Ceres Negros Bankrupt, Evidence that Football Clubs Should Not Depend on Owners’ Money

Philippine giant club, Ceres Negros, recently announced its bankruptcy. The Philippine League championship club in the last three years (2017, 2018, 2019) must have finished their history as a result of the financial difficulties.

The owners have financial difficulties as a result of the corona virus pandemic. Through the club’s social media account, Ceres Negros’s management said it was in talks with a prospective new investor who would take over management and ownership of the club in preparation for the Philippines League and AFC 2020 Cup.

Later, if Ceres Negros officially changes owner, the club name and other identities will change soon. “Once the takeover is complete, the club will no longer be known as Ceres-Negros because the current owner, Leo Rey Yanson will not be interested at all in club affairs,” Ceres wrote. “This is one of the toughest decisions made by Mr. Yanson, whose passion for football is reflected in the way he poured his personal resources and steered the club to an unprecedented level since it was formed eight years ago.”

Since it is owned by Yanson, Ceres’s achievements have immediately shot up, not only at the national level, but also the ASEAN Zone AFC Cup. At the 2018 AFC Cup, Ceres made it to the final of the ASEAN Zone, before losing to Home United (Singapore) in the final.

The bankruptcy of Ceres Negros is proof that football clubs are very vulnerable if they only depend on the owner’s money. This is the background of the emergence of financial fair play in Europe in 2011.

Under the FFP rules, club owners may not inject personal funds into the club. The owner can only bridge the cooperation between the club and his companies, of course, remain under the supervision of UEFA. There should be no under table agreement that violates market value. If caught, punishment is waiting.

Since it was first implemented in 2011, there have been a number of top-level clubs affected by the sanctions, such as Manchester City, Paris Saint-Germain and AC Milan. FFP began to be implemented in 2011 when UEFA was led by Michael Platini.

The purpose of its application is to prevent the club from getting into debt problems which of course threatens the existence of the club. So, every club is obliged to balance its financial balance sheet.

The existence of FFP is believed to make clubs compete financially and only rely on “lawful” sources in the world of football, such as player trading, broadcasting rights income, merchandise sales, and trying to excel in order to increase the commercial value of the club. So, the club must not do shopping beyond its means.

If you want to buy players at high prices, the club must have a healthy balance sheet. Clubs that want to make large purchases will usually also make large sales in advance. No more clubs can rely on funds to buy players from sources of debt or excessive contributions from the private money of club owners.

Starting the implementation of FFP is actually not without cause. In addition to trying to create healthy competition, UEFA itself learns from the many cases of club bankruptcy because of over-reliance on owner’s money. One of them has experienced the Italian League club, Parma. In the 90s, Parma was one of the elite teams in Italy.

Promotion to Serie A in the 1990-1991 season, Parma immediately shot into a team with a myriad of achievements. The club is quite easy to attract the interest of star players. In the mid 90’s, Parma was strengthened big names, from Hernan Crespo, Enrico Chiesa, Juan Veron, Fabio Cannavaro, Lilian Thuram, to Gianluigi Buffon.

Parma’s financial strength in bringing in players cannot be separated from the support of Parmalat, a dairy and food company that began to be the owner of the club since 1991. However, the triumph of Parma lasted only for short period.

2003 is the starting point for their destruction. In that year, Parmalat began experiencing financial difficulties until it finally went bankrupt. At the same time, Parma for the first time finished outside the top six of the final standings of Serie A.

After changing names and being thrown away to Serie D, Parma finally returned to competing in the 2018-2019 season. However, until now Parma has not managed to return to the ranks of the elite Serie A.

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