FAI chief executive John Delaney has again insisted that the association is in a position to have cleared its stadium-related debt by the end of 2020, although he has declined to say if this would require the upfront use of funds raised from long-term sponsorship deals.
The association announced solid financial returns for 2017 on Thursday, with a turnover of €49 million yielding a retained surplus of €2.8 million but at a press event held to discuss the accounts Delaney said that the organisation’s outstanding debt on its share of the cost of redeveloping Lansdowne Road has been reduced by around €8 million to €29.5 million since December 31st, the end of the year covered.
This figure is broadly in line with the amount it is believed the association would have received from the renewal by Aviva of its naming rights in the event that an arrangement had been reached to obtain the funds for the five-year deal up front.
Asked if plans to reduce the debt by a further €10 million next year and, potentially, to pay it off in 2020 were dependent on diverting either large portions or the entirety of other major long-term sponsorship deals, Delaney declined to say, insisting that the course of action required would be outlined to delegates at the association’s agm in Cork next month.
The issue is clearly addressed in a briefing document provided to the media on Thursday, however, with one section specifically stating that: “Sponsorship renewals, TV contract extensions and grants available in 2019/2020 make it clear to the board that a debt-free position can be achieved by the end of 2020.”
Sponsorships
Amongst the sponsorships up for renewal are the association’s kit deal, the value of which was put at €2.5 million per annum plus performance related bonuses when the current one was signed with Toplion (Umbro and New Balance) back in 2009, and front-of-shirt sponsor Three, whose backing was reported to be worth around €1.8 million a year when the firm last extended, for five years, in 2015.
Any decision to use the bulk of those funds to pay down debt would likely come at a cost if it required that either the firms pay the money up front or the association had to go to a third party with the intention of securing a lump sum.
It would still be a legitimate option for an organisation that has been plagued by the issue of its debt since the disastrous miscalculation it made regarding the sale of premium seats in the stadium, but for so much of its commercial revenues to be swallowed up “going forward” as Delaney used to say, would be a far cry from the optimistic talk that accompanied the original stadium construction.
Vantage Club, as it was called, was launched 10 years ago in September 2008 when Delaney confidently predicted that the initial naming rights deal combined with the 10-year ticket sales would cover the entirety of the association’s financial commitments to the project.
“Then, from 2016 onwards,” Delaney said that day, “we get to see the real dividends from it, the way we have done our financial business model around the stadium plan. I think the real net worth will arise in 2020 when we resell these seats, though, because then they become a pension for the FAI.”
Projections
Delaney, as it happens, made it clear on Thursday that the resale of the premium seats no longer plays any part in its projections, which is no great surprise given the failure of the original scheme and the way the value of the seats has been undermined since by falling attendances, heavy discounting and the introduction of season tickets, which have sold well but provide access to all senior games at a fraction of the price of the premium level product.
Despite all of this Delaney was upbeat as ever as the 2017 figures were published, insisting that “I don’t want to go back into history today; I’d much prefer to deal with the facts as they are”.
“There’s no doubt we had a debt of €70 million, it’s now for the first time under €30 million, it will be under €20 million next year. If the association takes the view, which we’ll present to the members at the agm, we can demonstrate how we can be debt-free.”
The new accounts reveal that switching its debt from KKR to Bank of Ireland helped to reduce the association's interest payments from €4.25 million in 2016 to €1.6 million last year, but asked what the total cost of getting to this point with the stadium has been for the FAI, Delaney declined to provide a figure, insisting instead that: "You have to look at the broad picture, and 2020 will be the time to say 'this is what the stadium cost us'. It's an incredible asset for the association, and we've done well to manage it the way we've done.
"We have an asset that we can bring the Euros to, the Europa League to, big international matches, FAI Cup finals, Spar 5-a-sides. It's an asset that will be on the books of the FAI for a long, long time."
United Park
Delaney, meanwhile, confirmed that United Park is to be redeveloped, initially as a 3,000-seat stadium but with scope for expansion further down the line, in a joint project with Louth County Council. The move is part of a wider plan to provide high-quality playing facilities in Drogheda.
"It's been a long time coming, but it's going to happen now, which I am delighted for Vincent Hoey [the longtime chairman of Drogheda United] and delighted for the club," he said, before suggesting that he expects news on the Dalymount Park redevelopment by the end of September.
It is expected that plans for an initial 6,000-seat redevelopment of the Phibsborough stadium will be announced, while the addition of a fourth stand and extension to 12,000 seats in likely at Tallaght.
