Tuesday, December 5, 2023

The ghost of the cartel looms over SM League – a panic button below


The SM League is being pulled in different directions.

The SM League only had time for a short time to enjoy the positive publicity brought by the resumption of the qualifiers, before the series resumed again.

Immediately after the press conference in October, it became clear that the mere decision to reinstate league qualifiers would not satisfy even all the clubs in the league.

The biggest contradiction lies here: the bigger teams of the SM League would like to reduce the number of teams and bring in the most dynamic teams from larger economic regions, while the smaller clubs fear that their existence will be jeopardized if the series system is renewed. real terms. Big clubs are not satisfied with merely returning qualifications.

The bigger clubs are concerned that there are not enough quality SM League players for the 15 or 16 clubs. The clubs also believe that with the reduced number of teams, the SM League will be more competitive and more interesting in the eyes of the public.

Big clubs have also grown tired of sharing common income among so many participants.

According to IS information, SM League decision makers continue to discuss the future series model behind the scenes, and the A and B series models, which have been very visible in public, are on the table. The terms and model have not yet been agreed upon, but efforts are now being made to pull the SM League in different directions.

Smaller clubs fear that if the league were divided into A and B leagues the larger clubs would have no interest in the common good, but would instead begin to develop an A league together.

There is a lot of discussion about SM League in recent times. The situation has now escalated to such an extent that Tappara contacted SM League with a letter on Friday, in which, according to Hameen Sanomat, SM League needs to take action regarding the league share and license terms.

Last spring, Tappara celebrated as champions again.

Last spring, Tappara celebrated as champions again. Photo: Tony Repo/Amulehti

The formula for calculating the league share price is defined in SM League’s shareholders’ agreement, and currently, according to SM League’s calculation formula, the price is approximately 3.6 million euros. Many different parties have contemplated large sums of money.

When the price has reached such a high level, the question has arisen whether SM League has fallen into abuse of a dominant market position, or whether SM League’s “closed circuit” also meets the hallmarks of a cartel.

This concern was raised within the league earlier this year, when Kiko-Espoo’s letter shocked league staff. Keikko-Espoo was prepared to challenge the decision taken by SM League in the summer at the Finnish Competition and Consumer Authority that the series would not receive new license applications for the 2024–2025 season.

SM League reversed its decision.

In the worst case scenario, the league may have to pay a penalty fee, which would indeed be significant in terms of magnitude.

The wheels are turning faster now. Some league clubs therefore hope that careful and major changes to the series system will be made as soon as possible, because according to the original plan, the finals were already to take place in the spring. The SM League’s October decision to reinstate qualifiers was merely a reaction measure.

On the other hand, at the same time, the league clubs are planning to review the clauses written in the shareholder agreement and the league license terms. The ghost of a cartel looms in the background. Veteran sports law expert Ollie Rouste had already hinted that it should be possible to play SM League even without buying shares.

– The Finnish Competition Authority may well consider that when league shares are so expensive, it is necessary to be able to offer the league product on a license basis even without being a shareholder, Rauste said.

According to IS information, SM-Liga has asked an external party to evaluate the market value of league shares. According to league leaders, the current price, which is between 3.6 and 3.8 million euros, has been calculated using the same formula as the 1.8 million euro sum paid by Zukuri, Sport and Kuku at the time.

According to the information, the new player will have to pay the league share immediately. This arrangement is different from the previous riser mentioned above. Jukurit, Sport and Kooku received a five-year payment period.

Kiko-Espoo applies for the SM League.

Kiko-Espoo applies for the SM League. Photo: Laurie Heino/Lehtikuva

According to the information, if the new club was promoted to the SM League through the qualifiers, this amount would be transferred directly from the emerging team to the team assigned to Mestis as “cushion money”.

According to the information, the SM League is also committed to redeeming the league shares at the subscription price in the event that a club wishes to voluntarily leave the SM League. So, for example, if Saipa, struggling with financial and sporting difficulties, decided to give up its place in the league, the league would redeem the stake at a price of approximately 3.6 million euros. Of course, the price of a share may rise or fall when the subscription price changes.

This arrangement also reduces the risk of risers. Although league participation is expensive now, the investment can be recouped if the league is demoted or drops out of the league.

In case of bankruptcy, instead, the mathematical value of the share will be observed, which is significantly lower than the market value. For example, the league paid only 295,000 euros for the shares of the Blues bankruptcy estate.

When you take into account that SM League’s president, Heikki Hiltunen, is also the chairman and second largest owner of Vasan Sport, SM League’s share arrangement takes on questionable characteristics. Therefore, in theory, Hiltusen Sport could give up league status at any time and receive 3.6 million euros from SM League. This would be a good return on the $1.8 million investment that Sport paid for the stock at the time.

Jokerit announced that the club does not intend to apply for a place in the SM League in the 2025–2026 season under the current circumstances. Touto and Kiko-Espoo, which have submitted license applications for next season, are still waiting for more detailed information about the league share.

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