A push by the Football Association of Malaysia to ensure its leading clubs become private and cease relying on state handouts was challenging enough before COVID-19 arrived. While the group remains committed to the transition, it must accept that the shift will take longer than anticipated.
The Football Association of Malaysia (FAM) has been pushing its member clubs towards privatization in a bid to end their reliance on state funds.
All of the clubs playing in Malaysia’s top two divisions except for one were funded by state government money when the FAM set a deadline of September 30, 2020, for them to begin going private. Thirteen of the 20 clubs met the deadline and were given conditional permission to compete in the 2021 season. However, COVID-19 has set the project back and it seems unlikely clubs will move to being fully self-funded just yet.
Why does the FAM want clubs to go private?
The FAM wants its top clubs to emulate others in the region, particularly Thailand, whose teams have been privately run since 2009. “It is an amazingly difficult exercise that has to be done when we are trying to get clubs to move out of the government hand-me-down mindset to a commercial mindset,” Stuart Ramalingam, the FAM’s general secretary, told Nikkei Asia.
If run properly, a privatized club should be able to bring in more money than it receives from the state. By investing that money into coaching, player recruitment and youth development, performances should improve, generating more interest among fans and creating a better-quality product.
If clubs must fend for themselves, they will have to increase fan engagement and that could drive more interest in the domestic game and generate more revenue. These changes would in turn make clubs attractive propositions for investment from corporations or individual backers.
While Malaysians love football, many choose to follow clubs elsewhere, such as in England’s Premier League, rather than those at home. Malaysian billionaires—as well as others in Asia—such as Tony Fernandes and Vincent Tan chose to invest in clubs in England rather than those at home.
Relying on state money rather than having to generate revenues can hinder ambition and innovation, according to Alistair Edwards, technical director at Johor Darul Ta’zim, currently Malaysia’s only privatized club.
“It is extremely important to move towards a new model as it will add more professionalism,” he told Nikkei Asia. “When you have that handout mentality, it doesn’t inspire people to become better at what they do.”
What happens next for Malaysia’s football clubs?
However, without fans coming into stadia due to COVID-19 restrictions, clubs cannot pull in enough money to make going private feasible. The FAM hopes to start the 2021 season in late February but with cases of the disease in Malaysia rising again, there is no guarantee that fans will return to stadia when play resumes.
The country’s leading teams were reportedly cooperative throughout the transition process. However, if, for example, clubs fail to lay out a clear pathway towards privatization, either by forming their own company or planning for investment, they will be forced to drop into the amateur divisions. This would require restructuring the league.
Clubs have work to do if they are to attract sponsorship and financing to go it alone. The move to running independently is a significant shift in mindset. Some clubs have a reputation for not paying salaries which could drive potential investors and backers away.
Other clubs have been criticized for failing to do enough to develop young talent, including channeling funds meant for youth development into wages. Companies might struggle to see where their return on investment will come from when backing a football team or may fear receiving negative press from associating with such clubs.
However, that is not the case across the board; firms were paying as much as RM60 million (US$14.96 million) to sponsor the top two leagues in 2018 despite clubs being funded by the state. Some corporations, including Fernandes’ Air Asia, remain prepared to back the leagues despite COVID-19.
Going it alone makes sense for both clubs and state governments
In the current climate, Malaysia’s state governments have bigger priorities than running football clubs. Clubs employ hundreds of people, many of whom will have lost work since the coronavirus pandemic began. However, governments could face a backlash if the public feels that the money used to fund football could be better spent on the fight against the pandemic.
Funding for clubs could therefore be cut at any time, leaving them in a precarious situation. “This exercise is to unchain local football from governments as the plug of funding from government can be pulled at any time,” warned the FAM’s Ramalingam. Self-sufficiency would give the clubs more control and confidence about their future, particularly as fans begin to return to matches all over the world.
In general, the more independent clubs and teams are, the better. Malaysia only needs to look to their neighbors in Indonesia for an example of how things can go badly wrong. There, the national team was banned from international competitions between 2014 and 2016 after the global governing body, FIFA, ruled Indonesia’s government had interfered to an “unacceptable” level in the game’s administration.
“We need accountability, transparency and responsibility and this will attract outside investment,” Ramalingam added. COVID-19 might have stalled the FAM’s progress towards privatization and reductions in government handouts, but it is committed to seeing the job through.
It will not happen as quickly as the FAM envisaged but Malaysian football is set for its most significant change since the advent of professionalism. Its clubs will finally come into line with others in the region and elsewhere in the world, paving the way for increased competitiveness, prosperity and transparency.