Switzerland’s oldest football club, the 131-year old St. Gallen, has been saved from the brink of bankruptcy after six businesmen combined to invest 10 million Swiss francs (about the same amount in dollars) in the club. The club faced going out of business and automatic demotion from the top division after the city council refused to contribute to a bailout last month. Five banks waived debts of nearly 5 million francs as part of the rescue.
Switzerland’s oldest football club, the 131-year old St. Gallen, has been saved from the brink of bankruptcy after six businesmen combined to invest 10 million Swiss francs (about the same amount in dollars) in the club. The club faced going out of business and automatic demotion from the top division after the city council refused to contribute to a bailout last month. Five banks waived debts of nearly 5 million francs as part of the rescue.
But the club is not out of trouble yet as it still needs to find another 5 million Swiss francs to pay back debt and prove to the Swiss Football League that it has a viable business restructuring plan. Otherwise it could still be sent to the lower divisions. Canton St. Gallen has been asked to provide SFr 4 million and will make a decision in 10 days’ time.
St. Gallen’s financial problems grew after it opened a new stadium two years ago. The 20,000-seat AFG Arena cost SFr340 million with an additional SFr70 million spent on improving transport infrastructure. The club was relegated to the second tier just as the stadium opened in 2008 and poor results from the stadium’s VIP section and business events service soon brought the stadium into the red, dragging down the club’s finances with it.
Last year the famous Grasshoppers Zurich club faced a similar situation. They were bailed out by the private sector, but also had to sell most of their top players. Their financial situation is still precarious, but at least they avoided the fate of FC Lausanne and FC Servette who were thrown out of the higher football leagues in Switzerland the last few years after going bust.
Television revenues in Swiss football are not substantial by the standards of the top European football countries and Swiss businessmen have been attracted to invest elsewhere, as in the case of Southampton.