Fiscal opportunities of a restructured sports sector: Football as pilot (2)
The Nigerian league system owes its format to the British. The modern game of association football originated with the formation of the Football Association (FA) in London in 1863 following multiple efforts to standardize the varying forms of the game.
There are more than 140 individual leagues, containing more than 480 divisions. The exact number of clubs varies from year to year as clubs join and leave leagues or fold altogether, but an estimated average of 15 clubs per division implies that more than 7,000 teams of nearly 5,300 clubs are members of a league in the English men’s football league system.
Obviously, the football league system in the UK is more extensive than the Nigerian league system. This is probably why it provides an opportunity to Nigerian football administrators and other stakeholders to observe the structure of a working system and run with best practices.
League football was established in Nigeria in 1972 with only six teams. The League in Nigeria enjoyed its peak during the 70s and 80s, an era that witnessed fans trooping out in droves to stadiums to watch their teams play. With club sides such as Ranchers Bees (later BCC Lions), Calabar Rovers, Bendel Insurance, Stationary Stores, IICC (later 3SC), Sharks FC, Rangers International, Iwuanyawu Nationale, New Nigerian Bank, Leventis United, Abiola Babes, etc being common household names, it was common to see stadia packed to the rafters, with standing room only.
With respect to club ownership, this era also witnessed a high level of private participation in the league at various levels. Wealthy individuals and business moguls such as MKO Abiola, Alyuf Salam, Lekan Salami and Isreal Adebajo as well as corporates such as Julius Berger, Okin Biscuits, and Leventis owned and funded club sides in Nigeria in this era.
Currently, the Nigerian league system comprises the Nigerian Professional Football League (NPFL), the Nigerian National League (NNL) and the Nigeria Nationwide League (NNWL) Divisions (formerly called Nigerian Amateur League). The NPFL is the flagship football league in Nigeria whilst the NNL is the second tier of club football in Nigeria. The NNWL is the third level of club football in Nigeria. Every year, up to eight teams are promoted from the NNWL Division One to the NNL.
From 1997-2011, the NNL was split into 1A for northern teams and 1B for southern teams with the top two from each division promoted to the NPFL (then Nigerian Premier League) the following season. The exceptions were the 2005/06 and 2006/07 seasons where there were four divisions of eight teams each, with each division winner winning promotion. Up to four teams in each division are relegated each season to the NNWL. In 2012, the league expanded from 32 to 36 teams with 2 more teams promoted. The league used the 2006 format, with four divisions of nine teams each, with division winners receiving automatic promotion. In 2012-13, it went back to two divisions of sixteen. For the 2015 season, it used four divisions of eight teams each.
The Nigerian Football Federation (NFF) is the supreme football governing body in Nigeria. The League Management Company (LMC), a private limited liability company registered with the Corporate Affairs Commission, is the body licensed to manage and administer the NPFL which is the premier professional football league in the country.
The NPFL comprises 20 association football clubs which compete in Nigeria and are from time to time members of the LMC. A review of the 2013/14 standings would suggest that the NPFL is a very competitive league. Whilst usually 40 points or above would guarantee that a club in the English Premier League (EPL) would avoid relegation, Gombe United with 50 points was one of the relegated teams at the end of that season! Similarly, Shooting Stars Sports Club with 50 points became relegated with three other clubs at the end of the 2016/17 season!
While it is arguable that the NPFL has experienced some form of growth within the last 5 years, stakeholders have highlighted the need for football administrators to begin to pay more attention to the legal and ownership structure of our club sides. It is said that club sides must have the right structure before our football league can generate the kind of buzz and revenues in Nigeria which it does in the top tier leagues in Europe.
There are already existing guidelines on the legal structure or ownership of club sides in Nigeria. Based on the prevailing Framework and Rules, it would appear that the preferred legal vehicle for football clubs in Nigeria is the private limited liability company structure. Accordingly, Paragraph 1.3 of the Rules states, “Each member shall on request furnish to the LMC the address of its registered office and provide certified true copies of any requested certified true original of incorporation documents which shall include but not limited to:
- Certificate of Incorporation
- Memorandum of Association
- Articles of Association
- Particulars of Directors
- Return of Allotment
- Particulars of Company Secretary
- Any amendment to the above documents
- Any other document to indicate the corporate status of the Club
Similarly, Paragraph 5.3.4 of the Framework and Rules prescribes the way to go with respect to ownership of football clubs in Nigeria. Clubs can be independently owned by private corporate entities as well as government and other public institutions. However, clubs owned by government and public institutions were required to provide LMC an undertaken of its owners to commence a divestment process from 2015/16 season of the League relinquishing 50% of the equity of the club.
This speaks to the intent of the LMC to ensure that club sides are run as self-sufficient and independent or semi-independent at the very least, of government interference. However, the reality besetting the league is a different story. For instance, only 4 of the 20 club sides that competed in the just completed 2016/17 season, are privately owned with the remaining 17 owned 100% by various state governments. We will dilate more on this issue when evaluating the prospects for privatization.
Special thanks to the Sports Vision team comprising Deji Tinubu, Deji Omotoyinbo and Bode Oguntuyi; Debola Adebanjo and Harry Iwuala for their input.
Our specialist Sports Business Group at Deloitte provides consulting, business advisory, regulatory and corporate finance services including: club side restructuring/ transformation, league and competition restructuring, advice on development of sports facilities, club licensing and cost control regulations, customer data analytics and fan surveys amongst others.
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