Football Clubs Revamp Finances to Join Bourse
EghtesadOnline: Tehran's two main football clubs Esteghlal and Persepolis are set to be listed on the stock market because the financial restructuring required of them is complete, the deputy head of the Iranian Privatization Organization, Abolqasem Shams said.
The capital increase was done in the form of "contribution in kind" in which each club incorporated two sport complexes into their assets. The properties were originally owned by the government, according to the IPO public relations website.
Contribution in a method of increasing capital for companies. It is a capital increase that is not in cash: for example incorporation of liabilities in equity, contribution of assets or of a business and which is remunerated by issuance of new shares (either during incorporation of a new company or increase in share capital).
The acquired properties include Derafshifar Stadium and Shohadaye Gomnam Sport Complex in west and east Tehran now owned by Persepolis popularly known as the reds. Marghoubkar Stadium and Hejazi Training Camp were transferred to Esteghlal, the Blues.
The property transfer pushed Persepolis’s capital to 7.01 trillion rials ($28 million). Esteghlal's also rose from 100 billion rials to 7.19 trillion rials ($28.5 million).
As per arlier announcements, Iran’s two biggest soccer teams will join Iran Fara Bourse, the junior equity market, soon after the process of registration and recapitalization is over.
Accumulated debts of the clubs and their ambiguous financial statements are said to be the main hurdles to privatization. In August 2017 it was announced that the two teams had 1.45 trillion rials ($38 million based on forex rates in that year, and $5.8 million at current rates) and 1.3 trillion rials in unpaid taxes, with half the amount in fines for late payments.
Officials have said that the problems of the two clubs will be resolved once their shares are offered on the bourse. As per the plan, 50% of the shares are supposed to be sold to companies with more than 10,000 shareholders and the rest can be purchased by cooperatives.
Esteghlal and Persepolis are to be sold via the IFB Base Market. Shares of companies unable to meet the main regulatory requirements, such as financial transparency, can be traded only at the base market.
Esteghlal had a private owner before the 1979 Islamic Revolution, but the club was later put under the control of the then Physical Education Organization (now Sports Ministry). Persepolis had a similar fate.