Privatization of soccer clubs in Iran

This week, Iran’s minister of sports and youth, Mahmoud Goudarzi, appointed Amir Reza Khadem, former wrestling world champion and member of the Tehran City Council as the ministry’s special representative in the process of privatization of Tehran’s most prestigious soccer clubs, Persepolis and Esteghlal. This appointment was welcomed by leading stakeholders as a positive step in resolving a lasting issue in the country’s soccer scene.

Incidentally, the plan to privatize these two popular soccer clubs has been stalled since 2005. In fact, these two entities were put on the privatization list in accordance with the provisions of the fourth five-year development plan. Mohammad Khatami’s government then took the first step and authorized the Iran Privatization Organization (IPO) to prepare the two clubs for privatization. However, after the change of government in 2005, the plan was put on hold indefinitely and without any clear explanation.

Since 2009, various attempts to present the clubs for privatization faced administrative and legal challenges, mainly due to the fact that they were both major loss-making entities. In fact, none of these clubs could survive without massive financial support from the government. Transparent and audited accounts and financial reports are a prerequisite for the initial price offering of any entity that is introduced into the Tehran Stock Exchange, hence making it impossible for the IPO to technically start the process of privatization. However, the fact that these two clubs were not profitable had more to do with other inner-government financial practices, especially the nonpayment of broadcasting rights to sports clubs by the Iranian Broadcasting Company.
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