By Charlie Charalambous
STRUGGLING local soccer clubs are to benefit from a £1.2 million state subsidy to pay off outstanding debts, at the tax payers expense.
But the football authorities warn it is only a drop in the ocean and that big spending clubs must tighten their belts if they are to stave off bankruptcy.
The Finance Ministry has agreed to waive the interest owed on income tax arrears and outstanding VAT in the form of a £1 million plus subsidy.
But the ministry was reluctant to say where the new-found cash was coming from.
“It’s a government subsidy which comes out of the government’s expenditure, ” senior ministry official Fani Vassiliou told the Cyprus Mail yesterday.
As there is no legal process which would allow the government to waive outstanding VAT debts, the “gift” had to come in the form of a subsidy.
“The government will pay the VAT bill, provided the clubs undertake to pay their taxes on time in the future,” said Vassiliou.
The proposal, backed by Finance Minister Christodoulos Christodoulou, was last month taken to the Council of Ministers for approval, which is thought to be a formality.
Many top flight clubs had been calling for a financial reprieve for some years, warning they would go to the wall because of crippling debts.
Cyprus Football Association vice president Costas Koutsoukoumis said big clubs like Omonia, Apoel and Apollonas could be the first to go under because they have spent beyond their means in the race to win trophies.
“Basically, a lot of clubs are crumbling because they can’t afford the present level of expenses,” Koutsoukoumis told the Mail.
He said the problem wasn’t just the influx of expensive foreign players or transfer fees breaking the £500,000 barrier, but also the rising salaries of Cypriot players.
“I can see the first clubs to go under will be the big clubs. Three or four years ago, they had budgets of £800,000; now their budgets have doubled, while sources of income have not improved,” said Koutsoukoumis.
Although the Cyprus championship boasts more goals per game than most other European leagues this season, only a handful of clubs like Omonia, Apoel and Ael attract average crowds of over 3,000.
Understanding that the national game could suffer a serious body blow and that the growing debts are unlikely to be settled, the ministry decided to wipe the slate clean.
But this was done on the proviso that clubs employed experienced accountants and pledged to submit tax forms, which they had failed to do in the past.
“We are to trying to encourage the sport and at the same time ensure that clubs start behaving properly,” said Vassiliou.
Most clubs do not have proper financial departments and are not even VAT registered, the CFA official said.
As a result, the total VAT bill of £900,000 was based on estimated income; the unpaid interest on income tax and the defence levy stands at £225,000.
Football sources said that clubs had withheld payments in tax arrears hoping the government would give in to their demands.
In an effort to save Cyprus soccer the CFA is considering putting financial constraints on teams to prevent them over spending.
“The problem is already acute and one answer is to limit clubs spending too much, but the future is not bright,” said Koutsoukoumis.
