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EghtesadOnline: The government is to sell a part of its shares in Tehran's two main football clubs, Esteghlal and Persepolis, in an initial public offering slated for next February, head of the Iran Privatization Organization aid.

“Offering shares of the two clubs in the stock market is the most viable path to privatizing them, as it would raise the transparency of their activities and by extension the quality of their management," Hossein Qorbanzadeh was quoted as saying by ILNA. 

Referring to the large fan base of the top soccer teams, he said, "We had to ensure that the two will become profitable, before offering their shares in the bourse.”

Not all the shares of the government will be offered, he said. "We proposed offering 20% of the shares in subscription sales…the money is to be paid to the clubs to help them solve their financial problems.” 

The move comes after recent media reports on the possibility of banning the two clubs from the AFC Champions League 2022 because they failed to meet the requirements for obtaining the entry licenses.

In May 2020, it was announced that shares of Iran’s two biggest soccer team will be offered in Iran Fara Bourse's Base Market after the process of registration and recapitalization of the clubs is over. Shares of companies unable to address the main regulatory requirements, such as financial transparency, can be traded only in the base market.

As per the plan, 50% of the shares were supposed to be sold to companies with more than 10,000 shareholders and the rest to cooperatives.

More than a decade ago, when the Asian Football Confederation insisted on privatization of professional football clubs, state-owned clubs were no more acceptable and deadlines were set for transfer of proprietorship.

Following the AFC ruling, several scenarios were considered for the two clubs, including auctions. Efforts were made in the past to privatize Esteghlal and Persepolis, but to no avail. The baton has been passed on from one government in Tehran to another. 

Accumulated debts of the clubs and their ambiguous financial statements are seen as the main hurdle to privatization. According to Qorbanzadeh the latest financial statements of the two clubs show that accumulated debts of Esteghlal and Persepolis at 2,000 billion rials ($6.6 million) and 1,500 billion rials ($5 million), respectively. 

Esteghlal (the Blues) had a private owner before the 1979 Islamic Revolution, but the club was later put under the control of the then Physical Education Organization (now Sports Ministry). Persepolis (the Reds) had a similar fate. 

 

Persepolis Esteghlal