Facing $370 Million In Debt, This Team Is Asking Fans To Chip In

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When Turkish Super Lig side Fenerbahçe asks fans like Tolga Babuz for money there is no doubt about him reaching for his wallet.

Facing debts of $370 million, hit by the coronavirus suspension of play and struggling with an already high wage bill, the club called for direct donations via text message.

Sending ‘1907’-the year of the club was established-to a special number gives Fenerbahçe 20 Turkish Lira, around $3.

“If the club is campaigning for something, it is our duty to join it”, Babuz says.

He did not hesitate in sending multiple texts, not only on his behalf, but in honour of his infant children and deceased father.

It’s not the first time the club has asked fans directly for money.

Despite being listed on the Turkish Stock Market and having been granted many lines of generous credit from the banks, Fenerbahçe is well-versed in fan-based fundraising.

Back in 2016, Babuz, who considers himself a ‘fanatic’ or ultra, saw every item in a downtown merchandise store bought by diehard fans, after calls for financial support.

Even the air-conditioning unit was unscrewed from the wall and carried off by a paying supporter.

Crowdfunding appeals may have raised sums in the short-term, but one figure which is harder to alter is the money owed to the banks.

Big signing addiction

The Istanbul giant is the 6th most indebted in Europe and has consistently lost money. Yet it cannot shake the habit of making flagship signings of players in the twilights of their careers.

From Nani to Martin Skrtel, Robin Van Persie to Mathieu Valbuena, players have queued up for a final pay-day by the Bosphorus.

But paying the giant wages these stars expect has pushed the club further and further into the red.

Not that the Istanbul giants are alone, bitter inter-city rivals Galatasaray and Besiktas have similarly large debt piles, having taken the same approach to player recruitment.

Trabzonspor from the Black Sea, which is considered the country’s fourth superpower, is also drowning in debt.

“These four clubs dominate Turkish football”, says leading soccer economist in Turkey Tugrul Aksar.

“[But they] do not seem to be able to solve their own financial problems because there are big gaps between total revenue and expenses.

“It is not possible to solve problems without generating new sources of income. Cash flows are insufficient, shareholders’ equity is negative, their debts are more than their income and their accumulated losses are about TL 4.5 billion, around $750 million.”

Aksar’s assessment of what would happen to the clubs if they played in a different country is blunt: “They would probably go bankrupt and be relegated.”

Helping ‘the family’

The idea that clubs might ask fans to donate to their soccer club at a time of national crisis is not universally embraced.

In countries like the U.K., the backlash against teams seen to be cashing in on fan’s goodwill has been extreme, even at teams where financial resources are tight.

English third division side Sunderland caused uproar by refusing to refund supporters season tickets for the remainder of the season. A decision which was subsequently reversed.

There was also a huge public outcry when Liverpool and Tottenham attempted to make use of the British government’s coronavirus support scheme-where the government paid a proportion of employees salaries to safeguard jobs. This also prompted U-turns by both organizations.

Players, the argument goes, should take a pay cut before others step in to support the club.

In Turkey, the mentality of supporters is different.

“I felt as if I was helping my family”, says Fenerbahçe fan and club member Ergün Bülbül.

“I supported with SMS [text message], I also sent money by bank transfer.”

“It is necessary to think as a whole, both the football player, the fan and the club should make a sacrifice.”

But as Fenerbahçe asked fans to donate, faced with what looks like a perilous financial scenario, rumours of a big-money move for the world’s most famous player of Turkish descent kicked into overdrive.

‘No explanation for this’ 

World Cup winner and Arsenal playmaker Mesut Ozil has long been rumoured to fancy a move to Fenerbahçe.

So it didn’t take long for speculation to begin that the crowdfunding SMS initiative could be used to fund a move for Ozil.

Hardcore supporters know such claims are hopeful at best, the target of the text campaign is to reach one million messages, which would be about $3m.

That wouldn’t even cover a month’s wages for Ozil whose current deal with Arsenal is an estimated $800,000 per week.

But the relentless need to spend big on a star player, regardless of the consequences or financial position, is a constant issue for Turkish soccer’s big four.

In January 2019, the banks whom Galatasaray, Fenerbahçe, Besiktas and Trabzonspor owe a combined TL 10 billion ($1.4bn), restructured their debts.

The aim was to get the vast sums owed under control.

Rather than helping to shift the approach, it prompted another summer of spending.

The four teams signed a total of 51 players for TL 716m ($104m) in the 2019 transfer window.

“Unfortunately, there is no logical explanation for this”, finance expert Aksar continues.

“These expenses were spent by the clubs so as not to be left behind in the competition. But it was a completely wrong policy.”

Aksar believes that stronger leadership and longer-term solutions from the Turkish Football Federation would help.

Whether that comes at this moment is another matter.

Ultimately for the sporting authorities and even the Turkish government, its four soccer superpowers are simply too big to fail.

Fenerbahçe fanatic Tolga Babuz certainly thinks so.

“Big clubs will survive. I think the state will help where the fan is not enough.”

Follow me on Twitter or LinkedIn.

Currently I am head of content at Construction News, specialising in investigations. I have led numerous collaborations with major media outlets. These include an undercover slave labour expose with the BBC, a Financial Times report which uncovered a sexual assault scandal and an international investigation into worker deaths on the world’s biggest airport with Architects’ Journal. My work has been longlisted for the Orwell Prize for Journalism in 2020 and I was a finalist at the 2019 British Journalism Awards. I was named International Building Press’ Journalist of the Year 2019 and awarded the IBP Scoop of the Year and Construction/Infrastructure Writer of the Year prizes.

