Financing Ajax

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-- Anonymous, July 25, 2000

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Ajax.nl reports that the Dutch Tax Department has announced that Ajax will have to pay 5.2 million euros of tax money. It has to do with irregularities in the transfers of Michael Laudrup and Shota Arveladze in 1997. Ajax has announced this plain fact on its website, but is unavailable for further comments. I will wait until I have the full scoop, and then write a news report about it.

Phew... The tax folks are focusing on footy these days. F-Word has already been convicted for similar irregularities and their chairman, jorien van den herik, is likely to be sent to jail for six months...

-- Anonymous, November 18, 2002


Interesting article, well to be honest I don't understand Italian, but I got the numbers in the valuations.

However, methinks the author doesn't quiet understand that the transfer market has imploded, those kinds of sums are only paid by Real, Man U., and......er.....that's about it. Add to that the fact that they spend money like that once maybe twice a year only.

I guess he missed the game against Wales.....;o)

-- Anonymous, October 21, 2002


Good one...But Ahmed Mido Hossam isn't form Morocco the furthest i can know... :O) Are there real treasury problems ?? As a french i can read a few italian and that list of players' cost is just .....Making me think of a club who needs money.

-- Anonymous, October 20, 2002

"The story is in English"

Italian is what I meant. Not English; Italian...

-- Anonymous, October 19, 2002


This is kind of interesting: Italian football website CalcioMercato.com sums up the current transfer value of a number of Ajax players. The story is in English, but the estimated transfer value can be easily found. Check it out, it's right HE RE.

-- Anonymous, October 19, 2002


Professor Menno - unfortunately you are another person who has found that the mystic built around the accounting world is just a myth/plan formulated by accountants to ensure that their salaries remain high. Good post from your goodself. As always I donot totally agree with the economists (another group of people who love the grey areas of the financial world) but the problems still exist in maintaining this level of expenditure in years to come if relative sporting success is not forthcoming. We only have one Chivu and Raffie to sell. What we could possibly take from all of this, is that the pressure on Mr Koeman to produce results on the sporting front from the board must be horrific and must have an effect on his thinking. However, good training for the Barca job I suppose ;-)

-- Anonymous, October 17, 2002

Apparently, figures in the annual report are no as bad as I thought. Ajax gave an explanation during a press conference after the presentation. Later that day, I heard a few report on the radio and I talked about it with a few guys in the economy section of the newspaper I work for.

They all said: this is not that bad at all. It looks much worse than it is. If you simply things a little bit, the loss of 25 million euros is (roughly) the 25 million euros Ajax would have gotten if they had sold Cristian Chivu.

You see, there's something strange with a sports club selling its stock: a sports club has two types of profit, namely "book- keeper's profit" (= money), but of course sportive success (= trophies) as well. There's a strange discrepancy between the two: sportive success will bring financial success in an indirect way. If the team makes it to the second round of the Champions League, the club will receive a big fat UEFA bonus, they'll be on TV (which brings 'em broadcasting rights) and the fans will buy more merchandise.

So, in the longer run, financial and sportive success are fortify each other. However, on short notice, there's a friction between financial success and sportive success: if you want sportive succes, you will have to invest (buy expensive players. pay them high fees and keep 'em for as long as possible).

It would have been very easy for Ajax to book financial success: they could have sold Chivu, Van der Vaart and Mido at the end of last season. The profit would have been spectacular. But it would not necessaril have meant that the club was doing well.

Other than for 'normal' companies, the perfect situation for a sports club, is to be exactly on the break-even point of financial and sportive succes: finishing the year exactly quits (financially) with a team of maximum quality playing the games. In a way, very bluntly put, if the club makes profit but the team finishes second in the league - there's something wrong.

Simply put, (financial) profit is an irrelevant factor for a sports club. A sports club should be close to zero (quits) and achieve the maximum on the pitch.

