The giant rises again: How Feyenoord improved their financial fortunes

Karl Marx once wrote that history repeats itself. First as tragedy, then as farce. But not at Feyenoord – at least not this time. After avoiding falling off the brink of bankruptcy in the fall of the 2010, the millions flowing into the club after the transfers of Graziano Pellè, Daryl Janmaat, Bruno Martins Indi and Stefan de Vrij are bringing the club back to an even balance. Still though, not much money can be used to strengthen the squad. This is an analysis of where it all went wrong and how it’s getting better.

It’s early in the morning of Monday October 25 2010 when Feyenoord’s financial director Onno Jacobs enters the club offices. He hasn’t slept much that night. A day earlier, his team lost a staggering 10-0 against rivals PSV, a true tragedy. Right after the match, coach Mario Been offers his resignation, but Feyenoord wants him to stay. “Stay” is a big word though. Feyenoord simply cannot pay for yet another early sacking of a coach.

That Monday, the board of Feyenoord has an emergency meeting. In four days, when October ends, the club will be bankrupt. That is, the wages will not be paid, the players will likely start a mutiny and the club will possibly have to file for bankruptcy. One hundred and two years of football history, all gone with the passing of the months.

In the months prior to that day, the club has started talks with a group of fans united under the name Varkenoordgroep, after the Academy offices they regularly meet in, and a group of investors, known as the Vrienden van Feyenoord (“Friends of Feyenoord”). Some of them are known investors, who have helped the club raise money multiple times over the years. Others are young, fruitful businessmen who have never before put money into the club. Some supporters have fought hard battles on and off the pitch with rival supporters, others visit matches in total silence; but the upcoming risk of the fall of a football giant has brought them all together.

On Wednesday, Feyenoord unites once again as the stadium is sold out for a match against VVV Venlo. That night, the players are greeted with banners proclaiming messages such as “Unconditional love, unconditional support”. Coach Mario Been tries hard not to cry as fireworks are set off. It is a unique night, proving the strength and impossibly great love of the Feyenoord fans for the club. That night, Feyenoord win 3-0, but the victory feels like a bigger liberation.

A new liberation comes the next day. The investors have reached an agreement with the club on the huge debt the club owns – somewhere between 35 and 40 million euros, the biggest in the country. The investors will not put any new money into the club to pay off debts, but exchange debt which the clubs owes them for stocks. In total, the investors get 49 percent of the stocks of the club (a majority was not possible due to statutory rules) for about 30 million euros. A bargain.

It’s hard to call them saviours of the club, as they are more like the saviours of their own money. Had Feyenoord indeed have gone bankrupt, they would have lost millions of euros.

Some of these millions were invested in the club under for the investors positive conditions with the transfers of Sekou Cissé (2009, for about 4.4 million euros) and Karim El Ahmadi (2008, 5 million euros). If these players were to be sold, big percentages of the profits would go the investors.

With these transfers, a special fund was set up to protect the interests of the investors, the Feyenoord Investment Fund (FIF). For Feyenoord, it gave the possibility to buy two talented players, but at the same time chained the club to the interests of the moneymen, which they will have to pay a lot of money any how, against high interest rates.

In five years, the club will have to pay the investors 12.36 million euros plus an interest of five percent back to the investors. Noteworthy is that Feyenoord buys Cissé under this construction one day after the KNVB appointed curators in part due to the use of this construction to buy El Ahmadi.

In the years prior to the transfers, the club has tried everything to bring in more money. After huge debts are exposed in the fall of 2006, leading to the forced departure of long time chairman Jorien van den Herik, a new board sets up Youth Investment Funds. For some 250.000 euros, investors can participate in funds including talented players, which Feyenoords expects to sell with big profits.

Except that they weren’t. Most players never lived up to the their promise and left the club as free agents. Others were indeed sold, but never for the huge prices the club hoped for. It left the club with even bigger debts to the investors, while at the same time new funds were set up for another generation of young players.

After these funds failed as well, they did bring money in without being able to pay off much of the debt since players aren’t sold and Feyenoord has to pay interest over that to the investors, the club has one final solution of bringing in money.

On Varkenoord, the Feyenoord Academy fields, some very talented generations are ready to make the step to the first team. In generation ’92, players like Stefan de Vrij, Bruno Martins Indi, Shabir Isoufi and Luc Castaignos seem to have a big future ahead of them. In the generation ’94, even more players have such a future ahead, including Jean-Paul Boëtius, Terence Kongolo and Nathan Aké. Feyenoord knows these players are likely to bring in many euros in the upcoming years, and asks the investors for one last time to invest in a fund. This time, all players in the Academy, starting with the U15 team up to the flagship U19 team are included. Millions flow to the club, as the investors see a possible goldmine. For every transfer, the investors will receive a cut of 18,33%.

This summer, their time has come to cash in. With Bruno Martins Indi leaving for FC Porto for approximately 7.7 million euros and Stefan de Vrij making 8.5 million euro move to Lazio, the investors will finally receive their millions.

Feyenoord De Vrij

In the same time, Feyenoord has paid off the last six million euros of debt after the transfers of Graziano Pelle (10 million euros) and Daryl Janmaat (7.5 million euros). Still, even less money will be available for transfers as the club is starting to buy back the stocks the investors got in the fall of 2010, slowly making the club boss in its own house again.

Many millions will flow to the club this summer, but a maximum of 40 percent is available for reinvestment. Right now, after selling Pelle, Janmaat, Bruno Martins Indi and Stefan de Vrij, it means football director Van Geel’s purse is filled with some nine to ten million euros.

But to avoid turning the financial tragedies of the past into a farce in the future, Van Geel is treading carefully and not in a rush. Talking to me after a friendly game earlier this month, Van Geel honestly talked about the cautiousness of his work. Yes, he said, “we can buy a striker right now. But it will cost me three million euros more”.

Van Geel was referring to the upcoming qualification matches in the Champions League against Turkish side Besiktas. After the departure of Graziano Pelle, of the strikers left at the club, only Mitchell Te Vrede has some experience in the Eredivisie. Back-up Wessel Dammers has just graduated from the Academy and is not likely to make his first appearance this season. It means Feyenoord desperately need a striker who is ready to score goals immediately. Bas Dost, former top scorer at SC Heerenveen and now at VFL Wolfsburg, has been linked to Feyenoord for a while, but negotiations between the clubs are tough, as Feyenoord are keeping a tight rein on the purse strings and Wolfsburg keep asking for several million for a season on loan. Belgian striker Jelle Vossen and Argentinian winger Hector Tito Villalba have also linked been with moves to De Kuip.

Slowly though, the club is leaving the ruins created after years of financial mismanagement and building up again. Under the realistic and sober policies of Martin van Geel, the sun is shining again at Feyenoord.

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