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Safa ‘a going concern’ despite loss

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By SAPA

The SA Football Association (Safa) “remains a going concern” despite reporting an operating loss of millions of rand, Sport Minister Fikile Mbalula said on Thursday.

“The association has received an unqualified audit from KPMG, and has demonstrated that it remains a going concern,” he said in written reply to a question in the National Assembly.

Safa was currently going through significant restructuring to create a reduced and sustainable cost base, and new and innovative measures to generate funding for football development were also now in place.

Mbalula was responding to a question by Congress of the People MP Graham MacKenzie about the reasons for Safa reporting an operating loss of R56 million, given the amount of sponsorship the Premier Soccer League (PSL) received.

Mbalula said although the PSL was a “special member” of Safa, it had its own governance structures, generated its own revenues, and ran its own administration.

Given that it was the professional league in the country, it was able to command significant broadcast and sponsorship revenues for itself.

Safa, on the other hand, had to generate its revenues primarily from Bafana Bafana and Banyana Banyana, and this had to be used to fund nine national teams, four leagues (three of which were separately sponsored), and all football development in the country.

The PSL gave Safa an annual grant of R7 million out of its television funding.

Safa's loss this year could be attributed to the difficulties in renewing its broadcast sponsorship and the consequent delays in renewing other key sponsorships, a cost base created during the World Cup years that needed further significant reduction, and a contracting sponsorship market due to tough market conditions.

“This loss includes non-recurring losses from the impairment of assets of R15.9m, additional depreciation of R7m from increases in their vehicle assets, and a R6m provision for loss in Afcon 2013 LOC, incurred until June 2012.”

The loss from Safa's core operations was therefore R27.6m, which was incurred through a full programme of all national teams, including the Olympic preparations for the senior women's national team, and an increase in investment in football development and competitions.

But, Safa was able to reduce its operational costs through cost containment measures, and intended to intensify these in future, Mbalula said.

Safa had hoped to achieve revenue targets last year of R340m, based on the renewals of key partners, ABSA and SA Breweries, and signing new broadcast deals for both free-to-air and pay television.

These renewals had been delayed due to difficult negotiations on the sale of the broadcast rights.

Safa was able to conclude a significantly improved free-to-air broadcast package with the SABC, but had not as yet finalised a pay television deal.

The failure of the men's senior national team to qualify for the African Cup of Nations in 2012 also negatively affected these negotiations.

“Both ABSA and Castle have now renewed their sponsorships, but at lower than anticipated levels. Going forward, Safa has plans to make up this revenue with other sponsors and other funding sources through a new sponsorship structure for the association.”

Safa had started a restructuring process in response to difficult market conditions and a high cost structure which was the result of an intensive preparation programme for the 2010 Fifa World Cup.

“It has adopted a two-pronged approach; that is, raising additional funding and reducing and realigning costs to funding,” Mbalula said. – Sapa

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