I had come to this conclusion myself, which means this stuff is quite logical and not that complex. My ecomomy colleagues at the newspaper confirmed that this is the way it works, and they provided the 'technical terminology' for it. For a sports club, more than for a 'normal' company, it's the actual profit that counts, but the operational result. So I looked it up in Ajax' annual report. The operational report has actually improved/increased/grown (?) by 18%.

Also, the loss is still covered by the money Ajax actually has. The club not is not in debt. Arie van Eijden explained that the future looks good for Ajax. I thought: yeah, yeah... yada-yada. But the guy in the economy section (who's actually a feyenerd) said that, too.

This loss was suffered because no transfer money came in (= because they didn't sell Chivu) and because (I didn't exactly understand this bit) the club "made a provision" of 9.4 million euros on their foreign satellite clubs. Ajax announced (this is news!) that they will terminate their financial participation in Germinal Beerschot Antwerp and Ashanti Goldfields.

Also, the club invested money to dissolve the contracts of a few players (Vierklau was the most expensive case). The contracts of a few very expensive players who are no longer needed, will terminate at the end of this season.

So, it seems like the board and directors are right: these figures are not that negative. In fact, they guarantee a good future. My economy colleague confirmed it and - moreover - after the presentation of the report, the price of Ajax stock went up by 5%. It dropped when Ajax announced a "significant loss" last week, but now the full picture is there, recovery set in immediately.

The loss as such is not a problem. However, the revenues from merchandise sales - like Bill already said - are a big fat joke indeed. "Embarrassingly low", he said.

I'm starting to understand this stuff.... ;-)

-- Anonymous, October 17, 2002


My Dear fellow Menno, dont be so hard on yourself when it comes to the accounts - if the accountants have done a good job then nobody, anywhere will be able to fully analyse them. As the old saying goes, there are lies, dammed lies, statistics and then accounts ;-)

It isnt really the figures that are important at this moment as they just reflect actual events, although the level of debt will no doubt haunt us in times ahead - it is what happened in the background (and it isnt always decisions taken in the said year, but decisions taken say 10 years ago which can effect the trading position of the club) to produce this loss and how the business is controlled (or not) by the Board of Directors on behalf of the Shareholders and the Supporters. Therefore, I would recommend that you try and hunt out the reports which get behind the figures and not one that just talks about balance sheet ratios etc. ie in the case of Merchandising - what plans have the club got for increasing this stream of income. Rgds From an Accountant who Loves Rock & Roll

-- Anonymous, October 16, 2002


BTW, folks: I decided I will write a news report for Ajax USA about this whole thing tomorrow. I'm sure there will be a good analysis, written by a knowledgeable person, in the paper tomorrow. The article on Ajax.nl is very 'technical'. I do not know how to interpret some of the facts and figures. In other words: some passages are friggin' Chinese to me. Don't shoot the Alpha... Have mercy. I'm a rock & roll journalist... :-/

-- Anonymous, October 16, 2002

Great post, Bill. Thanks. I think I fully agree with you, except with your final sentence: "I have a feeling that the shareholders meeting could be a very interesting day."

Forget that. There will only be a few big shareholders who have interesting questions to ask. Other than that, the room will be packed with supporters, possessing a few Ajax shares for fun, who will get emotional and angry, interrupting people and thusly making any reasonable (let alone interesting) conversation impossible.

Also, knowing that the room is filled with that category of 'shareholders' (?), the board and directors will give boring and derogatory answers. Which is disgusting, although the average 'shareholder' in the room doesn't reall deserve anything else than that.

I think I wrote a good piece on Ajax Mania (in Dutch; not the one in the English Zone), which I will translate and post in this thread later. It may even be a 'From The Desk Of...' installment, if it makes sense (which I think it does).

-- Anonymous, October 16, 2002



Picked up an example of the type of revenues we are talking about in the CL on www.manchesteronline.co.uk :

"Last season, as beaten semi-finalists, United's coffers were boosted by UEFA prize money to the tune of 21.5m. The Reds also banked a cut of around 11m from UEFA's broadcasting pot.

