ICELANDIC FOOTBALL AND THE CREDIT-CRUNCH: THE GOVERNMENT'S VIEW

During the course of researching this series, Pat's Football Blog put forward several questions to the Icelandic government to ascertain their thoughts on the financial situation in Icelandic football, and also in Icelandic sport and society in general; many of which were kindly answered by Óskar Þór Ármannsson, adviser to the Department of Culture in the Ministry of Education, Science and Culture (henceforth referred to here as the MESC), in January and March of this year.


PFB: First of all, I would like to know how the current government views the current financial situation in Iceland, not only in general, but also in a sporting sense and, more to the point, in the local football scene. 

ÓÞÁ: The financial situation in Iceland is still sensitive but is moving in the right direction. The debts are still severe but the state Budget has a minimal deficit in 2013 compared with 2009. The sports also had to put up with some budget cuts from the state’s support. The effects of the crisis on local football are mainly through lower contributions from sponsors. In many cases, not only in football, the clubs lost a big part of their sponsors during the years between 2008-2012. The situation is getting better but it is still difficult.

PFB: Which sectors of Icelandic society have, in your opinion, been the worst-hit by the credit-crisis?

ÓÞÁ: It is difficult to compare how the crisis hit different sectors and it is also different as to how much sectors had to cut down their budgets..[The health-care system in Iceland has suffered because of budget-cuts.]..There are discussions about how severely this has affected the healthcare system. The municipalities are having difficulities now and they are cutting their budgets in general. That affects the schoolsystem but the Municipalities drive the elementary schools and the kindergartens.

PFB: How badly affected has sport been in comparison?

ÓÞÁ: The sport sector has been cut much more percentage-wise than all other sectors but seems to be able to adjust better than many other sectors. Other sectors covered in the state budget receive an inflation upgrade while the sport sector doesn't. This means in comparison that the sport sector had to deal with about 30% more budget-cuts than other sectors. The sport sector also had to deal with severely decreasing support from both companies and households at the same time that the financing of international competition costs increased up to 50% because of the fall of the Icelandic Currency (Króna/ÍSK).

PFB: Does the Icelandic government usually assist football in any way, financially or otherwise? Has the current government done so since it took office, or has it offered any tax incentives (for example) to clubs?

ÓÞÁ: The only direct support from the state to football is through contracts with the National Olympic and Sports Association.

PFB: What is the MESC's attitude towards sport in comparison to the other sectors under its administration, namely education and culture?  

ÓÞÁ: The sports are in comparison to other sectors different from the administration point of view. The sport sector is organised from through non-governmental organisations, namely the National Olympic and Sports Association, and the federations for individual sports and finally district federations. The state co-operates with the sports sector on that basis. The Ministry has more direct responsibility towards the education sector and some other parts of the cultural sector. A general legislation on sports is in place as the basis for this cooperation of the state and the non-governmental organisations. 

PFB: How did successive Icelandic governments help fund sport in Iceland before the credit-crisis? 

ÓÞÁ: With support to the National Olympic and Sports Association and its Federations and related projects. That has not changed as a result of the crisis, but there have been budget-cuts for this support from 2008-2012. In the budget 2013 there is again a slight increase of the budget to the sports sector. 

PFB: Do you have any figures for government expenditure with regard to sport (funding the Icelandic National Olympic and Sports Association) for the period between, say, 2007 and 2013 - to act as a comparison between before, during and after the worst of the credit-crisis - which you can make public?

ÓÞÁ: The [state's finances] are public so everyone can see who are getting funds from the State budget. In this table [see below], funding to anti-doping work and to other sport organisations are not included.


Contributions from the Icelandic State Budget towards sport in Iceland (totals in millions of ÍSK)

	2007	2008	2009	2010	2011	2012	2013
Icelandic National Olympic and Sports Association	122.5	162.9	177.9	160.5	159.1	156.1	173.7
Sports Clubs Travel Fund	30	59	60	57	54.1	64.7	70
Elite Sports Fund	30	30	30	25.5	24.7	34.7	55

PFB: Was the Icelandic government at the time of the credit-crisis able to fund sport after the crisis, and if so, did football receive any financial assistance?  

ÓÞÁ: The government has funded the sports before and during the crisis in the same way as before, but had to cut the support considerably. Football receives support from the State budget like other individual sports through the government’s contracts with the National Olympic and Sports Association.  

PFB: How many clubs in Iceland were affected by the credit-crisis at the time and since? I understand that there were some sort of "confidentiality agreements" in force between some clubs and their sponsors. What does this mean - that clubs are not allowed to mention (to anybody other than the tax authorities and, I would think, the KSÍ) who their sponsors were/are or how much they actually received in sponsorship-money?  

ÓÞÁ: The Ministry has not such information.

PFB: Which sports were the worst-affected in Iceland after the credit-crisis?

ÓÞÁ: Sport in general was affected. As stated previously, the State had to cut its support. The same also applies to the support that companies and businesses provided to sport, this decreased considerably – almost crashed – so the sports which relied the most on support from sponsors, such as football clubs, were most severely affected.

PFB: Which sports were less badly affected?

ÓÞÁ: The Federation for Disabled Athletes gets special funds from the State Budget and also the Icelandic Glima Federation which presents Icelandic Wrestling (old traditional sport in Iceland).

PFB: Does the KSÍ receive (and has it ever received) any financial help from the Icelandic government?  

ÓÞÁ: Yes, as stated before, KSÍ has received such financial help through the government’s contracts with the National Olympic and Sports Association, which distributes the funds to the sports federations. In the case of KSÍ, this support is only a small part of their total annual budget while it secures the basis for the work of some of the other sport federations. KSÍ also receives support from the National Olympic and Sports Association's Elite Sports Fund, which is also funded by the State.   

PFB: Finally, how does the government see the future of sport - especially football - in Iceland?

ÓÞÁ: The state is working on better funding in the sports sector in general. A new national policy for sports has been adopted by the government and the Ministry is working on its progress. This will also affect football.

PFB: To finish, could you tell me a little more about this new "national policy for sports?" and how it will affect football? 

ÓÞÁ: If we will be able to strengthen the support to the Federations and the Sports Clubs Travel Fund and the Elite Sports Fund as stated in the Policy, then football will also benefit from that. Football is, on the other hand, much better funded, with the support from UEFA and FIFA, [than] other sports. So, state support does not count as much [for football] as for other sports, but it will have some effect financially.
---------------------------------------------------------------------------------------------------------------------------------
AUTHOR'S NOTE: Many sincere and grateful thanks to Óskar Þór Ármannsson for taking the time to answer the questions put to him. A previous attempt to contact the MESC was made last year, which came to naught; thanks also to Eyjólfur Eyfells, a former intern at the Icelandic Embassy in London, for his attempts to provide assistance.

Next up, in the fourth and final part of this series, is a brief statistical overview.

Link to Part 1:  http://patmcguinness.blogspot.nl/2013/04/icelandic-football-and-credit-crunch.html
Link to Part 2:  http://patmcguinness.blogspot.nl/2013/04/icelandic-football-and-credit-crunch_9851.html
Link to Part 4:  http://patmcguinness.blogspot.nl/2013/04/icelandic-football-and-credit-crunch_1163.html