Asfaw Nigatu was waving the blue and white flag of Weldia Kenema, as he made his way to Addis Abeba Stadium to watch his favourite football club play with Meqelle Kenema. Although he does not have a regular source of income, he has travelled all the way from his hometown of Weldia to catch the game.
“This is not my first time; I rarely miss the chance to support my favourite team,” he says.
But he finds the currently inflating salaries of soccer players worrying, especially since football clubs such as Weldia are not that financially well-off. Nor is the sport growing at a level that can justify this inflation.
“We, the fans, have to help the clubs by other means aside from just buying tickets,” he adds.
This is the view of many soccer fans of the 74-year-old Ethiopian Premiere League. Clubs are running into financial ruin. This financial situation cannot be sustained unless some change is brought to the fore by the management of the clubs, a fan who did not want to be named told Fortune.
One of the highest paid players is Fitsum Gebremariam, who has been playing for Weldia for the past six months. Although he stopped playing for the team a couple of weeks ago, he has been earning a gross monthly salary of 168,000 Br. He declined, however, to comment on the issue, stating that he was under contract.
But Weldia is not the only one that is paying its players well-over the national per capita income, which stands at under 900 dollars. Fasil Kenema’s Dawit Estifanos earns 200,000 Br a month, while Adama Kenema pays Jecko Peaze Peryze 165,000 Br. Moreover, at least three players at Dire Diwa Kenema earn over 150,000 Br.
Although some of the 16 clubs that participate in the League such as the Ethiopian Electric and Mekelakiya get government support, the Ethiopian Football Federation (EFF), which is the regulator, does not have the mandate to set salary caps.
For Tedla Dagnachew, the club licence manager at the Federation, this is harmful in that the most common factor that determines the success of any sports club or organisation is the efficient and responsible management of financial resources.
“Sports clubs need to have a budget plan and financial policies to identify all sources of income, funds and sponsorship mechanisms,” he says, adding that these could be membership fees, donations, and TV commercial deals.
Clubs such as Saint George Football Club together with Ethiopian Coffee, is one of the most well-known, source some of their income from sponsorship deals with 17 local entities such as Derba Cement, Moha Soft Drinks Industry and BGI Ethiopia. Other ways of covering expenses include the sale of jerseys. Furthermore, the club collected five million Birr from stadium fees last year.
But football clubs such as Weldia, which joined the premier league four years ago, are having a hard time balancing their income and expenses. The club had to raise the salary of its players, especially the experienced ones, after they started to complain about pay packages. Given that the alternative is seeing its players move to other clubs that offer better pay, the club’s management had to yield.
Monthly expenses on salaries are now around half of what the club earns from sponsorship deals. While the club spends 1.8 million Br monthly to pay the salaries of its players, it gets three million to 3.5 million Br from sponsors, according to Geremew Kassa, the general manager of Weldia.
“We depend on our sponsors, and the City Administration for funding,” Geremew told Fortune, adding that the club has no constant source of income.
Weldia is not the only one. Dire Dawa, which was established in 2007 and joined the League half a decade later, is having similar problems. It is supported entirely by the city administration, with an annual budget of 40 million Br to 48 million Br allocated to it.
“The players’ salary is getting out of hand; it’s growing day by day,” Ambessaw Awgichew, the club’s manager, said, adding that club has established a new public relations and marketing department to generate more money in order to better cope with these expenses.
Such financial problems are not only faced by clubs such as Weldia but also by most of the regional ones, according to insiders of the sport, these problems can continue as long as the clubs are dependent on a single source of revenue – sponsorship deals.
For Fikir Yilkal, a known sports journalist, this could affect not just the clubs but the sport itself.
“If local governments continue to spend too much of their budget on football clubs, then they would not have much money left for youth development in the sport,” he said. “Clubs must diversify their incomes.”
The international governing body of football, Federation Internationale de Football Association (FIFA), agrees with this view. FIFA obliges each nation’s football regulator to oversee the financial plans of clubs as well as to carry out annual audits.
“But the Federation does not have any clear insight into their financial portfolios,” said Tedla. “They even started to pay taxes only recently,” he added.
Others see the weak financial status of the clubs in a different way. They believe that the main issue here is not that players’ salaries are too high but rather that clubs generate too low an income.
Alazar Ahmed, a private marketing expert and a lecturer at Addis Abeba University’s School of Commerce, is one of these people.
“They require a robust marketing strategy to make use of various sources of income,” he said. “They must think about boosting their revenues through the sale of merchandise and through TV and radio deals.”
Participating in continental matches such as the African Clubs Championship can be another source of revenue, according to prominent football clubs.
“If we participate in such games we can earn one million Birr from each game,but only if the game took place in our stadium,” said Minilik Girma, the public relations head of Saint George.
Sustainability is vital for many of the sport’s fans, including Abel Solomon, an adolescent who dreams of becoming a football player one day. Despite not knowing the salaries of players, he nevertheless wishes to be a football player when he grows up because of the love that he has for the game.
Asfaw, who supports the team whether or not it wins, is of a similar mindset. Financial matters rarely affect his support for the team. He only wishes to see them on the playing field.
“My club is my life,” he told Fortune.
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