Slavia FC needs financial help to retain license

Slavia Prague FC’s owners hiding behind Key Investments don’t have an agreement to repay a Kč 110 million loan to ENIC

Na trávníku bojují o udržení Slavie v první lize Lukáš Jarolím a spol. Osud legendárního pražského klubu však nemají tak úplně na kopačkách. | na serveru Lidovky.cz | aktuální zprávy Na trávníku bojují o udržení Slavie v první lize Lukáš Jarolím a spol. Osud legendárního pražského klubu však nemají tak úplně na kopačkách. | foto: © ČESKÁ POZICE, ČTKČeská pozice
Na trávníku bojují o udržení Slavie v první lize Lukáš Jarolím a spol. Osud legendárního pražského klubu však nemají tak úplně na kopačkách.

Will Slavia be playing in the top Czech football league next season? On the pitch, Prague’s oldest professional football club has seven matches left to play and, while it hasn’t been an epic season, the team looks to be safe from relegation. Nevertheless, in six weeks time the license tribunal will confirm the teams to play in the Gambrinus Extraliga next season, and an unpaid debt of Kč 110 million could spell relegation to even the third division.

Champions from Key Investments

Czech Position broke the story of Slavia Prague’s financial and legal problems back in March. Unlike the team on the pitch, which has not been exactly convincing this season, the team directing the club’s legal and financial affairs has been remarkable — unfortunately, for the wrong reasons.    

Some of the club’s owners are concealing their identity behind the dubious securities brokerage Key Investments; the basic capital of the club is enormously over-inflated, reportedly to cover potential player injury insurance costs; and several shareholders, including the Luxembourg-based ENIC Football Management, have been barred from participating in the club’s general meetings. Several on-going court cases reflect the troubled situation with the running of the club.   

Insurance? No, out-of-date offer!

Firstly, there was an infamous judicial assessment approving the raise in capital of the firm SK Slavia Praha – fotbal a.s. with nonmonetary assets in 2008, which made SK Slavia Praha – fotbal the majority owner at the expense of ENIC. The assessment written by Otto Šmída is in itself an absurdity, and the consequent entry into the commercial register of the revised level of company’s capital a reminder of the sad state of the Czech judicial system.         

So far, we have been unable to establish which bureaucrats or judges were responsible for the entry into the commercial register. “Slavia’s registration documentation is now in the High Court in Prague,” court spokeswoman Martina Lhotáková told Czech position. It is not clear why the court of higher instance requested Slavia’s registration documentation.

But it is not clear why the court of higher instance requested the registration documentation. Jan Fořt from the High Court in Prague confirmed to Czech Position that they have the documentation at their disposal, but did not want to divulge more information because this publication is not a participant in the on-going legal proceedings.            

In the previous article about the situation surrounding Slavia, Czech Position did not mention two aspects about the judicial assessment that should be known. The author of the assessment, Šmída, justifies the raise of capital on the grounds of an insurance policy which Slavia Praha – fotbal, a. s. took out with the German insurer Aon Jauch & Hübener in Hamburg. Šmída submitted the insurance contract along with the judicial assessment. A number of problems arise from this: Aon Jauch & Hübener is not an insurance company, but an insurance broker and advisor; the document submitted is not a contract, but an offer; the offer is valid until October 31, 2007.   

Nevertheless, judicial expert Šmída presented his assessment two months later on January 14, 2008. Thus it appears he based the assessment not on an agreement, but on an offer from an insurance broker which was already two months out of date. This in turn raises doubts as to whether an insurance contract existed at all. We will continue to follow the dispute over the raising of Slavia’s capital.        

ENIC demands Kč 110 million

The football teams qualified to play in the Gambrinus League in the 2011 — 2014 season submitted license applications to the Czech-Moravian Football Association (ČMFS) by April 4. It is well known that the ČMFS has minimal requirements for clubs to demonstrate financial stability: If a club has overdue debts, it must present a repayment timetable approved by the club’s creditor(s).

In November this year, SK Slavia Praha – fotbal must pay ENIC, which also has a majority stake in Tottenham Hotspur of London, Kč 110 million. As we wrote in the previous article, Slavia cannot expect to be granted a deferment.            

We don’t know the contents of Slavia’s application for its license for next season, but hardly any attention has been paid to information which appeared on Slavia’s website on April 4. Here’s what it says:    

“The media reports according to which Slavia is bound by a court ruling to pay obligations to the firm ENIC in installments are not true. No such court ruling exists, nor does any other agreement with ENIC exist. This information did not come from the club and Slavia distances itself from the reports.” The statement is in the name of the club’s general director Miroslav Platil.      

This suggests that Slavia doesn’t have a chance of fulfilling the football association’s financial requirements if the club doesn’t manage to reach an agreement with ENIC on the repayment of the Kč 110 million debt. It would be a hard and undeserved blow for hundreds for Slavia’s 100,000 or more fans if the club is barred from the top flight.