Approximately 14m was deposited into United's account from seven sell-out Old Trafford crowds to watch the likes of Bayern Munich and Deportivo La Coruna."

Big monies on offer indeed. However, this is still not the whole answer. The merchandising turnover is laughable for a club the size of Ajax. It should have a fantastic brand name and be able to exploit this world-wide. An interesting debate on this and the ajax.nl website has recently been happening on Ajaxmania - one wonders who is holding back the organisation. It really smacks of trying to save a cent instead of spending 1 Euro to make 5.

I know the Financial Director of a club which has just been relegated from the English Premier and he said that the only prudent way for them to budget was based on finishing 4th bottom and going out of each cup competition in the first round. Whilst not totally agreeing with this approach it does illustrate that clubs should live within their means. Did the Board of Directors of Ajax forecast this loss or did it come as a surprise to them as well ? Surely monthly management accounts were produced as the board does contain qualified accountants. Are the Directors and the backers (ie the banks) comfortable with these results ? I would imagine that one of the problems has been the number of players on the books on very long contracts which are no longer required - an outcome of the Bosman Ruling with the club trying to tie people into long contracts. All well and good until the club wishes to reduce its wage bill. As an example, but hating to raise the topic of 3 centre forwards again, do these accounts show that we can afford all 3 ?

Have the directors come out with a "recovery plan" that covers all areas of the club or does it just contain the hopes of CL glory and hence cash with the alternative plan that if plan A fails, Raffie and Chivu are sold. Have the club formulated a long term plan which in its infancy will not give rise to a balanced budget, but will give rise to large surpluses in later years of the plan ?

How I wish I was a shareholder and could talk the lingo. I have a feeling that the shareholders meeting could be a very interesting day.

-- Anonymous, October 16, 2002


...add to that, now the Netherlands has only two places in next year's CL - the winner automatically gets in while the runners up play a qualifier.

All the more important to win the Eredivisie.

And beat Rosenborg. And Lyon.

And ESPECIALLY Inter !

-- Anonymous, October 16, 2002


Thanks Menno,

It strikes me that Ajax are stepping on the "rake of reality" (which hurts by the way....;o)) of what football is these days. They were not in the Champions League, and even a successful domestic season cannot protect you from the financial consequences.

Domestic Dutch football does not generate the income to maintain a top class team. Admittedly the youth academy used to be a profit/player generator (Bosman saw to the end of the profit bit), but how many of the current squad come from there? Few, and the rest need to be bought, even if it's on the cheap 'cause we scout them when they're still young. I know the current youth team is strong, but let's be honest, they come in 5-7 year waves and you can't twiddle your thumbs while you're waiting.

What does a team get for getting to the first group stage.....I thought I'd read somewhere about 10 million....Menno says last year's loss was 8.2 million....draw your own conclusions.

Being in Europe (I'm talking "Big Cup" (Champs League) not "Euro Vase" (Uefa Cup) here) used to be the "icing on the cake"...a bit of fun. Now it's fundamental to solvency. Teams like Herenveen can view getting into Europe as a nice little distraction, but with Ajax's infrastructure and cost base it's a bloody serious business!

I don't see things changing 'til the TV money bubble bursts, but even then the football landscape could be changed forever, with a number of "formely big teams" falling by the way side.

God...I need a beer!

-- Anonymous, October 16, 2002


Ajax has just presented its annual report to the stakeholders. An official 'warning announcement' (not sure about the English terminology) was issued to the stakeholders last week, announcing that the figures were going to be very negative. It turned out to be an understatement: a loss of 25.8 million euros over the 2001-2002 season. Yes Sir. Last year, the loss was 8.2 million euros. A year before, the balance was negative as well. Conclusion: the cash of 1995-1996 must now be gone. We're in financial shit again; things are back to normal :-)

I will *try* to write a decent news report about all this. The problem is that I'm not interested in stock exchange related crap, and that it's really hard to translate all the different terms (operational result, blah-blah) into English. Not sure what all the different things are called in English.

