Slavia's fortunes turn for the worse

It's a quick fall from being a soccer powerhouse to cellar dweller. Slavia Praha is now 23 points behind the Gambrinus liga leaders, Viktoria Plzeň, after only 12 games, sitting in third-to-last place.

Slavia dominated the Gambrinus liga until last season but has met unexpected struggles on the pitch this year. Still, there are even more worrisome things for the team. The traditional power that boasts 17 Czech league titles - the most recent in 2009 - is on the verge of bankruptcy.

The team has been on alert since July after a London-based court decided that the Prague club must repay its 112 million Kč debt with the English National Investment Company (ENIC), the club's previous majority owner. ENIC wants Slavia to settle the debt through a single payment and without delay. However, the cash-strapped club wants to agree on a payment calendar and to pay off the debt over a longer time. Should ENIC insist on an immediate payment, Slavia could file for bankruptcy, enabling the club to postpone debt payments.

Slavia Director Miroslav Platil told daily Hospodářské noviny that filing for bankruptcy is a real prospect, because ENIC will likely insist on immediate payment.

"Should this happen, I'll call a general meeting and ask shareholders to deal with the issue," Platil said. "And, if they fail to find a solution, I'll have to file for bankruptcy."

In the past, ENIC helped Slavia boost its equity by giving loans to the club they owned. Now, the English company wants the money back, and Slavia does not have it. Two years ago, the soccer organization paid the English firm about 40 million Kč toward its debt, thanks to appearance money for qualifying to the financially lucrative Champions League. But Slavia has been struggling on the pitch, and the organization's income is insufficient.

In order to secure cash for the 400 million Kč seasonal budget, Slavia had to sell some of its top players prior to this season. The most expensive deal featured defender Marek Suchý leaving for Russia's CSKA Moscow for 90 million Kč.

Although Slavia still has money to keep the organization running, its ownership structure has been unclear ever since ENIC gave up its majority stake in 2006. Later, Slavia board members Petr Doležal and Tomáš Rosen publicly admitted they owned 61 percent of the club. Doležal left the club last season, and he and Rosen now say their shares were transferred to an unspecified firm.

"I've got no idea how the current club owners deal with the debt. Neither I nor Rosen own the club any more," Doležal said.

A tight budget and opaque ownership structure put Slavia's future in jeopardy. Should the shareholders fail to find sources for repaying the debt and the club files for bankruptcy, an administrator appointed by a court would take over the club's management. Slavia would then be unable to sell assets, including players, at its own volition. On the other hand, the administrator would be entitled to sell the club's assets, including players, in order to clear Slavia's debts - possibly further detracting from the product on the field.

Another solution could be to restructure the organization and sell it to new owners, lawyers said. Platil admitted that some potential investors already expressed interest in taking over the team. However, he refused to elaborate on details.

"All I can say at the moment is that would-be investors called to express interest," Platil said. "However, no particular negotiations have yet taken place."

František Bouc can be reached at
fbouc@praguepost.com