Indonesian government bans funds to football clubs

Indonesia's Ministry of Home Affairs has ordered regional governments to stop funding football clubs with immediate effect. Currently, only four of Indonesia's over 40 professional clubs are owned by private companies or state-owned enterprises (BUMD), all others are owned by provincies, municipalities and regencies. The Director of Regional Development Capacity and Work Evaluation at the Ministry of Home Affairs, Saut Situmorang, explained to Kompass newspaper that financing football clubs from regional govenment budgets (APBD) was a violation of central government regukations. "Helping the budgeting or financing of football clubs is not in accordance with the provisions of the law. If regional govenments want to support football clubs they must formulate a program and related service activites," he said, adding that those programs must be audited by the public's accountant, could not be "continual" and nor could the football activity tap into "social help" budgets. This required the compiling of a report on APBD responsibility in accordance with Home Affairs's regulations No 58 of 2005 and No 13 of 2006 regarding the Management of Regional Finance.

Separately, the State Minister for Youth and Sports Affairs, Adhyaksa Dault, said the APBD funds poured into football reflected what the regional leader thought would be well received by the local people. But the size of the funding was alarming. "There were areas with very low APBD but Rp 15 billion would be taken out to fund the football club," he`said. This was done even if the region did not have a football base, with the money used to pay for players coming from elsewhere. In the State Minister's opinion, Indonesian football will benefit from getting away from dependence on regional government budgets and by linking up with local businesses, private and state-owned. This will help create a competition more sustainable and clean from "match mafia", he said.

"Up until now the APBD funds used by Indonesian football clubs were rarely accounted for. In several areas, it was discussed by the regional House of Representatives but overall, the APBD funds continued to irresponsibility gush to football clubs from season to the season," Kompass commented.

In Bandung City in West Java, Persib FC Executive Director Edi Siswadi coordinated with city officials for a quick disbursement of the club's 2007 funding to "ease concerns of players". He told the club's supporters the city council had received the Ministry of Home Affairs's circular No. 903/187/SJ. asking if funds for the football club had been allocated from a social help budget or as a grant. "The funds for Persib in APBD 2007 was put in the grant fund so we do not have further problems," he said. Despite this, the club will continue to consult with the Public Audit Board (BPK) to identify the municipal sports service work unit (SKPD) which Persib is allocated to. Assessment of the success or otherwise of the designated sports service will be vital for any future municipal funding of Persib, Edi admitted, as his Premier League side could not easily find sponsors. He said it would have been better if the Ministry of Home Affairs had given clubs two years to adjust otherwise many could die once their APBD funds are interrupted.

The Head of the Centre of the Study of Education and Training (PKP2A) I LAN Bandung, Deddy Mulyadi, agreed that it was probably best if the funds were reduced in stages, before finally being cut off but said the freeing up of Rp 15 billion into local educational and the alleviation of poverty would certainly will give quite significant results. It would be best if governments did not have to think about football and management of the clubs handed over to the private sector, he said. This would be more professional and could also lead to a positive change in players' attitude once they understood they were responsible to the sponsor and the community and did not expect money to pour from the government. Deddy suggested that, apart from approaching sponsors from the private companies and state-owned enterprises, Persib should also look for fresh funds from the community.

In the Special Capital City province of Jakarta, football powerhouse Persija FC, believes the new regulation will not affect its financial stability despite it previously receiving about Rp 16 billion (about US$1.75 million) from the provincial government. "Take away the money from the city budget and Persija will still survive. We are a big club. We have companies and private parties lining up to sponsor us," he told Damar Harsanto of The Jakarta Post. The club, for instance, has recently signed a one-year sponsorship contract with the Diadora sports apparel and equipment company.

But Jakarta provincial legislator, Dani Anwar doubts the club's ability to compensate for the loss of government money. "It is not going to be easy for football clubs in this country to find their own sources of income," said Dani, who chairs the province's commission overseeing sports affairs. He said it was inevitable that Persija would receive money from the city budget, but the concern is ensuring the club manages the money professionally. Legislator Mansyur Saerozi, however, disagrees. He told the newspaper that Persija had enjoyed the "privilege of government financing" for too long, and that the administration should be fair and spread its financial support around to other sports. "Many sports have yet to benefit from budgetary allocations, most of which go to football clubs," he said.

The two clubs representing Indonesia in the forthcoming AFC Champions League also differ. Last season's Indonesia League champion Persik of Kediri, East Java, received Rp 15 billion from the Kediri municipal budget. Following the issuance of the government regulations on financing, the club is still receiving money from the city, only now it is called a grant. Last year's Copa Indonesia winner Arema of Malang, East Java, one of the four clubs not receiving APBD funds (the others being Semen Padang, Pelita Jaya Purwakarta and Bontang PKT) supports the rulings, saying they will force football clubs to be more independent.

However, Arema manager Satrija Budi Wibawa, said it will be difficult for clubs to find sponsors if the Professional League Board (BLI) of the Football Association of Indonesia (PSSI) enforces a new rule that teams cannot accept sponsors that make the same products as the league own sponsors. "PSSI must involve clubs in negotiating with league sponsors so we can get good deals from our own sponsors," he said. Arema is in a dispute with the BLI over its decision to ban the club from putting its sponsor's logo on its shirts. Arema is owned and sponsored by cigarette manufacturer Bentoel, with a sponsorship deal worth Rp 15 billion.

The Indonesian league is sponsored by Djarum, one of the country's largest tobacco company, whose four-year contract, starting in 2004, injects about US$40 million a year into the competition.

The BLI will reportedly fine Arema and any other club breaching its new regulation Rp 100 million (US$10,990) per match and an additional Rp 50 million per match if the club puts another sponsor's logo on A-boards in the stadium. The BLI will also slash the points earned by the rule-breaking clubs.

"Soccer is the No. 1 sport in Indonesia, but the unprofessional management of teams and leagues makes the headlines more often than clubs' successes. There also are concerns about match fixing, unfair play and glaring leakages in the ticketing system, in addition to recurrent fan clashes, all of which soccer less than attractive for sponsors," Damar Harsanto commented.