The business of Indonesian football and the hopes of players and fans

By Geoffrey Gold

A country of 220 million with a passion for football, Indonesia was described by the president of the Asian Football Confederation, Mohamed Bin Hammam, as the "Brazil of Asia" as recently as July 2006.

The record books, however, tell a sad story of decline from a past that had moments of glory. The first Asian team to participate in the FIFA World Cup in 1938, playing as the Dutch East Indies, Indonesia has subsequently only played once in qualifying rounds. The national team went through to the final rounds of the 1956 Olympic Games but hasn’t appeared there since. Despite being a founding member of the Asian Football Confederation, Indonesia has yet to appear in the knock-out rounds of its Asian Cup.

More recently, spectators at Indonesia’s Bung Karno national stadium expressed their disappointment at their mediocre Under 23 Olympic side's performance against Thailand by cheering the visiting team's increasing number of goals.

The friendly was just the latest in a series of embarrassments for Indonesian football fans since Football Association of Indonesia (PSSI) president Nurdin Halid received his remission from jail in August 2006.

Fresh from an extensive and expensive training camp in Holland, the U-23s were held scoreless in Vietnam's BV Cup and were then quickly bundled out of their US$3 million mission to the Asian Games in Doha. The senior men's team returned home from the ASEAN Football Championship (formerly Tiger Cup) without appearing in the finals for the first time in the history of that tournament and its English coach, Peter Withe, was summarily and publicly dismissed by Halid ten months before the term of his contract.

Reflecting on the stadium crowd's annoyance and Indonesia's current FIFA ranking of 149 out of 199 countries, a PSSI official confided, "this is a dark time for Indonesian football,"

Now, a $10 million upgrade of  Bung Karno may symbolize a renaissance of Indonesian football. Southeast Asia's largest stadium is getting a remake to comfortably seat 88,000 spectators at a group round, a quarter final and the final of the 2007 Asian Cup. The group brings South Korea, Saudi Arabia and Bahrain to Jakarta and automatically includes Indonesia.

South Korean supporters are expected to pack Jakarta between 7-29 July.  The tourism industry is targeting 200,000 South Korean visitors in 2007 and the Korean community in Jakarta itself has more than doubled in the last six years to 30,000. With 570 South Korean companies in Indonesia, including Samsung and LG, there may be significant corporate backing for the Korean "Red Devils" and their fans, expected to show off their kkokjijeom (crazy dance) in the streets of the city.

The final will be the biggest sporting event every played in Indonesia, watched by more than a billion people across the world. The 2004 final was the biggest single TV event in the Asian sporting calendar, beamed to 120 countries and watched by 450 million in Asia alone. In China, a staggering 43.1% of the population tuned in to watch their team play in their first Asian Cup final in 20 years.

The renovations at the national stadium are impressive, albeit behind schedule. There is a LCD scoreboard, pixelized commercial boards, new lighting, repaired bench seating in the public areas, totally rebuilt VIP/VVIPs sections and new, world-standard player and official facilities to bring the 1950s edifice into the 21st century.

Hopes of professional standards

AFC President Bin Hamman is convinced that Asia is suffering from poor competition structures, particularly club competitions. "We will not see any improvement at the international standard unless we restructure and improve professionalism in our clubs and in our leagues," he has said. "We need to professionalise all aspects of the game, including administration and management, to really create professional leagues comparative with those outside Asia.”

PSSI General Secretary and former football star, Nugraha Besoes, agrees. He sees the hosting of the Asian Cup as an opportunity for Indonesian football to reorient itself towards professionalism, transparency and youth development.

He believes the cup can spark changes that will boost the sport as a community asset, ensure strong professional clubs throughout Indonesia and develop a national squad capable of taking Indonesia into the 2018 World Cup. The sport’s relationship with the private business sector is critical.

This would be a major sea-change for the sport after forty years of New Order mismanagement. “It didn't work,” commented Jason Tedjasukmana in Time Asia back in 2001. “The National League has degenerated into a private club for retired generals and their cronies ... as long as the generals can entertain friends and snack on fried tofu … during matches, why should they change anything?”

Today all but four professional clubs in Indonesia’s 36-team Premier League are still owned by local and provincial governments with operating budgets provided primarily from regional government budgets.

Marketing links with small and medium businesses are minimal and there is little focus on spectator facilities, club membership, or merchandising sales or match-day gate receipts. Fans of many teams don't bother paying when they can climb over fences of poorly secured pitches. Some football stadiums earn barely enough from their share of the gate to pay central government land taxes.

PSSI’s solution is to create a Super League with a maximum of 18 clubs for the 2008 season. The other 18 clubs will remain in the Premier League and some 30 semi-professional clubs will be organized in regional zones as Division One. The three levels will be managed by PSSI’s autonomous Professional Leagues Board (BLI) chaired by Nirwan Dermawan Bakrie.

