Economy, Business And Markets

Iranian Football Clubs' Botched Privatization

Iranian Football Clubs' Botched PrivatizationIranian Football Clubs' Botched Privatization

Football is one of the most popular sports in Iran and clubs hosting the teams have a large following of fervent fans.

Despite the avowed goal of privatizing state assets, the fate of two top Iranian football clubs symbolizes the gap between state declarations and actions.

In fact, recent developments laid bare the government's internal resistance to selling off its assets to the private sector or to the quasi state sector—like the 95% of companies "privatized" since the government embarked on ceding the ownership of Persepolis and Esteghlal.

The government has been saying that it wants to sell the clubs to private owners, so they can finally be managed successfully like businesses, for six years. Yet, all four "privatization" attempts have failed for various reasons.

The two Tehran-based rivals are reportedly in an abyss with no bottom, although both receive hefty state funds. They have lost money more often than not in publicized and mostly unpublicized financial scandals.

"Various people have taken over these two teams' management and spent public money without accountability. And after making their fortune, they have resigned after losing a match or two or whatever other reason," says parliament member, Seyyed Hadi Hosseini.

Whenever the Economy Ministry goes after privatizing a hot asset, despite the president being in favor of it, "the minister or his deputies or one of their subordinates put up a resistance. Of course, they do not announce that they are against privatization, but they block the attempts with professional deeds," Deputy Economy Minister Mir Ali-Ashraf Abdollah Pouri-Hosseini told Bourse Press.

"Professional deeds" implies using the internal bureaucracy of the government to block privatization attempts. Like coming up with a higher value for a company than the one previously set for the sale, or suddenly finding new debts in the company's balance sheet to scare off buyers, which has been admitted by Economy Minister Ali Tayyebnia.

The pressure on him has been high, prompting him to come at government and parliament alike.  

"Government companies have become centers of corruption and rent distribution," Tayyebnia was recently quoted as saying by IRNA. "They have worn me out for two years."

What of the two clubs? Well, after four botched sale attempts, the Cabinet ruled to keep the clubs.

"These two clubs are cultural and artistic centers, and cannot be given to the private sector," reads the Cabinet's ratification.

So the government is keeping the two clubs because it wants to promote art and culture, or it does not want the private sector to promote art and culture.

Are we missing something? Distinctions of art, culture and sports fade in the face of government bureaucracy.