Privatization of Iran's Top Two Football Clubs Unlikely by March 2020

EghtesadOnline: The planned privatization of Iran's two major football clubs, namely Persepolis and Esteghlal, is unlikely to be concluded in the current Iranian year (March 2019-2020), amid impediments to reforms in the clubs’ structure and problems related to their financial statements, the head of Iranian Privatization Organization says.

News ID: ۷۴۷۸۵۷

13 July 2019

“There are many hurdles on the way of privatization of Esteghlal and Persepolis, which will take a lot of time to overcome unless the parliament comes to our aid to transfer the ownership of the two clubs through Iran Fara Bourse," Mir Ali Ashraf Abdollah Pouri-Hosseini was also quoted as saying by Mehr News Agency.

Persepolis (locally 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 and Youth Ministry) after the revolution.

The other popular Iranian club Esteghlal (locally known as The Blues) met the same fate. Since the PEO chief used to be directly appointed by the president, the policies of the clubs were set by politicians, Financial Tribune reported.

Several attempts were made in the past to privatize Persepolis and Esteghlal, but to no avail. The baton has been passed by one administration to another.

The deep-rooted interference of the government in the ownership and control of football clubs in Iran is not something new.

According to commentator Ali A’zam Mohammad-Beigi, currently not only Persepolis and Esteghlal, but also a majority of football clubs in Iran are under the ownership of the government.

The unwillingness of the government to hand over the clubs to private hands, due in part to security reasons stemming from the massive popularity of the two teams in question, has led to inefficient and costly running of the heavyweight teams, the Persian Daily Donya-e-Eqtesad reported.

What’s more, major sources of revenues for football clubs in Iran have been blocked. The government does not provide a fair pay to the clubs for screening rights, considering that the state owns the broadcasting media, too.

Referring to broadcasting rights, revenues earned from holding matches and revenues from commercial activities as major sources of income for football clubs worldwide, Amir Alizadeh, a sports economics expert, said, “In Iran, the clubs only earn revenues from sponsorship to an extent,” adding that some clubs also earn money by renting out their properties and lands.

He also noted that seats in the stadiums must be numbered and tickets should be sold electronically so that revenues and shares of the clubs become transparent.

An analysis of revenues earned by the clubs of Iran Pro League during the 2012-13 season shows the government budget allocated for the club had the highest share among sources of revenues for the clubs with 65%, followed by financial means provided by sponsors with 14.51% and revenues earned from advertisements (around the pitch, etc.) with 4.8%.

As for the English Football League One, the second-highest division of the English Football League and the third tier overall in the entire English football league system, broadcasting rights had the lion’s share in clubs’ revenues in 2013 with 31% followed by commercial exchanges with 22% and revenues earned on match days with 21%.