Esteghlal, Perspolis Privatization at Final Step

EghtesadOnline: The long-delayed plan to privatize Esteghlal and Perspolis, Iran's two top football clubs, seems to be in the final stages. Stocks of the two clubs are to be offered on the Iran Fara Bourse soon after the process of registration and recapitalization of the clubs.

News ID: ۷۵۰۰۸۵

20 May 2020

Amir Hamouni, CEO of the junior equity market said this in a talk with IRIB, the state-owned broadcaster

"We have studied various plans for privatization of the two clubs…one suggests selling 10% of the shares in the initial phase to discover the price.

Fifty percent of the shares are supposed to be sold to companies with more than 10,000 shareholders and the remaining 40% can be purchased by cooperatives across the country, he said on Tuesday.

Esteghlal and Perspolis are to be sold via the IFB's Base Market. Shares of companies unable to address the main regulatory requirements, such as transparency of financial records, can be traded only at the base market.

Esteghlal (aka The Blues) 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).

Perspolis (aka The Reds) had a similar fate.

Since bosses of the two most powerful football clubs are directly appointed by the president of the country, policies and decisions of the clubs have been traditionally made by politicians.

More than a decade ago, when the Asian Football Confederation insisted on privatization of professional football clubs, no state-owned clubs are acceptable and deadlines have been set for transfer of proprietorship.

Following AFC’s ruling, several scenarios were considered for the two clubs, including auctions. Attempts have made in the past to privatize Esteghlal and Perspolis, but to no avail. The baton has been passed on from one administration to another.

In fact, accumulated debts of the clubs and their ambiguous financial statements are seen as a main hurdle to privatization.

In August 2017, it was announced that the two teams had 1.45 trillion rials ($38 million based on exchange rates in that year, and $8.5 million at current rates) and 1.3 trillion rials in tax arrears, with half of the debts pertaining to fine for late payments.

Hamouni, however, said the problems of the two clubs will be resolved once their stocks are offered on the capital market.

"Selling TV screening rights is one of the major sources of income for sports clubs across the world," he said. "So long as the two clubs are owned by the government this type if income will not come to fruition."

The government does not pay reasonably to the clubs for games broadcast on radio and TV simply because the broadcaster too is owned by the state.