The nightmare continues for the supporters of the Girondins de Bordeaux. After sporting relegation to Ligue 2, the club risks demotion, administrative this time, to National 1 (the equivalent of the third division). The National Management Control Directorate (DNCG) formalized the sanction on Tuesday, June 14. The club immediately appealed, enough to give itself time to meet the requirements of the financial policeman of French football and avoid sinking.
During a two-hour hearing on Tuesday, Girondins de Bordeaux owner Gérard Lopez “presented the guarantee of the re-engagement of the majority shareholder in the amount of 10 million euros, an agreement with the holders of the club’s debt, as well as offers to sell some players, the cumulative amount of which exceeds the objectives fixed by the committee, the club said in a statement. But while the transfer window has only just begun, no player sale has yet been able to materialize. Above all, according to the press release, the DNCG sanctioned “an agreement with the creditors deemed insufficient” and “the absence of abandonment by the lenders of profit-sharing on the sale of players in favor of the club”a point which concerns in particular the transfer of Aurélien Tchouaméni to Real Madrid.
“It’s a good lesson for French football. This situation shows that an American-style assembly does not work in the extremely unstable model that is Ligue 1. In franchises in the United States, there is no no descent system, it makes the investment less risky”, analyzes Michael Tapiro, founder of the Sports Management School.
For several years, the financial situation of the Girondins de Bordeaux has continued to deteriorate, marked by a structural deficit and heavy debts. Already last summer, Gerard Lopez saved the club from administrative relegation to Ligue 2 by buying the Bordeaux institution. This time, the financial policeman of football was not convinced by the Spanish-Luxembourg businessman. “The job of the DNCG is to ensure that the owner has the backs strong enough to last the entire season, to pay his expenses, the salaries… But the situation of Bordeaux is very worrying in terms of cash flow”, summarizes Jean-François Brocard, sports economist at the Center for Sports Law and Economics (CDES).
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Between now and the appeal hearing, scheduled for the end of June or the beginning of July, if he wants to keep his club in Ligue 2, Gérard Lopez will have to prove the solidity of his project, in particular by finding additional funds. Several options are available to him: invest his personal money, renegotiate the maturity of debts with the club’s creditors, convince them to hand over money, find or new investors, or even sell players. “The problem is that now everyone knows the situation of Bordeaux so the clubs will want to buy at a knockdown price”, observes Michael Tapiro.
“Gérard Lopez has one month to find new money because, a priori, new loans would only push back the deadline”, Judge Jean-Francois Brocard. Creditors could reinvest and hope to be reimbursed in the longer term, or on the contrary withdraw and lose their investment. According to the economist, the hypothesis of a takeover is unlikely: “Already last year, few candidates presented themselves. And there, the situation is worse.” Conversely, Michael Tapiro believes that the “intangible value of the Bordeaux brand” and the club’s degraded price could attract new investors. “Buying a Ligue 2 club can be a good operation because with few means you can do something with it”, continues Michael Tapiro, citing the effectiveness of the “frugal model” of Toulouse FC.
If no agreement is reached, the club risks filing for bankruptcy. Relegation to National 1 would indeed mean a drastic drop in income, which would make the institution insolvent. “It would not be economically sustainable. The club could no longer do business. It would lose the manna of the investment fund CVC Capital Partners and the TV rights would be much lower, while the charges would remain enormous because we cannot reduce them all at once”, listing Jean-Francois Brocard. If Bordeaux had remained in Ligue 1, the club would have received 33 million euros in CVC Capital Partners, new shareholder of the commercial subsidiary of French football, against 16.5 million euros in Ligue 2, but nothing at the lower level. In addition, the manna of the ticket office would also evaporate greatly in a city where its rugby team shines.
In the event of bankruptcy before the commercial court, two procedures are possible: on the one hand, receivership, which would freeze the debts over a given period; on the other hand, the judicial liquidation, which would sign the end of life of the club, before a possible recovery. “If an investor in love with the Girondins was interested, I would advise him to wait for the bankruptcy filing. It would cost him much less,” analyzes the CDES economist, who is also a supporter of the club.
In the event of a liquidation, the Girondins de Bordeaux would find themselves relegated to National 3 (the fifth division). Strasbourg had experienced such a scenario in 2011: then in National, the Alsatian club had been administratively demoted to CFA (now called National 2), before being liquidated and resuming in CFA 2 (National 3). Six seasons later, Strasbourg returned to Ligue 1.