Umeå staves off financial iceberg

The most successful team in Swedish sports almost declared bankruptcy as a financial crisis rocked Umeå IK. 

  • A pair of Umeå supporters beat the drums during UIK's 3-1 win over Stattena Oct. 18 in Helsingborg. The team has been beating its owns drums, trying to raise money to stave off bankruptcy. Bildbyran photo/Lennart Mansson

  • by Chipp Reid

  • What was once arguably the greatest success in women’s sports is on the verge of extinction as soccer power Umeå IK battles an economic crisis that could send the club the way of the dinosaurs.
    The reigning Swedish champions announced Oct. 5 it needed 300,000 Swedish kronor—about $50,000—to avert dropping into bankruptcy. A fund-raising drive in the city and a last-minute sponsorship pledge allowed the team to meet its tax payments but the problems remain.
    “Yes, we survived in the short term, but the future remains a question mark,” said UIK economic director Raja Thorén. “The team is going to lose money again this year, and the loss will be in the millions.”
    Umeå, despite enjoying more success in the past 10 years than any other Swedish team in any sport, has hemorrhaged money. The club made a women’s sport record 9 million euros ($12 million) in 2006 but still lost more than $2.2 million. In 2008, the club made nearly $15 million but its losses rose to slightly more than $3 million.
    “It is always easy to sit back and use hindsight to say what we should have done,” said UIK managing director Britta Åkerlund. “But, it is clear that I regret that were not tougher when it came to saving money.”
    The global recession hit Umeå especially hard. Revenue from sponsors declined by 45 percent this year alone. However, the biggest financial problem the club faced was living up to its reputation of being the home of the best player in the world.
    Umeå rightfully claimed that title for three years when Marta da Silva, the Brazilian women’s soccer superstar, toiled for the team, leading it to three straight Damallsvenskan titles and a European crown. UIK, however, paid dearly for the Brazilian. After signing her in 2005 for a relatively small sum, Marta exploded on the Swedish soccer scene. Crowds flocked to see the player the media dubbed the “female Pelé.” To keep her, UIK broke the bank, shelling out the unheard of salary of 100,000 kronor ($15,000) a month to the Brazilian.
    At first, Umeå officials said much of that money came directly from sponsors, all eager to use the Brazilian star to sell products. It didn’t. Umeå was responsible for much of Marta’s salary, and the efforts to pay the Brazilian while honoring the club’s other commitments quickly began to erode a financial base former director Roland Arnqvist painstakingly built during his decade running the club.
    “I don’t know how much of our trouble can be traced back to Marta, but that clearly played a role,” Åkerlund said.
    As sponsorship money began to dry up late in 2008, it also became clear Marta planned to leave the snow of Sweden for the Southern California sun. The Brazilian agreed to terms with the Los Angeles Sol of the fledgling Women’s Professional Soccer in the U.S. UIK all but begged the Brazilian to sign a one-year deal with the club while she negotiated with WPS so the club could command a hefty transfer fee. Marta refused and left the team in March.
    When she left, even more sponsors bolted from the club, believing her departure coupled with other key player losses would change UIK from champions to also-rans. UIK defied those, holding onto first place for much of the season. The financial strain, however, hovered over the team. The club stopped paying its players and staff in September, making everyone wonder how long the team could remain afloat.

  • Strain transfers to the field
    The strain of the crisis finally took its toll in the beginning of October when Umeå lost 3-1 to Hammarby, a team it has dominated for a decade. Team captain Karolina Westberg admitted the players’ minds were not on the game.
    “I think everyone is very worried about what is happening,” Westberg said. “We’re football players so we should always focus on football, but we’re also people and it’s natural to worry.”
    Just days after the loss, UIK announced it was broke and asked for help from the community. Superstar Hanna Ljungberg, who retired as a player in September but stayed on as an assistant coach, found herself in the office day and night, frantically making phone calls.
    “We received a huge response,” Ljungberg said. ”There have been many visits and many phone calls. It is really encouraging that there is such a commitment to help us.”
    Still, it was a quick transition for Ljungberg, who found herself running the day-to-day operations of the club while Åkerlund concentrated on raising money.
    “I'm trying to relieve her so she can spend all the time she needs for the economic situation,” Ljungberg said.
    Ljungberg was one of the players that helped Umeå rise to the top of Swedish and international women’s football. She was also the last of a group of remarkable athletes to leave the field as a player. Umeå lost more than just the most prolific goal scorer in Swedish soccer history. Ljungberg, along with former teammates Malin Moström, Anna Sjöström, Frida Östberg and Hanna Marklund were all articulate and passionate proponents of the women’s game. They were also extremely marketable and attracted sponsors. As those players retired from playing, it created doubts among sponsors as to whether UIK could continue to dominate the women’s game. Although Marta alleviated those doubts for a brief period of time, the doubts remained.
    At the same time, the cost of simply doing business began to rise. The creation of a women’s version of the UEFA Champion League brought on greatly increased travel as did training camps in Cyprus, Spain and Portugal. Although necessary expenses, they added to the club’s financial burden. The team’s management claimed it had the finances under control. Åkerlund said the picture they painted was somewhat too optimistic.

  • A long way back
    “We knew we might have some hard times, but we also thought everything was under control,” Åkerlund said. “We thought the measures we took would be OK.”
    Thorén, the economic director, said the club has assets, but even those won’t prevent another huge financial loss.
    “We have money in the bank, so we can absorb them once more, but this simply cannot continue,” Thorén said.
    And, the club isn’t out of the financial woods yet. Much of the financial infusion the team received from its October appeal came from The Umeå Company AB, a local conglomerate. Umeå Company CEO Michael Öhlund said the community’s support hinged on one thing.
    “It must remain an elite team. It must stay in the Damallsvenskan,” he said. “It also must make some changes in how it does its accounting. It must be more transparent, but the most important thing is that the team wins.”
    Pressure to win is nothing new at Umeå. The financial pressure that remains—Umeå needs 2 million kronor to meet all of its remaining financial commitments—still has everyone guessing.
    “I didn’t know if I would even have a job this week. Now I know,” Åkerlund said. “I was always prepared that if we went down in bankruptcy, I would be the last one on the ship and I would go down with it. Now, it looks like that may not happen but we still have a lot to do.”
    Umeå has won its last two matches since the financial crisis came to a head Oct. 5 ad is currently in second place, one point behind league-leaders Linköping. UIK lost to Linköping for the second straight year in the final of the Swedish Cup on Oct. 13. The two teams meet Oct. 31 in the second-to-last game of the season.
    “We certainly still have a good chance at winning the league,” Ljungberg said. “We just have to focus and concentrate on football.”