Many teams don’t have sustainable revenue channels and continue to rely on state funding
By MARK RAO / Pic By DZUL ASYRAF
Almost half of the football clubs that are currently competing in the country’s top two professional leagues may “disappear” in the next 10 years as revenue shortfall will make the teams existence untenable.
Football Malaysia LLP (FMLLP) CEO Kevin Ramalingam (picture) said many teams do not have sustainable revenue channels, fail to transform into commercially viable entities and continue to rely heavily on state funding.
“Over the next eight to 10 years, I think a large number of the teams currently in the top two tiers of Malaysian football will not be competing in the professional leagues anymore,” he told The Malaysian Reserve.
“This is because some (of the teams) operate in a very old school manner [where they feel that state funding is their only source of income] and this does not allow the teams to have a future,” he said.
Presently, the Super League is the highest football divisional competition, followed by the Premier League. Both professional leagues, with 12 clubs competing in each division, are governed and operated by FMLLP. The third level is the FAM League, but it is a semi professional league and operated by Football Association of Malaysia (FAM).
Football is the country’s No 1 sport and Malaysia was one of the region’s powerhouses in the 70s and 80s.
But over the last 25 years, the country’s football global rankings had plummeted from No73 in1993 to a historic low of No 178 last March. There are 207 countries listed on the FIFA global rankings.
Most footballers want to ply their trades at professional clubs which had originated from the state’s football teams. Besides commercial deals and ticket sales, these teams source their funding from the state and the national football body.
Though attendance for the Premier League is strong, many clubs have failed to secure lucrative advertisement contracts or commercial deals with the private sector or sponsors.
Ramalingam said there is a need to inject new blood with new thinkings into these clubs, while FMLLP works to create a vibrant and commercially-viable football industry in Malaysia.
“We need more companies, sports marketing agencies, merchandising agencies, sports lawyers, insurance companies. We need the industry to be more vibrant,” he said.
“If we have a more vibrant sport industry and more players wanting to do commercials and merchandising, then teams in the country will have more options [in terms of financing],” he said.
FMLLP was established in 2015 after the FAM’s decision to take the league private. FMLLP oversees the operations of two leagues and three cup tournaments in Malaysia.
The body has helped FAM raise the annual grants given to teams playing in the Super League by three times to RM3 million and doubling that given to teams in the Premier League to RM1 million.
It is understood that the annual grant comprises 20% to 30% of a club’s yearly income, putting a team’s budget at a ballpark range of between RM10 million and RM15 million a year.
Ramalingam said the grant growth was achieved due to the increase in matches and long-term and wide-ranging sponsorship deals.
FMLLP currently broadcasts all Super League or top division games and one out of six Premier League or second-tier games.
“We did this in order for the teams to have the platform to put themselves out there and the sponsors of each team today have gained unprecedented return on investments whether they are advertising on the jerseys or stadium boards,” he said.
He said the commercial value of Malaysian football is higher now based on games played and live broadcasts.
“It is a complete aerodynamic shift. Because of this, we were able to raise more money and give teams back more money than what they were used to getting in the past.”
Ramalingam said FMLLP, together with FAM, has also learnt from the flopped RM1.26 billion deal signed with MP & Silva in 2015, which is currently in the middle of arbitration. The deal would have seen MP & Silva pay RM70 million annually for the first six years from the start of the 2016 season, followed by annual payments of RM85 million (2022 to 2024), RM92 million (2025 to 2027) and RM103 million (2028 to 2030).
Ramalingam said FMLLP has secured new deals including an eight-year deal with Telekom Malaysia Bhd and a 10-year deal with iflix, besides other short-term contracts with other companies. He did not reveal the value of all these deals.
He said the different agreements ensure multiple sources of funds and investors.
“We learned to split up the rights to ensure that there are multiple holders rather than one managing all,” he said, adding that the league owners had staggered the long-term and high value deals to ensure constant cashflow.
Ramalingam also added that FMLLP is close to announcing an agreement with an official bank and is negotiating with an airline partner.