15.09.2022 – Yesterday, at 15:00, the tender to buy basketball club K.K. Split’s shares from the City of Split ran out. The result is still unknown. Rumors are that there has been no response. TCN has asked for official feedback.
Mayor Puljak (left) and Deputy Mayor Kuzmanić presenting the tender in August (Photo: Grad Split)
Mayor Puljak’s PR speaker replied that she has no authorized info on the topic. Deputy Mayor Kuzmanić didn’t reply to two emails. The clubs’ PR speaker and director have replied that they have no knowledge and referred back to the City of Split as the only official source.
So instead of news, today we have Part 2 of Burak Canboy’s editorial where he answers a few questions that the initial editorial has caused and adds his opinion on the recent developments..
Dear Basketball Fans and readers from all around the world. Many thanks for giving me feedback, both critique and support on my first editorial regarding the sale of K.K. Split.
Yesterday, the tender to invest into K.K. Split ran out. More than 24 hours later, nobody seems to know the results. And, nobody really seems to care either as there is no news on the topic today and social media seems to be on hold. If you have read my first opinion on the topic, it shall come as no surprise why I think there is no big interest in the tender. Its preparation was way too unprofessional.
Like the City of Split after the tender: Roko Ukić with his hands empty and his head down. (Photo: Burak Canboy)
Let’s say you want to sell your car on Njuškalo, you would wash it first, clean it on the inside, take nice pictures, write down all extras and even list the problems if you are a fair sales person. But Mayor Puljak and Deputy Mayor Kuzmanić, seem to have thought that while that is necessary for selling any car for only several thousand Euros, it would be enough to say that the city has a “historic basketball club for sale” and that investors from all over the world would run to Split in masses at the opportunity to buy a basketball club for millions of Euros, without even knowing what that would mean. No sales presentation, no numbers, no concept, no plans, no ideas. No realism. No professionalism. No offer. No surprise.
The saddest part is that this makes the club even harder to sell now. But maybe the Dynamic Duo of Puljak and Kuzmanić were not even looking for a sale. Maybe all they wanted was to have an excuse to close the club?
While we can all think about that, I would like to use the opportunity to address the following topics that most people didn’t agree with me on or that may have been misunderstood in my initial editorial.
The very big majority of people thanked me and told me that I was 99-100% right. Since I believe in always striving for 100%, here are my explanations to the most common questions and some forum questions that I received:
1. How can the name not be worth a single Lipa? It is a great name with global recognition. It must be worth a lot of money.
I did not write that the name is not worth anything. I wrote that the club in the current condition, is not worth anything. On the contrary, I believe that the name is still globally very well known. It is one of the club’s few assets. I just believe that all the current problems and the known and unknown debts in my opinion are larger than the value of the brand. Unfortunately, as so many things with the club also the name which it does not really own. If you refer to just “K.K. Split”, then of course, it belongs to the club. However any club can call itself something similar. K.K. Adriatic Split, K.K. Dalvin Split, etc. So any basketball club in Split can be “K.K.” and “Split”. This dilutes the value of the brand for an investor. If you are referring to the name “Jugoplastika”, which is what most people abroad recall the big name as “Jugoplastika Split” it gets even more complicated because it was not the name of the club but it was the name of the sponsor (like “POP84”, “Slobodna Dalmacija” and “Croatia Osiguranje” later which were also all sponsors and obviously own the rights to their own names themselves. I am not sure if K.K. Split even legally owns any rights to the name “Jugoplastika”. Like so many things in Croatia, now nobody says anything when the club uses the name because currently there are only Croats involved and no money is to be made, but I wouldn’t be surprised if somebody appears out of nowhere claiming to own all the rights to the name “Jugoplastika” and wants to be paid, as soon as a new investor has signed all papers, paid the money and starts to use the name. So, like I wrote, it is a tricky question how to value that, but as an investor, if in doubt, you better go with a lower valuation due to the unclear ownership situation. And now you have a combination of unknown value of a name and unknown debt situation of an organization that stays alive for many years only due to taxpayers’ money spent, so that’s why I say the club is currently not worth a single Lipa.
A club icon of long past, better times: Hall of Famer Toni Kukoč (left) in 2021 with Director Edo Blažević (Photo: Burak Canboy)
2. What is the value of the concession for the gym? It can surely not be zero.
I did not give a definite value regarding the concession of the gym. When reviewing the concession in 2014 it was clear that the City of Split had used it originally as another creative way to fund the club. I am not sure if the old concession has changed or is still in place. All I recall about that was that the value of the concession was somehow estimated by some expert and the city used that value as some basis for the amount of shares it received from the club. I also remember that the value stated in the expertise seemed ridiculously high to me and I thought that the city may have used this method of funding to control all other shareholders. Anyways, today I cannot say anything about that and that’s why I wrote that the value depends on the condition of the hall (which is terrible), the contracts with tenants (which are probably old and not very high) and which obligations the city will have in the future in regards to renovations and maintenance. As you see, we always come back to how the city is funding the club and how much it will do so in the future. If the gym was owned by the club, then you could say that it is an asset for which you can have an appraisal issued and I might even come to the conclusion that the value of the club is more than zero, if the debts are not too high. Since the club does not own the gym and since the details of the concession are not disclosed, I prefer to stay conservative on any value it may have.