“Super League candidates must fulfil certain financial, facility and administrative criteria,” Besoes says. These include capital and income streams to pay players and other expenses, a full-time administrator, a full-time coach, a junior development program  and control of a safe and comfortable stadium.

“I expect that 90% of the stadiums our clubs are currently must be brought up to the required standard. We will be very strict, even if it means accepting fewer than 18 clubs,” he says.

The Ministry of Home Affairs is also accelerating changes. It has ordered provincial, city and regency governments to stop funding football clubs, with immediate effect.

It says financing football clubs from regional government budgets (APBD) violates central government regulations on management of regional finance. If regional governments want to support football clubs they must formulate specific programs and related service activities. Under the new ruling, football will not have access to social welfare budgets.

State Minister for Youth and Sports Affairs Adhyaksa Dault says the use of APBD funds has reflected what regional leaders think will score goals in their bailiwicks. The size of funding has been alarming, with poor regions spending Rp15 billion on professional clubs. Some areas with no strong football base buy players from elsewhere.

The minister says Indonesian football will benefit from corporate sponsorship that will create more sustainable competition without the current "match mafia".

Bandung’s Persib FC executive director Edi Siswadi quickly coordinated with city officials for disbursement of the club's 2007 funding to "ease concerns of players".

"The funds for Persib in APBD 2007 have been put in the grant fund so we do not have further problems," said Edi. The club will continue to consult with the Public Audit Board (BPK) for assessment of the designated sports service, vital for any future municipal funding.

Edi admitted that it will be hard for Premier League clubs to find sponsors and regretted the industry had not been given time to adjust.

Deddy Mulyadi, head of the Center of Study of Education and Training in Bandung, says governments will no longer have to think about football and management of the clubs. They will be more professional, prompting a positive change in player attitudes. He also ponders what an extra Rp 15 billion would do for local education and poverty alleviation.

In Jakarta, football powerhouse Persija FC believes the new regulation won’t affect its financial stability, despite the likely loss of some Rp16 billion ($1.7 million). "Take away the money from the city budget and Persija will survive. We are a big club. We have companies and private parties lining up to sponsor us," club secretary-general Biner Tobing told The Jakarta Post. Persija recently signed a one-year sponsorship contract with the Diadora sports company.

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, chairman of the city commission overseeing sports.

Papua’s famous Persipura football club, Premier League champions in 2005, is already generating income to supplement its APBD funding by promoting HIV prevention. Billboards in Jayapura display the team with slogans such as ‘Be a Champion, Wear a Condom’.

Radio game commentators present HIV-prevention messages and promote safe sex. On television, Persipura striker Boas Salossa and popular singer Edo Kondologit chat about responsible sexual behavior and the importance of condoms.

The team receives an Australian grant of about Rp200 million for its campaigning and a share in Australian assistance for Radio Republik Indonesia through broadcasts of its games in Jayapura and Wamena.

Last season's Indonesia League champion, Persik of East Java, has been getting a Rp15 billion grant from the Kediri municipal budget. It has also signed a Rp900 million ($98,685), one-year contract with Italian sportswear maker Lotto, critical extra financing for its prospects in the AFC Asian Champions League.

Last year's Copa Indonesia winner, the privately-backed Arema of Malang, East Java, which does not receive APBD funds, supports the government rulings, saying they will force football clubs to be more independent.

However, Arema manager Satrija Budi Wibawa says it will be difficult for clubs to find sponsors if the football administrators enforce a new rule that teams cannot accept sponsors in the same industry as the league’s own sponsors.

Arema, owned by cigarette manufacturer Bentoel  which provides Rp 15 billion in sponsorship, is in dispute with the BLI over its decision to stop the club putting X-Mild's logo on its shirts in order to protect the Indonesian League’s naming rights sponsor, Djarum.

Football sponsorship is also threatened by House of Representatives draft legislation that would block tobacco sponsorship of sport, but the government is meeting with the industry, with talk of an alternative bill. The House’s draft is based on the WHO Framework Convention on Tobacco Control which Indonesia, alone in Southeast Asia, has not ratified.

Tobacco companies have been major supporters of football since 1994, albeit with a halt while Indonesia underwent political and economic crises. In 2000, with the assistance of international sports marketing company IMG, Liga Indonesia became Liga Bank Mandiri. The bank reportedly paid Rp7.3 billion for the 2000 season.

Of this, disbursements to the 28 clubs amounted to Rp 2.6 billion, another Rp 985 million went to advertising, IMG received Rp 657 million for marketing and PSSI retained “about Rp 1.6 billion”. By 20013 Bank Mandiri’s sponsorship was reported to have risen to Rp 25 billion.

In 2004, PSSI discontinued its relationship with IMG and negotiated the sale of league naming rights to cigarette company Djarum in a four-year deal for $40 million a year.

But, says a marketing professional previously associated with the tobacco industry, “the banning of tobacco advertising and sponsorship associated with football in Indonesia is inevitable.”

