Two months ago, before Japan was fully consumed by the surrealist hellscape of the COVID-19 pandemic, the J. League’s first division opened its 2020 season with 18 teams.
Now the league is doing all it can to ensure that when play resumes — whether that’s in late June or even July — it does so with those same 18 teams.
On Tuesday, the league announced it had established a commitment of credit, calling it “roughly equal” to its annual budget, which called for nearly $273 million in revenue and almost $285 million in expenses.
While the league pushed back against multiple outlets reporting it had already taken out loans exceeding $200 million — with chairman Mitsuru Murai saying the credit line had been established “for the league to secure enough funds when necessary” — it was the latest indication that officials are preparing for an extended battle to protect clubs from financial collapse.
Some of those steps may need to be taken as early as this month, with many clubs — including some of the first division’s biggest — indicating in their annual earnings reports that rough times are ahead even after the coronavirus-enforced shutdown ends.
Perhaps no team is in greater danger at the moment than Sagan Tosu, the Kyushu club whose survival has been an open question since it reported annual losses of over $18.7 million on Sunday.
While the club’s recent financial struggles are no secret, the staggering volume of red ink represents more than three times Tosu’s 2018 losses and will take more than short-term support from the league — or yet another issuance of new shares — to overcome.
Most of Sagan’s staggering drop in revenue came from club sponsorships, which plummeted from $21.5 million in 2018 to just $7.5 million last year. Much of that gap had previously been filled by video game publisher Cygames, which ended its four-year partnership with Sagan in 2018.
An even bigger blow came at the end of last season, when cosmetic manufacturer DHC, Tosu’s shirt sponsor since 2008, announced that it too was ending its partnership with the club.
That left Sagan heading into the 2020 campaign without its biggest draw (Torres, who retired in August), any other player who could attract fans and maintain the modest gains the club made last year in gate receipts, or a major sponsor — a recipe for disaster, even before the COVID-19 crisis forced professional soccer in Japan to a halt.
Tosu chairman Minoru Takehara told his players during a Wednesday video conference that both Cygames and DHC had left “because the team wasn’t able to win a title,” according to Sponichi.
That statement likely didn’t sit well with the squad, even as they were promised that their salaries would not be delayed and that a sponsor “has been decided” but cannot be announced until the coronavirus situation stabilizes.
What comes next is uncertain. While new rules implemented by the league in response to the coronavirus’s economic effects may protect Tosu from losing its J1 license, league sources have suggested to Nikkan that the club may not be able to receive financing from the league if it appears unable to pay that amount back within the required three-year period.
Several newspapers reported that Tosu could be relegated to the J3 or even the fourth-tier Japan Football League, while others suggested that the club could convert into a “citizen’s club” owned by the city.
Takehara denied those possibilities in an online town hall with fans on Thursday night, apologizing for his role in fueling speculation.
“It’s true that our 2019 balance sheet has some very harsh numbers,” Takehara said according to Nishinippon Sports. “I want us to reflect, improve and create a reliable future for the club.”
Even if Sagan is rescued, Takehara will likely have to account for how the situation reached this point, despite club licensing rules that were created in response to a pair of notable 2009 crises.
At the end of that season, Tokyo Verdy’s J. League membership was threatened after the departure of main shareholder NTV and shirt sponsor CyberAgent — a catastrophic low point for the Original 10 club.
Despite the rapid creation of a new holding company to oversee the storied side, an audit’s discovery of financial mismanagement forced the J. League to take temporary control and operate the team for the rest of the 2010 season.
On the other side of the country, Oita Trinita suffered similarly, losing most of their top sponsors during a dismal season in which they lost 20 games, just one year after finishing fourth in the J1. The Kyushu outfit was forced to take nearly $6 million in emergency loans from the league in order to finish its season, which it finally paid back in 2012.
While Trinita has fully recovered and Verdy is still hobbling along in the second division, Tosu’s own legacy includes one club that couldn’t bounce back from significant debt.
After earning J. League associate membership in 1994, Tosu Futures finished fourth in the Japan Football League in three straight years despite the presence of internationals such as Diego Maradona’s brother Hugo and former Cameroon captain Stephen Tataw.
The year-end withdrawal of owner and club founder PJM Japan saw Futures enter 1997 with $10 million in liabilities. The Saga Football Association responded by creating a new club — Sagan Tosu FC — which was allowed to replace Futures in the JFL and participate in that year’s Nabisco Cup. Two years later in 1999, Sagan was one of the J2's own Original 10.
Under normal circumstances, J. League fans would be all too eager to help Tosu, a favorite away trip of J1 supporters since the Kyushu side finally reached the top flight in 2012.
The depth of that mutual support was seen in 1997, when Urawa fans held fundraising drives in support of the newly formed Sagan, purchasing tickets to be donated to Tosu-area school children in order to help the newly formed club find its footing.
But under these circumstances, with so many fans shouldering extra financial burdens due to the economic slowdown, it may not be as simple as passing around a crowdfunding hat.
Yet neither will the J. League — having previously rescued Verdy when even Kenji Onitake, then league chairman, argued that it was a “club without a hometown” — so easily give up on one of its own.
The next step will come when the league’s board of directors meets after the Golden Week holiday period.
While there are surely tough decisions to be made in the weeks and months to come, the J1’s smallest club is down — but certainly not out.