Deputy Mayor Kuzmanić (center) together with his biggest problems. (Photo: PR; KK Split)
3. K.K. Split is now playing in ABA League and playing for titles in Croatia, how can the club be worth less than in 2014?
Well, first of all, along with playing in ABA League and playing for titles in Croatia, the debts of the clubs are growing and with that the dependency for the city to pay for cost. Despite the additional TV airtime, there is no trikot or naming sponsor to cover the extra costs. Also, the administration in 2014 was actually a good situation for an investor. It was 100% clear what the debts are, who will get how much and when. Back then, due-diligence was easily performed within just a few days because director Metod Šolto had all books and all numbers openly lying on his table every day. All numbers and payments were verified/controlled by the administration rules. I would not at all be surprised if today not even the supervisory board of the club knows the exact financial situation of the club. So today there is a much higher risk for potential investors to be confronted with people claiming to have the rights to be paid by the club for something. They may even have the right to come forward years from now.
Back in 2014, as insolvency was obvious, the value of the club was already zero and the only reason why the club was not dissolved was because the city agreed to cover the outstanding debts and pay for the club’s future activities. Just like today, if the city is not covering part debts and warrants for future expenses, the value of the organization is again zero. For these reasons I think that today, the club is also not worth more than nothing.
Dominik Mavra: Few months ago succesfull with KK Zadar at Gripe, what teammates will he have in Split this season? (Photo: Burak Canboy)
4. Why should Kuzmanić be lying about other potential investors?
How do I say that Kuzmanić is lying about potential other investors? How should I even know that? All I am saying and thinking is that the city (that means him especially because he is the man in charge) is not acting professionally in this matter. If you have no own strategy for the club, if you cannot present the assets and problems of the club honestly and openly, if you only give an interested party 3 weeks for due-diligence for such a complex problem, then this is not something that I personally find professional business behavior. Since we are in Croatia and since Croatian politics have a history of not acting transparently, it is only safe to assume that the only alternative to this unprofessional behavior may be that something bigger is being dealt with in the background and that K.K. Split may be being used as part of such a background deal. I hope both for the club and the city that some big investor will come who believes 100% in this club and has no other intentions than to renovate this club, but how likely is that right now after what Kuzmanić said?
Quite honestly, the request of 1 EUR pre-emptive rights for the city is the stupidest thing I have ever heard in my 30 years of business life. How can anyone believe that an external investor will come, spend time, effort, connections and a lot of money to make this club valuable again, if the city has a right to say: “Thank you very much for taking this big problem we have had, a club that was not worth anything and has only cost us money, thank you for taking this problem from our hands. Thank you for making K.K. Split a wonderful, successful and profitable club again. Now here is 1 EUR, so you can go home again with nothing!” Really???? This also makes the mayor (who I respect btw), appear unprofessional, just by standing next to him without objections while they present this.
How can a club with tradition but no future become a club of the future with a long tradition? (Photo: Burak Canboy)
5. Is it true that back in 2014 you only wanted to realize a real estate project on Gripe but were not allowed to. Is that why the deal didn’t work out? Are you out for some kind of revenge because you still want to, but don’t have enough money to buy the club now.
I have never made a secret about having been disappointed that the deal didn’t work out in 2014. If I remember correctly, my answer to the first question at my press conference in Hotel Park was something like “I would be lying if I said that I am not disappointed.”
Back then unfortunately it only became clear to us very late in the process that the Baldasar administration was only trying to find an investor to realize a huge real estate project on Gripe. We found out only very late that the main goal was that an investor should take the burden of K.K. Split in return for realizing an approximated 40-100 million Euro project. I had no interest to be involved in such a deal and we as a group who had prepared our offer needed to stop our efforts because we were all 100% about basketball and nothing else. So, I think it is unfair to say I am out for revenge. I wish the club and the people of Split nothing but the best. It is just my personal belief that we should call things by their name . I don’t think that Puljak’s and Kuzmanić’s latest stunt will help the club but are actually making things worse.
When it comes to my financial situation, it is safe to say that I never had enough money in my life to invest it into basketball, but it has never stopped me from doing it anyways 🙂
Let’s hope again that the people in charge in Split will one day smarten up and understand that even the famous Aladdin had to first start rubbing the lamp before expressing his wish very clearly and precisely and he still had to do that work even though he already had the unlimited cosmic magical powers of the genie on his side. For all normal people without three magic wishes, it means that if you want to find an investor for the club, you will need to work hard like everybody else to create something valuable first, then you can think about achieving a return from selling it. Or maybe it is better that you just throw the magical lamp away and maybe someday, somebody will find it and decide to rub it really well, until it’s magic reappears.
For further reading:
i. A sample mission & vision for the club was already gifted to the club and the city in 2014. Look for yourself how much of it has been adopted and how much more needs to be done before you can call the club valuable: KK Split Mission & Vision 2014
ii. Hrvoje Frančeski’s thoughts on Croatian Basketball “We Have Nothing”. It is in Croatian but worth translating, if needed
The views of the author are not necessarily the views of TCN.