Southern Thai football club financial crisis

Many teams across the Thai Football (soccer) league are undergoing financial crisis’ due to a recent ruling by Thailand’s Audit-General condoning funding of juristic entities (incorporated firms) using state resources, i.e. tax money directly benefiting a private company.

Such ruling particularly affects at least four leading Southern Thai football teams set to play in the 2012 Thai Premier League Division One league coming season: FC Phuket, Songkhla FC, Pattalung FC and Krabi FC each reportedly need access to budgets ranging from 20 to 60 million baht to survive and/or succeed next season.

Even though these teams were all officially incorporated in 2009, over the last two years they continued to depend on varying levels of sponsorship by local municipal and provincial organizations, but now that they can no longer do so legally, they have been forced to regroup and actually start running these clubs like any other business (and not a charity).

According to this Thai language report on Siam Sports, Pattalung FC’s most recent president, Dr. Natee Ratchakitprakarn dissolved her company rights of the club and returned all managing and administration rights to the provincial sports authority, who are now discussing the financial direction of the club.

Meanwhile, Phuket fans are still not sure if they’ll have a team to cheer who will compete in Division 1 next season following news that current manager, Narubas Aryupong plans to step down from the club and instead manage a cheaper Division 2 club next season.

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If taken care of and managed properly, loyal Thai fans can prove to be a valuable asset to a football club

Krabi FC on the other hand have raised their budget expectations for next season up to 60 million baht, up from a previous announcement that they needed a minimum of 20 million baht.  They have yet to confirm the source of such projected budget.

Indeed fans in Pattalang, Krabi and Phuket are all waiting over the new year for developments and news about how or if their clubs will survive financially next season.

The likes of Songkhla FC is the least worrisome of all the southern teams in a financial predicament, considering that their finances and administration appear to be the most advanced and transparent, not to mention having access to a larger fan base which can easily attract more than 10,000 fans per match on average.

Unlike Songkhla, Phuket, Krabi and Pattalung are relatively new to the Division One business, having less efficient management experience in addition to slightly smaller fan bases. And so their slightly more dire situations is no surprise.

In the business of football, there eventually comes the time where a club must ‘sell out’ to corporate sponsorship in order to continue on, so it seems. But rather than solely rely on ‘free money’, and ‘hand outs’ football clubs have ability to generate a fair amount of revenue and thus profit — if managed and administered properly, starting from fan base and moving on the revenue sources and sales targets.

To better understand the numbers, and thus have insight in to why these teams could possibly be on the verge of collapsing without ‘free’ money, I decided to do a business planning exercise and made a sample monthly account, imagining that I was managing one of these clubs accounts for game day operations.  The idea was to consolidate and maximize profit.

To read and view details about this sample account click here.

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