €44.3M including taxes and operating expenses. This number was denied to Eurohoops by Real Madrid at the time of the initial report, however, it can be, if not accurate, then at least not that far from the truth. After all, according to the same report, the basketball section of Real Madrid registered last season record earnings of €15.5M.
Still, can a team lose 30 million euros and be operating? The answer is pretty much yes and the reason for that is simple. Real Madrid as a club can pay up this sum which is peanuts compared to the total revenues, generated mainly by football (or soccer if you are a US reader). As the club officially announced: “Operating revenues for the 2017-18 financial year, without taking into account gains obtained through player transfers, have reached 750.9 million euros, some 11.3% higher than the previous year. The figure represents an increase of 76.3 million euros, the largest rise the club has enjoyed in a financial year since 2000”.
That’s the story not only for Real Madrid but also for basketball teams connected with major football clubs like Barcelona, Fenerbahce, and Bayern Munich. The Germans, in general, are much more cautious with breaking even, still, Bayern due to its football section has a solid advantage over any other basketball team from Germany. And if a club is in financial trouble, like Fenerbahce, which announced a total debt of €621M, the amount that the basketball section contributed to the total loss is minimal. In Fenerbahce’s case, the basketball debt is just €8,49M as the club’s president Ali Koc admitted.
Presidents-sponsors
The revenues, in general, are pretty limited. The EuroLeague clubs have a real change to get league revenues that can be considered respectable, meaning starting from more than one €1M and going upwards even to €4M or €5M, in the case of Spain, Greece, and Israel, the countries with the biggest television rights contracts for basketball in Europe.
Having said that, EuroLeague clubs are also those who register the biggest loses and out of the 16 teams that are competing in the top European competition, none can really speak about profit. Breaking even is the best case scenario and very few achieve it. The 7Days EuroCup and the Basketball Champions League are also providing revenues that can boost a budget but are far from enough in order to break even just by competing in the league.
And how everyone gets paid? Koc is a prime example. The newly elected president of Fenerbahce is one of the richest persons in Europe and one of his companies, BEKO, became the name-sponsor of Fenerbahce.
The model of the president who pays from his own pocket the financial loss of his team is quite popular, especially in Eastern Europe. Owners like the Aggelopoulos brothers in Olympiacos, the Giannakopoulos family in Panathinaikos‘ case and Giorgio Armani in Milan take pride into financing their teams from their own money. That’s the case in most European clubs where the owner has to pay for damages. And if the owner goes broke, or doesn’t want to pay any more, then he has to sell, like it recently happened in Italy with Cantu in the middle of the season.
Players’ contracts
Still, the top players in Europe have contracts that can be compared to those of the NBA. which is the force driving the prices up. Here’s the list of this season’s Top EuroLeague contracts with Alexey Shved having a €4M deal per year excluding taxes. Practically this deal translates to a $10M contract in the NBA. While the financial details of European contracts never get announced, the numbers reported are general the net earnings of a player.
That’s why if you want to compare it with an NBA contract, you have to double the amount in order to factor taxes. And that’s where things get tricky in Europe. Depending on the country and the money paid to each player, taxation can be vastly different, starting from a simple 10% to doubling the value of the contract, as it happened in Greece and Spain after the taxation changes due to the two countries’ financial crisis. Keep that in mind when you read numbers about EuroLeague teams’ budgets since taxation can be a game-changer depending on which country each team is based.
The sad truth is that the business model is flawed in every level of competition and that’s why delays in payments can be the norm for many players in almost every European league. The most recent case that was made public was the financial issues between Olympiacos and their star forward, Giorgos Printezis. but if you take a look at the decisions of the Basketball Arbitral Tribunal, there’s a tone of cases.
Printezis, despite being owned a lot of money has not taken his case to the BAT and the same applies to many other players, simply because delays in payments are not unusual almost in every level of European basketball. With that being said, a lot of US players have taken precautions against this “mondus operandi”, adding on their contract clauses according to which they can be released anytime due to late payments, or interest is included for every day of delay.
A team that does not pay on time is hardly news – and if you read about a team having debts to a player, then it usually means that there’s a delay of payments for more than two or three months – and the top contracts are the simplest explanation about the fact that there’s no salary cap in Europe. The NBA salary cap is strictly related to the league’s revenues. If that happened in Europe, then the top contracts should be around 400.000 euros per season, just over the tw0-way NBA contracts.
The recent presentation of the EuroLeague head coaches board and also the institution last season of the EuroLeague Players Association is a step towards the right direction, but they apply only to the EuroLeague and their goal is to protect the employees. The financial challenges of European basketball are bigger than that and they are becoming bigger and bigger by day, as the NBA grows and emerges as the main competitor for European basketball talent and European fans interest.