Updated with additional MFA comments

Football’s governing body in Malta is facing “significant doubts” over its ability to meet its financial obligations, as its accumulated deficit hits €5.6 million. 

The Malta Football Association’s financial report for 2023 shows the precarious state of its finances, with its auditor drawing attention to doubts about its capability to continue functioning as a going concern.   

The MFA disclosed in its financial statements that negotiations are underway with its banker to reschedule certain loan repayments because of financial difficulties. 

“Thanks to its good standing and relationship with the bank, it has already obtained reassurance that the bank would consider an extension of loan repayments…”, the report says.  

The financial statements say the MFA is “confident” that the bank borrowing repayments will be rescheduled, and that it will be able to achieve the level of income and expenditure needed to continue in operational existence “for the foreseeable future”. 

Football’s world governing body FIFA has already granted the association a one-year moratorium on the repayment of a COVID relief loan, taken out in 2022, according to the financial statements. 

The MFA’s financial losses continued last year, with the association registering a deficit of €786,000, taking its accumulated deficit over the years to €5.6 million. 

A spokesperson for the MFA argued that last year’s loss is a significant reduction from the €3 million loss registered the previous year. 

The spokesperson told Times of Malta that the €786,000 loss includes depreciation and finance costs on loans which the association has been carrying for a number of years, in relation to capital invested in club infrastructure, as well as loans taken out during the pandemic. 

At an operational level, the spokesperson said last year’s revenue exceeded spending by €441,000, which shows that efforts towards returning to a positive balance are starting to show. 

"A spokesperson for the MFA argued that last year’s loss is a significant reduction from the €3 million loss registered the previous year"

On the material uncertainty about the association’s finances highlighted by its auditor, the MFA’s spokesperson said the association relies mostly on UEFA and FIFA funding programmes. 

“While these programmes have increased significantly cycle after cycle, their likely future increase cannot be taken as a certainty for the purposes of financial reporting.

“Despite this, the association remains committed to prioritising cost-consciousness with a view to achieving better sustainability while seeking not to prejudice the objectives set out in its strategy,” the spokesperson said. 

The association’s financial statements describe the support received from UEFA and FIFA as “critical”. 

The statements say the association has already obtained backing from UEFA, which reiterated its support to its member associations in guaranteeing financial stability in case of financial difficulties “due to unforeseen circumstances”.

Income will continue to grow, the statements say, particularly in the area of sponsorship and operations of its facilities. 

“This will be coupled with a sustained control of spending on international travel and salaries, both of which remained contained over the past year, and this trend is reflected in the budgeted expenses for 2024,” the association’s financial statements say. 

Spending on travel and accommodation reached €2 million in 2023, up from €1.7 million the previous year.

'Cash loss lower than accumulated deficit'

In additional comments, the MFA said its cash loss was lower than the €5.6 million accumulated deficit.

"It is important to note that the accumulated deficit cited includes depreciation over a number of years and therefore the cash loss was much less than that, in the region of €1.6m."

"This was particularly influenced by the significant costs associated with the support that the Malta Football Association gave its members during the pandemic – in the end that is the mission of the association."

In addition, rising costs and inflation related to core activities, and inflation related to core activities such as national team travel and accommodation and pitch maintenance have also been major factors, the MFA said.

The association said it is actively implementing a comprehensive recovery plan triggered in 2022 and aimed at achieving a balanced budget by 2024.

"It is comforted by the fact that the necessary structure is in place to ensure sound financial management.

"Key measures in this regard include the establishment of a Finance Committee and a Remuneration Committee to enhance financial oversight and transparency."

Furthermore, the digitisation of all budgetary and financial controls, along with the introduction of a rolling budget, are steps we are taking to ensure better financial management practices".

It added that in the coming months, the association will be launching a significant commercialisation project for its facilities.

This initiative is expected to generate substantial revenue and further strengthen its financial position, the MFA said.