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Finance: why OM will not file for bankruptcy – Around OM

Health crisis, abysmal deficit, departure of the sports director, uncertainty about AVB, controversy over wages, rumor of sale … nothing is spared OM in this spring 2020. And to top it all, we even mention a risk of bankruptcy, just that. A term that is cold in the back, since it means that the Marseille club would no longer be able to pay and should therefore close shop. This catastrophic scenario is Mediapart who unveiled it Thursday evening by publishing a survey dealing in particular with the loan guaranteed by the state, voted by the LFP, of 224.5 million euros to fill the shortfall of clubs of L1 and L2 vis-à-vis TV rights. A bank loan deemed dangerous according to the website given the uncertainty around the financial capacity of Mediapro to keep its commitments, while the future broadcaster is supposed to pay more than a billion a year (the LFP has also filed a complaint against the media on the subject of the loan). Mediapart considers, moreover, that four L1 clubs show a net deficit of € 541 million as of June 30, 2020, and that OM “could” have the largest share with a loss of € 206.3 million and, therefore, potential termination of payment. Basically, that OM risks outright bankruptcy.

“The DNCG ensures that McCourt has sufficient financial standing to be a guarantor. There will therefore be no bankruptcy for OM”

So how do you interpret this information? Even if there is no question of questioning the seriousness of the investigations of Mediapart, there are still things to put in perspective, as explained in Phocaean sports economist Vincent Chaudel, from Sport-Business Observatory : “There are the figures on the one hand, and on the other, the interpretation that Mediapart makes of them. There is in them the anchored conviction that football is necessarily unhealthy, and everything else stems from this We are talking about bankruptcy for OM, but when we are bankrupt, it means that we are no longer able to pay and that we file for bankruptcy. OM, which has a big deficit, but whose shareholder is able to make up for it. This is the advantage of having a DNCG in football, unlike the rest of the companies. It ensures that club owners are able to pay, and so are OM. There is a certain deficit to be filled, and the club must sell before June 30 to remedy it. If not, the DNCG can then sanction by framing the wage bill or by prohibiting recruitment, for example. But, the DNCG was invented in the 90s so that there are no more bankruptcy filings, and it is a success. s’ ensures that Frank McCourt has sufficient financial standing to stand surety. There will therefore be no bankruptcy for OM. Of course, one could imagine that McCourt no longer wanted to assume, but in this extreme case, he would sell the club to someone who would be able to do it “.

The catastrophic scenario would be that Mediapro does not assume, but that would concern all the clubs

That said, it would be silly to ignore the fact that French football and its clubs are in danger, if only because of the cessation of the championships ten days before the end. The losses caused by the shortfall in TV rights are enormous, hence the State guaranteed loan contracted by the LFP. A loan whose solidity is called into question by Mediapart who expresses doubts about the reliability of the future broadcaster Mediapro and its ability to inject more than a billion euros next season. “What Mediapart is right about, confirms Vincent Chaudelis that French football risks very big if Mediapro is not there. It would be an apocalypse scenario. This would mean that we would have to leave with Canal +, BeIN or RMC, and that they would obviously revise the figures downwards. This would cause a terrible drop in competitiveness for French clubs and an abysmal gap with the other big European championships. Unable to strengthen, the French clubs would tumble to the UEFA index and our football would be very difficult to recover. This is the scenario chosen by Mediapart, but again, we are still far from it. For me, the danger comes rather from the too hasty government decision to stop the championships, while the others will finish them. This is where the financial gap will widen with European competitors “. In summary, OM is in financial difficulty and still has a colossal deficit this season, French football is obviously weakened by the crisis, but talking about the risk of bankruptcy for OM is irrelevant.

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