Vijay Mallya’s financial mess casts shadow over Mohun Bagan and East Bengal

KOLKATA: Vijay Mallya’s financial mess has cast a shadow over two iconic football clubs of Kolkata. Among the two, I-League champion Mohun Bagan seems to be facing more problems than East Bengal.

The storied rivals on the football pitch entered into mega funding and sponsorship deals with Mallya’s UB Group towards the end of the millennium. The arrangements, with UB Group companies owning stakes in the clubs, worked mostly well, except for some minor licensing issues which were deftly dealt with. Then, Mallya’s woes came to the fore, with banks now chasing him for non-payment of loans.

While concerns were raised over the funding of UB Group’s sporting teams in the world of cricket and Formula 1 racing, the football clubs remained mostly out of the discussions.

United Breweries partnered with East Bengal in 1998 and the money it pumped in allowed the club to give itself a major facelift. Within the constitution of the club, a company was formed in 2000, called the United East Bengal Football Team Pvt Ltd, where half the stake belonged to the maker of the Kingfisher beer. The club and the company nominated five directors each to the board, Mallya became its chairman, and the club was branded Kingfisher East Bengal FC.

The arrangement is still intact, said club representatives, and they expect no fund crunch with Mallya continuing to head United Breweries.

A UB spokesperson said its plans remained unchanged for Kingfisher East Bengal. “Whatever agreement we have with the club will continue to be so,” he said.

But things aren’t that good at Mohun Bagan. One of Mallya’s private companies took a 50% stake in the club and United Spirits became its title sponsor. But since Mallya sold a majority stake in the spirits maker to Diageo, funds to the club have dried up.

With him now stepping down fully from the liquor maker, there is more uncertainty and the club is considering legal action against United Spirits. United Spirits didn’t respond to an email sent on early Friday seeking comment.

GREAT ENTHUSIASM
Mallya, it seems, was more inclined towards East Bengal. After his presence on the boards of rival clubs went against Asian Football Confederation club licensing criteria, he stepped down from Mohun Bagan in 2010 and handed over the board seat to son Sidhartha while continuing to hold chairmanship at East Bengal.

Mohun Bagan received Rs 2.75 crore a year initially from United Spirits. The amount rose to Rs 5 crore by 2013, the year a new 10-year sponsorship deal was signed. Then, Diageo took control of United Spirits.

“Funding to the club dried up completely since October 2014 in spite of United Spirit’s 10-year sponsorship agreement with Mohun Bagan, committing Rs 80 crore in instalments,” said Debashis Dutta, finance secretary at Mohun Bagan Athletic Club. “There was a settlement planned later which didn’t see the light of the day either,” he added.

While Mallya had shown great enthusiasm towards the game, his son, according to Dutta, never turned up at any of the club’s meetings. Working on an annual budget of Rs 12.5 crore, the club now depends on funds from other stakeholders with club president Swapan Sadhan Bose bailing it out in difficult situations. With its coffers dry, the club sent a legal notice to United Spirits three months ago and is now working to file a case against the company.

The green and maroon battalion is counting on its loyal fan following. The club, which won the I-League last season, tops it in the ongoing season. Arch rival East Bengal is at the third spot in the current points tally.

PERSONAL INTEREST
The red and gold East Bengal has a sponsorship contract with United Breweries under which the company takes care of 75-80% of its annual expenses. Amit Sen, director at Kingfisher East Bengal, said there have been no hiccups in terms of funding so far.

“Whatever has been committed to us has always been adhered to.” In fiscal 2016, the club had a budget of about Rs 15 crore, 7.5% more than the year before.

Mallya had a dream of setting up a football academy, a proper club house and a strong junior team for East Bengal Football Club, said Pranab Dasgupta, president of Kingfisher East Bengal and a friend of Mallya.

The club management is confident of achieving all of it and foresees no indication of a fund crunch, even amid the entire clamour to recover the money Mallya owes banks.

“Vijay took personal interest in the club and on many occasions has helped us with funds beyond the sponsorship contract,” Dasgupta said.