I look into it and will *try* to draw a decent picture. For now, the most accurate summary of the whole thing is as follows: not good.

-- Anonymous, October 16, 2002


For those interested...

Ajax.nl reports that two new sponsors have signed contracts with the Amsterdam club. The two companies are HDB Holding, a company which most Dutchmen will not know as such. However, HDB Holding is the company behing Holland's most famous chain of D.I.Y. shops: Hubo, which is also the name with which HDB will be visible on Ajax printwork and inside the ArenA.

The second new sponsor is Stern Groep BV, a so-called 'automotive gorup', specialized in lease contracts for cars. Stern Groep owns a large number of gas stations and will also take care of the leasing contracts for the players' Mitshubishis.

Here's an overview of all Ajax' sponsors: ABN Amro (bank; main sponsor), ATP Online (travel agency), BDO Accountants & Adviseurs (accountants), Breitling (wrist-watches), CSU Total Care (professional services and detachment), Grolsch (beer brewery), Hubo (do it yourself-shops), Mitsubishi Motors (automobiles), OAD Reizen (travel company), Roto Smeets (commercial printwork), Staatsloterij (state lottery), Stern Groep (leasing) en Verwelius Bouwen (building/construction company).

Besides its sponsors, Ajax also has three 'partners', namely Adidas (sports gear' clothing sponsor), Canal+ (pay TV network), KPN (telecom company) an Siemens Mobile (mobile phones).

The exact difference between a sponsor and a partner? I dunno, I must admit.

-- Anonymous, July 29, 2002



Interesting link, this one... It's some sort of profile of 'AFC Ajax NV'. All the info about the financial structure of Ajax is in it.

-- Anonymous, April 09, 2001

I think the ranking of most valuable sports brands, by FutureBrand, is extremely interesting. Not only that the brand 'Ajax Amsterdam' is worth 46 million. Actually, I'm more interested in some other remarkable things on that list. For example: it surprises me that the brands 'Dallas Cowboys' and 'Washington Redskins' are deemed of higher value than 'New York Yankees'. My favorite Dutch magazine, 'Amerika' (about the US) published a great article about baseball caps the other day. It said that NY Yankees stuff is by far the most popular all over the world and that the classic NY logo on the caps is probably the world's most famous club logo of all time. I'd have to agree, I guess, and I'm absolutely sure that the impact of the Dallas Cowboys (we're talking about brands here; not only about sportive success) is not nearly as big.

Another thing: it did not surprise me that Manchester Utd is the most valuable brand in soccer of this moment, and Real Madrid's ranking as the second soccer club is not very surprising either. But Bayern Munich as the third soccer club in the world?? Higher than Barcelona or any Italian club? I can't imagine. And where's AC Milan?? I can't believe the brand of AC Milan is of less value than Inter's, or Ajax's or Glasgow Rangers'.

This list creates a lot of questions. It's a shame that I coudn't find more info than the stuff we published on Ajax USA. Did anyone of you read anything about this?

-- Anonymous, February 08, 2001


Ajax is both a club and an enterprise. Most supporters only care about the club. For those interested in the enterprise-aspect of AFC Ajax as well:

Ajax has released an official statement, announcing that the club is expecting to finish this year with a significant loss, due to the disappointing profit from player sales. The club says that this is nothing to worry about: Ajax is optimistic about the near future.

-- Anonymous, September 26, 2000


You should indeed send Ajax e-mail. I think you should ask them to send you a copy of the information bulletin (such a thing is called a 'prospectus' in Dutch - not sure about the English word) that was issued last year, before Ajax Ajax went on Change. Everything about the club's financial structure should be in there. 'AFC Ajax' is a share at the stock exchange these days - the club is much more open about their financials these days.

-- Anonymous, July 28, 2000

You'd probably find more help if you tried e-mailing the site of Ajax itself(info@ajax.nl). Don't worry, I hear that a lot of Dutch people understand English... ;)

-- Anonymous, July 27, 2000

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