How Can Iran Economy Make Inroads Into Sports Industry

EghtesadOnline: How can Iran’s economy make big inroads into sports industry when 70% of people are merely speculators and give physical activity a wide berth? This was a question participants of a meeting entitled “Privatization of Professional Football Clubs: Opportunities and Threats” brought up for discussion at Iran Chamber of Commerce, Industries, Mines and Agriculture.

News ID: ۷۴۶۴۷۳

13 January 2019

A series of meetings over sports economy and privatization of football clubs have been held by both Iran and Tehran chambers of commerce since the government’s green light to the Iranian Privatization Organization.

Last month, IPO was tasked with initiating the privatization process, including evaluation and pricing of two top Tehran football clubs, Esteghlal and Perspolis. It plans to complete the pricing process by next month and put the duo up for public sale by the fiscal yearend (March 20, 2019).

Members of Tourism, Sports and Art Economy Commission of ICCIMA, the Ministry of Sports and Youth's Strategic Council and the Sports Committee of Iranian National Commission for UNESCO attended the most recent such meeting at ICCIMA's headquarters, the chamber's website reported last week, Financial Tribune reported.

According to the findings of studies presented at the outset of the meeting, unrelated governmental departments make decisions concerning physical education, youth sports, and public and professional sports in Iran, whereas in many other countries one single official body is in charge of all these.

The fact that Iran’s sport sector is largely owned by the government poses a major hurdle to its development.

The government is unable to complete 4,000 unfinished sports projects due to lack of resources.

Sports economy is a fraction of the whole economy. When the economy is jeopardized, the first thing households tend to do is stop sports spending.

The cumulative increase in the cost of sport services, absence of transparency regarding private sector investment in sports, serious shortage of sports infrastructures in under-developed areas and changes facing privatization of professional sports clubs were mentioned as stumbling blocks to a successful sports economy.

Need to Reduce Investment Risks

The natural potentials of the country are a valuable source for developing sports tourism and earning revenues, said Ahmad Asghari-Qajari, the chairman of ICCIMA's Tourism Commission.

Referring to Brazil’s achievements during Olympic Games Rio 2016 and the country’s $9 billion proceeds in a month—equivalent to Iran’s tourism earnings during one whole year, Asghari-Qajari said it is important to reduce risks to attract sports investment.

To promote sports tourism, he suggested taking measures, including delegation of authority to members of the public through privatization, termination of government management and ownership of sports clubs, organization of joint meetings and conferences with different sports federations to attract sports tourists and development of sports ecotourism, marine sports and public sports.

Asghari-Qajari also called for holding scientific workshops to train qualified workforce and promoting public awareness about the physical, mental and socioeconomic benefits of sports.

Government Clout

"The government is the main supplier of resources needed in sports sector; what’s missing here is a competitive climate," said Reza Shajei, a senior fellow at the Sports Ministry.

“Iranian sports clubs are highly dependent on the government. We need to bear in mind that Iran does not have a real multisport club. For example, Esteghlal and Perspolis are only football teams. The private sector would not invest in sports when all the avenues leading to making money are blocked. Inefficient restrictive rules and regulations have anchored the economy.”

Perspolis (known as The Reds) had a private owner before the 1979 Islamic Revolution but the club was put under the control of Physical Education Organization (now the Sports Ministry) after the revolution. The other popular club Esteghlal (known as The Blues), formerly named Taj, met the same fate.

Since then, the then Physical Education Organization has been running the two clubs and since the PEO chief used to be directly appointed by the president, the policies of the clubs were directly set by politicians.

"With the government in charge of making all decisions, you cannot expect professional sports to go places," Kaveh Sedqi, representative of the Iranian National Commission for UNESCO, said, adding that the gradual handover of sports management should be put on the agenda after the infrastructures for privatization have been prepared.

SCI Data on Sports Activity in Iran

According to the Statistical Center of Iran, about 51% of Iranians above 15 years are engaged in sports and exercise, while 49% shied away from exercising in the last Iranian year (March 2017-18).

Of those who exercised, a total of 19.4% exercised for more than two days a week, 17.6% for seven days, 14.1% for one day and 48.9% for between three and six days per week last year.

About 60% of people exercised individually and 40% participated in group sports.

SCI said each Iranian household spent about 432,220 rials (about $4) per month on sports last year.