Follow me on Twitter @JournoZak and email me at zakgarnerpurkis@gmail.com

Source: https://www.forbes.com

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Austerity has shaken the Turkish Süper Lig. Beşiktaş, Fenerbahçe, & Galatasaray face pressure from UEFA’s Financial Fair Play regulations, while a currency crisis and economic downturn has added to a wider sense of malaise. The Turkish game is now probably in its worst ever financial state.
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LVMH Says It’s Not Seeking To Buy Tiffany & Co Shares On The Market As Doubts Are Cast On The Deal

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French luxury conglomerate LVMH said it will not buy up shares of Tiffany & Co on the market in a bid to get a lower price for the American jeweler, as the company is seeking to renegotiate its $16.2 billion deal for the retailer hard hit by the coronavirus crisis.

KEY FACTS

The world’s most valuable luxury brand secured a deal to acquire Tiffany & Co in a deal that valued the company at $16.2 billion in November 2019.

But the biggest ever luxury deal now looks to be on the rocks as LVMH is reportedly seeking to lower the agreed price.

Sources close to negotiations told Reuters that LVMH CEO Bernard Arnault is now looking to convince Tiffany & Co to lower the price of $135 per share agreed in the deal.

LVMH discussed the takeover in a board meeting this week, with management said to be concerned about the coronavirus crisis, the economic fallout and unrest in the U.S. weighing on consumer demand for luxury goods.

LVMH is reportedly concerned about Tiffany’s ability to repay its debt obligations.

The luxury conglomerate, owned by billionaire Arnault, said in a statement on Thursday: “Considering the recent market rumours, LVMH confirms, on this occasion, that it is not considering buying Tiffany shares on the market.”

Key background

LVMH’s acquisition was seen as yet another bid for the conglomerate to strengthen its foothold in the U.S. But the deal, which was expected to close mid-2020, is likely to be reconsidered. Tiffany shares plunged 9% on Tuesday after a WWD report suggested the luxury conglomerate was considering backing out of the $16.2 billion deal in pursuit of a cheaper price. November’s deal followed weeks of negotiations between Arnault and Tiffany’s, after Arnault initially made a bid of $120 per share.

What to watch for

Tiffany’s Q1 results are out on Friday.

Tangent

Merger and acquisition deals have slowed dramatically amid the coronavirus crisis, which has forced businesses to close and focus on staying afloat.

Further reading

M&A Activity Plunges, It Could Get Much Worse As Coronavirus Hits Markets And Prevents Face-To-Face Meetings (Forbes)

Louis Vuitton Owner LVMH Buys Tiffany For $16.2 Billion (Forbes)

Full coverage and live updates on the Coronavirus

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I am a breaking news reporter for Forbes in London, covering Europe and the U.S. Previously I was a news reporter for HuffPost UK, the Press Association and a night reporter at the Guardian. I studied Social Anthropology at the London School of Economics, where I was a writer and editor for one of the university’s global affairs magazines, the London Globalist. That led me to Goldsmiths, University of London, where I completed my M.A. in Journalism. Got a story? Get in touch at isabel.togoh@forbes.com, or follow me on Twitter @bissieness. I look forward to hearing from you.

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CNBC’s Robert Frank joins “Squawk on the Street” to discuss French luxury group LVMH’s offer to buy Tiffany at $120 per share.

Inside The $2.5 Trillion Debt Binge That Has Taken S&P 500 Titans Including Boeing And AT&T From Blue Chips To Near Junk

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When chief executive Doug Parker took the pilot’s seat at American Airlines in December 2013, it seemed as though clear skies were ahead. His U.S. Airways had finally bagged a major partner by agreeing to combine with bankrupt American. The new company would emerge with modest debt as the nation’s largest airline, with only three domestic carriers left among its global competitors.

The financial crisis was well in the past, the economy was humming and travel seemed to be entering a new golden age. Carriers like American had mastered the science of dynamic fare pricing, and now nearly every seat on every flight was full, maximizing revenue and efficiency. Hailing the arrival of a “new American” by early 2014, Parker was eager to please Wall Street. “I assure you that everything we’re doing is focused on maximizing value for our shareholders,” he said on a call with investors.

Should You Pay Off Your Mortgage Early – J.D. Roth

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My friend Amy recently wrote with an interesting dilemma. “Should I pay off my mortgage early?” she wonders. Amy has a high-paying job and has managed to save enough that she could be completely debt-free if she wanted to. And she kind of wants to! But is this the best choice? She’s aware that this is a nice problem to have — but it’s still a bit of a muddle. She’d like some guidance. Just so everyone is on the same page, here’s a quick look at the pros and cons to paying off your mortgage. There are advantages and disadvantages to both choices. Are certain advantages more important than others? You make the call……….

Read more: https://www.getrichslowly.org/pay-off-mortgage/

 

 

 

 

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Debt Is Wonderful—Until It’s Crushing — TIME

Debt is one of our most powerful human tools, right up there with fire. After all, credit is simply a process in which those who have excess capital “rent” it to those who can make productive use of someone else’s money. Milton Friedman liked to call the interest rate the “price of credit.” To appreciate…

via Debt Is Wonderful—Until It’s Crushing — TIME

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