Dinamo earned a billion kuna in 20 years!

The Institute of Public Finance (IJF) has produced a very detailed analysis of the operations of Croatian football clubs. The topic that has been discussed for years is now consolidated in one place.

The football club Dinamo has earned more than a billion kuna in the last 20 years! The Institute of Public Finance (IJF) has produced a very detailed analysis of the operations of Croatian football clubs. The topic that has been discussed for years is now consolidated in one place.

– It is reasonable to ask to what extent football has remained in the realm of public – sporting and financial – interest, and how much it is subject to private interests driven solely by profit motives. To the extent that private interests dominate, football clubs should be deprived of privileged tax treatment, significant public subsidies, and other benefits they enjoy at the expense of the public sector – states the introduction of the IJF analysis.

Although there are seven tiers of football leagues in Croatia, the IJF included clubs from the first and second HNL in the analysis (according to the current schedule for the 2015/2016 season). HNL I includes 10 clubs, while HNL II includes 12 clubs.

– The average value of players in HNL I is around 4 million kuna, with Dinamo players having the highest average value, while players from Inter Zaprešić have the lowest. The average value of players in the second league is around 0.5 million kuna, so the total market value of HNL II clubs is just over 154 million kuna, while HNL I clubs are nearly 1.3 billion kuna. Of the total 319 players in HNL I, 78 are foreign players, and in HNL II, out of a total of 300 players, only 28 are foreign. This is logical considering that first league clubs achieve the highest player purchases and sales – states the analysis.

From the 1995/96 season to the 2015/16 season, the ten clubs with the highest earnings from player transfers conducted between 448 (Varaždin) and 906 (Dinamo) transactions.

– The net earnings from transfers for Dinamo over the past twenty years amount to over a billion kuna – states the analysis. However, it also highlights that, for example, in 2014, Dinamo operated at a loss, as did most clubs in the First HNL. The calculation was a minus of 90.4 million kuna, with revenue of 120 million and expenses of 211 million.

– The largest loss was incurred by Dinamo, which accounts for almost a third of the total revenue of football clubs in HNL I and HNL II combined. Given Dinamo’s dominance compared to other observed clubs, the analysis was conducted with a special focus on its operations. Business revenues dominate in all clubs. Dinamo, Zagreb, Lokomotiva, and Slaven Belupo have relatively high extraordinary revenues – mainly from the sale of fixed assets and other unmentioned revenues. It is not entirely clear from the financial reports what other revenues encompass, which are high, and the financial reporting of clubs on them is not transparent – writes the analysis.

Dinamo’s revenues nearly halved in 2014. In the structure of total revenues, donations and other revenues are the most significant. Revenues from donations in 2014 were 20 million kuna lower compared to 2013. This decrease is largely a result of reduced income from international organizations. In 2013, Dinamo received almost 42 million kuna from UEFA, while in 2014, it received significantly less – 23 million kuna. Revenues from donations from local government budgets are generally stable. These are mainly donations from the City of Zagreb amounting to 20 million kuna annually. Compared to most European first-league clubs that generate a large part of their income from merchandise sales and service provision, Dinamo generates almost twice as much revenue from donations from the City of Zagreb.

– Besides the fact that non-profit organizations are generally not subject to corporate income tax, the tax treatment of player transfers is also questionable, from which only Dinamo has generated almost 1.5 billion kuna in the last twenty years. As the largest Croatian football club, Dinamo generates over 20 million kuna annually from donations from the City of Zagreb, which is twice as much as the revenue generated from merchandise sales and service provision or about 25 times more than the revenue from membership fees and contributions. At the same time, Dinamo paid out 6.5 million kuna in donations in 2014, and the financial reports recorded about 10 million kuna in receivables from loans given to citizens and households as well as legal entities. Given the significant funding from the city budget, the justification of such loans is called into question – concludes the analysis.

You can see the entire IJF analysis HERE.