PSL takes aim at R1bn goal

2011-05-21 11:32

In South African football the game of billions has not yet arrived. In fact, the game is still a R500 million-a-year enterprise.

Outgoing PSL chief executive Kjetil Siem believes the league is capable of growing its revenue to R1 billion from R546 million over the next few years if football clubs step up their administration and commercial games.

When Siem took over the PSL in 2007 the league was raking in ­yearly revenue of R250 million but he has grown it to the commercial success it is today.

The phenomenal jump in revenue was buoyed largely by massive sponsorship and broadcast deals as well as the euphoria around the 2010 World Cup, which attracted big companies to the game, mainly banks such as Nedbank and Absa and telecoms companies like MTN and Telkom.

In 2007 the PSL signed the biggest broadcast deal in South Africa’s history with SuperSport, which gave the pay-TV channel exclusive rights to televise all 143 PSL matches a season. SuperSport paid R1.6 billion for the rights, which will lapse at the end of the 2012 season.

Under Siem’s watch the strategy has been to invest the bulk of the revenue back into clubs, leaving the PSL with very little profit but the clubs in a much healthier position than they were in four years ago. PSL clubs get a R1 million grant every month while second tier National First Division clubs receive R200 000.

The league’s 2010 yearly report shows that out of the R532 million revenue it netted last year it paid clubs R355.5 million in the form of grants, prize money, gate takings and competition appearance fees.

Last year it made an after-tax profit of R1.4 million while the previous year it had made a loss of R8.3 million. For the league to break through the billion rand barrier Siem suggests that clubs need to be as passionate about finding corporate skills as they are about finding onfield talent. He argues that such an approach towards the game will enable the clubs to make bigger profits.

“The difference between how the league is run and how clubs are run is big,” he says.

“ We have invested a lot in administration but the clubs don’t want to invest money in administration. They concentrate on football but neglect administration.”

That is why, he says, the PSL has introduced a licensing system that requires clubs to comply with stringent administrative expectations before they are issued a ­licence to compete in the league. Clubs without a licence will not be allowed to compete.

The licence will require that clubs meet minimum standards ­relating to the employment and ­academic qualifications of finance, administrative and legal staff. Clubs will also be required to send audited figures to the PSL.

This is being phased in and is ­expected to be finalised by the start of the 2012/13 season.

While the English Premier League is arguably the most watched league in the world, Siem believes its business model is too dependent on TV revenue and that should broadcasting houses crash, as they have done in the past, the game could badly collapse.

On foreign ownership of local clubs Siem says the Ajax Amsterdam-Ajax Cape Town deal (the Dutch club owns 51% of the local franchise) has worked very well.

“You need only look at the facilities and youth structures (of the club). But Ajax has a long history and culture of development and so we should not think other investors would do the same,” he says.

The PSL constitution now bars foreign investors from owning more than a 49% stake in a club.

On the involvement of wealthy investors such as Patrice Motsepe in local football, Siem says: “It is ­important that the league has personalities who can be regarded as magnetic. But they should be in it for the right reasons and not want to be treated differently.”

On PSL chairperson Irvin Khoza Siem says: “I think he is unfairly judged. He is greatly misunderstood. In my opinion he is not strong enough and should be given even more power because he knows what he is doing.

On post-World Cup expectations for local football he says: “We were told that after the World Cup interest in the PSL would collapse and we would struggle to attract sponsors and big broadcast deals.

“However, the league is exciting though we have not seen a huge number of white and Indian ­spectators.”

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