Investment Bank’s Soccer Deal Gets Fans’ Red Card: Turkey Credit

Mandatory ticket-payment cards for Turkey’s soccer league are spurring protests from fans who say the passes could be used for surveillance, while forcing them to pay the bank running the system a commission on every sale.

Starting this weekend, soccer fans must buy a so-called Passolig card from investment bank Aktif Yatirim Bankasi AS, owned by Calik Holding AS, which until December was run by Prime Minister Recep Tayyip Erdogan’s son-in-law. Fans will pay between 15 liras and 25 liras ($7-$12) for the card, and a fee of 2 liras for every ticket.

While the government says the e-ticketing system will reduce violence, some fans say it’s designed to boost surveillance at soccer games, where anti-government chants have become commonplace. The main opposition party called the deal a “gift” to Calik, a company that had $1.3 billion of short-term debt as of June, according to the latest report by Standard & Poor’s, which rates it six levels below investment grade.

“It’s about soccer only on the face of it,” Tugrul Aksar, a soccer economist in Istanbul who writes for financial daily Dunya, said in an April 16 telephone interview. “The real aim is for the bank to reach a group of money-spending consumers who are not part of its current portfolio.”

Exclusive Rights

Calik-owned E-Kent Teknoloji & Odeme Sistemleri Sanayi & Ticaret AS and Istanbul-based Netas Telekomunikasyon AS won the tender from the Turkish Football Federation last year, saying they’d provide the infrastructure and related services for 100 million liras. Aktif then got exclusive rights to issue the cards by committing to cover that cost in a separate agreement, Kemal Hacioglu, the soccer federation official in charge of the project, said by phone yesterday.

Aktif also promised to pool at least 150 million liras from commissions on ticket purchases for soccer clubs over the next 10 years, with another 15 million liras paid to the federation in August this year, Hacioglu said. Ten companies bid for the tender, with E-Kent winning after 104 rounds, he said.

“We were initially interested in the tender, but then the terms changed and we decided there was no profit in it,” said Alpaslan Ozbey, executive vice president in charge of credit cards at Turkiye Garanti Bankasi AS, Turkey’s largest bank by market value.

New Opportunity

While Aktif doesn’t have a commercial banking license, it got approval from the Banking Supervision and Regulation Agency last July for operations in some commercial fields including support for card-payment systems.

Murat Emre Duman, deputy general manager at Aktif in Istanbul, said the project won’t break even for 8.5 years or more, and that the bank “saw it as an opportunity to enter the card market with a new trademark -- Passolig.”

He said Aktif seeks “to issue 1.5 million cards in the first year and gradually increase the number by luring more people to stadiums and by expanding the use of the card in transportation and entertainment.” Duman said Aktif will get 1.06 liras of the 2 lira ticket fee, with the remainder going to the federation.

Netas declined to comment on details of their contracts with the soccer federation when contacted by phone and e-mail on April 16 and April 17.

Bond Sales

Aktif, whose annual report showed total assets of 5.1 billion liras at the end of 2013, sells bonds to help fund its activities, normally in private placements. It had 1.5 billion liras and $30 million of bonds outstanding as of April 17, according to data compiled by Bloomberg. Parent Calik, which has the second-lowest bond rating of any Turkish company in the international bond market, canceled a planned sale of $300 million in November 2012 after offering to pay a yield as high as 10.5 percent.

The stadium cards were introduced as part of a law passed in 2011 to reduce disruptions at stadiums. Istanbul team Besiktas’s Carsi fan club, which took part in the Gezi Park anti-government protests last year, called on supporters to boycott a match against city rival Fenerbahce this weekend, citing costs and privacy concerns.

“This law is an attack on all soccer fans,” Burkal Efe Sakizlioglu, head of the Fans’ Rights Association, said in a phone interview yesterday. “Although the law calls for fines against violence and insults in stadiums, that’s not how it works in reality.”

Youth and Sports Minister Akif Cagatay Kilic said the e-ticket project isn’t “a violation of private life in any way,” according to state-run Anatolia news agency. He said it will increase safety at stadiums and prevent violence.

‘We Are Soldiers’

Since the Gezi protests, the government has taken a tougher stance against political activity at stadiums. A federation match report earlier this year said Fenerbahce fans were violating the law by chanting “We are Mustafa Kemal’s soldiers,” a reference to Mustafa Kemal Ataturk, the secularist founder of the Turkish Republic. Broadcaster Digiturk, which was seized by the government last year and has exclusive rights to broadcast games, has since said it mutes the sound of non-sporting chants and curses.

The stadium cards will require fans to provide Aktif with their personal information as well as seat numbers, allowing the government to track fans chanting slogans and ban them from stadiums, according to Sezgin Tanrikulu, deputy head of the main opposition party CHP. It’s also intended to provide a financial benefit to one of Erdogan’s closest allies in the business world, he said.

Erdogan’s Ankara office didn’t respond to a phone call and e-mail seeking comment.

Mandatory Accounts

“Providing such a big portfolio of potential clients to a bank is commercially a big deal,” Tanrikulu said in phone interview. “The tender for Passolig was a gift.”

Passolig holders with a credit or debit card will have to open an account at Aktif, which has no ATMs or credit card customers, or pay an additional commission to the bank to deposit funds into their prepaid passes via the government’s postal service.

The bank probably expects fans to start actively using Passolig as a credit card once ownership spreads, according to Aksar, the economist. “It’s a smart move by the bank to reach new customers,” he said.

Data from transfermarkt.com, a German website that tracks the soccer industry, shows about 3.5 million tickets were sold for Turkish first division matches last year. Data wasn’t available for the second division, which is also part of the Passolig deal.

“The big banks have really good infrastructure for this sort of thing, whereas Calik’s bank doesn’t,” Emre Deliveli, a Turkish economist for Roubini Global Economics’ EconoMonitor and columnist for Hurriyet Daily News, said by phone yesterday. “In essence, they are being turned into a retail bank.”

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