Czech sports associations are facing a newer, tougher opponent these days: cash flow.

Just as a great year of sports is set to begin — with Czech athletes going for gold at the Winter Olympics in Turin, Italy, in February, and at next summer's soccer World Cup — sports associations are finding themselves short on money.

Estimates suggest that sporting associations within the Czech Physical Training Association (ČSTV), the most important athletic umbrella organization in the country, will have come up short on their projected annual revenues of 1.9 billion Kč ($77 million) by about 250 million Kč in 2005.

The main culprit? The Sazka lottery company.

ČSTV is a shareholder in Sazka, and the company is required to pay out 20 percent of its annual profits in the form of dividends to shareholders. That amounts to a fixed income for many shareholders. But the company this year is struggling to meet its financial obligations largely because it is saddled with debt incurred from the building of its new sports stadium in Prague 8–Libeň.

By the end of December, sports associations were supposed to receive 695 million Kč from Sazka. But to date, Sazka has paid out only some 400 million Kč.

"There's an obvious delay in payments. It's likely that the full amount of financial subsidies from Sazka will be paid out no earlier than next spring," said ČSTV Economic Director Pavel Pávek.

Sazka insists it will meet its financial obligations. Others aren't so sure, and say sporting associations should brace for a 20 percent reduction in their budgets.

"It's an open question of whether we'll ever see the full amount of money," said Matěj Urban, general secretary of the Czech Ice Hockey Association. "We'll need to start saving and look for money elsewhere."

This hiccup in cash flow seems most likely to affect smaller-scale sports. Some sporting associations have already begun reducing expenses: The Czech Volleyball Union did not register the national team for the European League competition next year in order to save money on traveling and accommodation costs. The Czech Canoeing Association also had to significantly reduce its budget for 2006.

"We had to reduce expenditures, but we did not want to harm juniors," said Jan Žižka, the Volleyball Union's general secretary.

Costly arena

Oldřich Dajbych, chairman of the Czech Skiing Union's supervisory board, said Sazka is behind on its payments because it is burdened with a 8 billion Kč debt related to the construction of the 17,500-seat Sazka Arena, which opened in 2004.

Also, Dajbych said, a change to the value-added tax (VAT) law that took place in early 2005 — which imposed an unexpected 200 million–250 million Kč duty on Sazka — also plays a role.

Sazka spokesman Zdeněk Zikmund denied that the arena was behind the problems. He said the delay should be fully attributed to the VAT duty.

Such large-scale sports as soccer and ice hockey are in better shape to weather any financial storm, since they can rely on independent cash flow from their own sponsors, said Jaroslav Vacek, the Czech Soccer Association's vice chairman for marketing.

"[Smaller sports] might have it more difficult, however, to get some independent sponsors," Vacek said.

The Czech soccer team's advancement to the World Cup is expected to earn Czech soccer at least 250 million Kč in prize money from the Fédération Internationale de Football Association (FIFA), the world governing body of the game.

Olympic athletes can also count on extra money as the Czech Olympic Committee created a pool of sponsors that contributes some 200 million Kč per year.

No mercy from the state

Sazka failed to provide full subsidies to ČSTV despite experiencing a desired turnaround in profits this year. In the third quarter, Sazka raised net profits by 100 million Kč, to 1.28 billion Kč.

The company seemed to be recovering from 2004, when it reported a 9 percent decrease in revenues from the 9.3 billion Kč earned in 2003 and also saw its net profit decreased by 100 million Kč.

Sazka is not out of the woods yet, however. The 5.5 billion Kč it took out in 2003 to fund the construction of Sazka Arena will saddle the company with an annual payment of 8 billion Kč until 2013.

In order to fulfil its financial obligations, Sazka is considering selling land in Libeň. The sale of 10–12 hectares (25–30 acres) of land should earn Sazka at least 500 million Kč.

Sazka's financial strains prompted ČSTV to seek more money from the state budget, from which ČSTV's management called for an extraordinary 170 million Kč subsidy.