“It will force football to get serious and more professional about its marketing. It will be painful at first but the reward will be attracting a wider range of sponsors. It has happened in many other countries and they have all survived and flourished. So will Indonesian football if it gets smarter.”

Amongst world-class sponsors pleased to work with football in Indonesia is Nike, which recently replaced Adidas as technical supplier to PSSI.  The value of the five-year deal, which includes national shirts and footballs, is undisclosed but Nugraha Besoes described it as "10 times bigger than our agreement with our previous partner."  Nike will supply the Indonesian national team shirts and footballs until 2011 and will be involved in talent development

Hope for youth development

Nike Indonesia marketing manager Penelope Chan, a Malaysian, was surprised by the intensity of Indonesian fans for the game. “The fans are exceptionally passionate and football is so much a part of their life. There’s a great future for football here that Nike wants to be a part of.”

Nike’s long-term plan involves youth development, including the Nike-sponsored Manchester United Premier Cup. It has selected well-known local footballers to be the face of Nike: national captain Ponaryo Astaman,  Bambang Pamungkas and Ellie Aiboy.

According to Chan, interest in local football “stretches across the demographic divide” and television audiences for Indonesian teams playing in international events can be two-to-three times larger than the audience for an English Premier League telecast.

The Nike promotion of local heroes will do no harm to encouraging more young people to look for a career in local football. The entry point salary for a Premier League club is around US$40,000 a year with top players earning up to US$85,000. The Division One salary range is between US$20,000 to US$40,000. Players usual receive accommodation, meals, and transport as supplementary benefits.

The 36 Premier League clubs are entitled to each register five foreign players but there are concerns that young Indonesians are not receiving enough experience through game time.

According to the PSSI director of Status and Players Transfer, Hamka Kadi, Indonesian-based Players’ Agents have not fully scrutinised foreign players before their arrival in Indonesia. “We  expect them to hunt in countries that traditionally have a lot of quality players and not to rely on recommendations from friends. That leads to unpredictable quality,” he says.

To ensure a more orderly and transparent market, PSSI is encouraging the 15 domestic players’ agents to sit for the March 2007 FIFA examination to qualify as FIFA-recognized international Players’ Agents. Unusually, PSSI will still require the agents to pay a five percent levy from the fees received for each player.

PSSI is also moving to a national player registration system. “At the moment we don’t know how many players there are in Indonesia,” Nugraha Besoes admitted. “It could be one million or five million. So we are creating an information centre to collect the information and we will try to give every footballer an ID card,” he said. Current plans are for a sponsor-subsidized third party to create the system and collect the massive data.

Before his sacking as national coach, Peter Withe spoke publicly of the need to invest more money in youth development. "Everyone thinks that in a country of 220 million people it should be easy to find a squad of good players," he said. "But this is not the case. The philosophy must change and more money must be spent to develop young talent, but as in most countries in Asia budget constraints are a major stumbling block."

PSSI is now researching the establishment of a youth development institution with financial assistance from the FIFA Goal program. “We are negotiating with foreign parties to help us establish a School of Excellence in Indonesia. The object is a 130,000 sqm facility but the first stage will be a 30,000 sqm development for youth,” Besoes says. “The first intake will be 30 of our best 16-18 year-old-youths.  The top-of-the-top will be sent to Europe for further training and to play in a youth competition while the others will be allocated to our clubs.".

From this year an amateur U-21 youth competition, based on provinces, will be a feature of Indonesian football. Organised by PSSI’s Amateur Leagues Committee, the new competition will be part of a chain of competitions starting from U-12 and culminating in U-23.  Teams representing twelve of Indonesia's 33 provinces (North Sumatera, Bangka Belitung, Bali, West Java, Banten, West Sumatera, DKI Jakarta, Maluku, Cemtral Kalimantan, East Java, Gorontalo and Yogyakarta) participated in the new national U-15 youth competition final round sponsored by Medco Group last November.

As mentioned by Penelope Chan, Indonesia’s passion for football is best gauged by the telecast rights. SCTV reportedly spent Rp100 billion on rights to the 2006 World Cup. ESPN STAR Sports confirms that retaining the EPL rights for Indonesia “was an important event.” The 2007 Asian Cup will be broadcast into Indonesia by both RCTI and ESPN Star Sports, but no figures are available on what they are paying.

The Bakrie Group’s ANTV won the bidding for Indonesia's professional league for 10 years commencing this year with a Rp100 billion ($920,000) bid, against Media Nusantara Citra group, which wanted only a one-year deal.

It all adds up to big money. The challenge now is to answer the dreams of millions of Indonesian fans and make the move from government handouts to professional funding and management and, most importantly, top-class football.

An abbreviated version of this article was published as “The Business of Football” in Globe Asia, March 2007

Geoffrey Gold is CEO of Football Dynamics Asia and publisher of Asian Football Business Review.