Lack of revenue hampering development of underwater rugby’s nascent professional league.
Chief Manager Anton Churzin is now considering raising capital through the sale of shares in a future company.
The Euroleague has the potential to grow. Competition for juniors and women are in planning. Expansion would, however, create additional financial demands on the already strained organization. The business model that has served for 6 seasons may no longer be adequate.
The Euroleague currently operates as a Russian domiciled non-profit organization, despite the league never having held a round in Russia. The costs of the competition have been covered almost entirely by the competing clubs. This has left the league starved for working capital. Churzin explained how the television production team, a hybrid business that lacks regular full time employees, could be transformed.
“Ten persons are working almost for free. We have very good professional team, but it will be very hard to save it, if we do not pay more for their work.”
The Euroleague anticipates an operating loss of at least euro 7,000 for the next two seasons. Without revenue from sponsors the league must charge the players more or risk bankruptcy.
The league has not yet explained how exactly how or where share sales might take place. The plan, covering the coming three years (2018-2021), proposes increasing the participation costs now to enhance the league’s value prior to an initial share offering.
“Opening to private investors will require considerable preparation,” Churzin said. “A share of future profits will of course belong to investors. So, I propose that initially the players and clubs invest so that they can benefit financially when the league monetizes.”
The notion that the league could become a company with a variety of shareholders is new. The original conception of the Euroleague was that quickly growing viewership would lead to commercial sponsors and a revenue stream from the sale of advertisements. Clubs would earn their own income. When founded, the league and clubs agreed to share any income from sale of television rights. However, no sales have occurred. In the 6 years of operation, only two significant sponsors have backed clubs (Betta and Vienna). The league itself has received sponsorship from Slomo, a video technology manufacturer that expects the league to begin paying for its mixing equipment.
Currently the league has just over 4,000 followers on Instagram.
“We need to increase that by 70 percent each season so that we reach around 20,000 by the end of the 2019-2020 season,” said Churzin, adding that 10,000 followers is a key goal this season because that is point at which the platform permits live links. “When we reach 50,000 followers we can monetize of our Instagram account.”
According to Forbes, “an Instagram user with 100,000 followers can command $5,000 for a post made in partnership with a company or brand.”
The new business plan calls on each club to meet social media activation targets. Furthermore, the league will require all club managers to create a database in their home market so that the league can issue press releases to television, radio and newspapers.
The response of the league managers has been muted. Molde, the most successful club in the league’s history, arguably has the most to gain from the league’s stable growth. Jon Reidar Heggdal, Molde’s league manager, said: “I have no comment at this moment.”
The league’s other Norwegian club, Egersund, competed in a qualifying round last year and this year won a place in the 10-team regular season that meets three times. League Manager Håkon Emil Sæstad, called the development plan “ambitious and interesting”.
“I like what he aims to achive with the Euroleague,” said Sæstad.
Martin Schottmüller of Malsch said that his club was economically maxed out and could face difficulties next year.
“I do not approve of 10 clubs bearing the economic burden of make underwater more professional. We should take step forward to CMAS to get support and a good relationship [with the governing body] again. This is only way to be more professional.”
Schottmüller said that while Churzin’s vision of the future was important, pushing too hard could cause the league to collapse.
Niclas Onkelbach of Krefeld replied that the business plan would not affect his club since the German team had determined that this would be its last season in the league. He explained:
“Yes, the fees are a major point and we also had huge trouble getting people together this year. I don’t see it becoming any easier next year.”
He did not foresee the league finances drastically improving.
“You can’t make it professional by telling the players ‘be professional’,
—Niclas Onkelbach,
Manager, Krefeld
In his opinion for it to truly be professional it would have to make enough money to permit the athletes to train more, which would mean adjusting work and studies.
“Getting paid 100 euro per round isn’t something you can give as a reason for your studies taking two years longer than those of your peers.”
Janne Lind, the league manager for Urheilusukeltajat, a Finnish club that will make its debut at the October round in Helsinki, said that he discussed the business plan with key players in his club:
“The response has been mixed. We all want underwater rugby to develop and to get more media attention. However not all the people in our organization see it as the players’ responsibility to fund this development. Ideally the growth should happen organically, but there is real worry that without risk capital and crowdfunding, the progress made so far will slowly diminish.”
Urheilusukeltajat was critical of large and sudden budgetary changes.
“We highly appreciate the work Anton and the media team are doing because the Euroleague has made a huge difference in the presence of the sport. Nonetheless, the current level of expense is already a straining our team. It comes from our pockets directly.”
Lind, a business development analyst by profession, noted that none of his club’s members were professionally involved in PR and marketing.
“We are uneasy and unsure on how we could get and fund the additional costs with sponsors even if we agree that we should try this approach harder,” he added. “Additionally there is nothing in the proposed model that would allow teams to benefit if the league starts to make money.”
One incentive to raise capital and generate marketing activity would be for the participation fees to earn stock in the Euroleague as a limited company.
“Maybe teams would start to invest time and money on business development if they owned a stake it and if the league started to make money the dividends would be paid back to the participating teams,” Lind added.
There are signs that the Euroleague may have priced itself beyond the ability of clubs in less wealthy countries. Ege, which hosted a round in Izmir last season, has dropped out because of the economic difficulties, said head coach Tarkan Laleli.
Three players who have been with the league from the beginning: Thor Funk, Kristian Schäfer and Victor Krylov. Photo: Davrell Tien
Kristian Schäfer, a league veteran who has played for three top clubs (Flipper, Akkaren and Molde), concurs with Lind that opening the league to a broader owner base would be the best way to engage clubs and players.
“Basically I think the best way to move forward is if all clubs owned the league. Just as you see several banks own a organisation. That way could you also involve the clubs much more in terms of financial growth.”
“But it will only be a business if we organize ourselves like a business and act like a business, until then is it, I don’t know the word… something else, an event.”
Mikkel Rasmussen of Flipper praised the Euroleague:
“Clearly it has been great for our sport. Certainly, the lack of money has limited what we have been able to accomplish. We could offer an alternative to Champions Cup, a women’s league, a junior competition, etc. but we do not have the funding to act quickly and forcefully. I hope the league will find a way to bring in capital, but we will never flourish if everything depends on payments by the players. Also, personally, I do not see any serious investors putting money into anything domiciled in Russia. There is too little confidence in the legal system there.”