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YESTERDAY, THE GOVERNMENT announced a financial rescue package for the Football Association of Ireland (FAI) to save the beleaguered organisation from collapse.
The package includes a new tranche of State funding and an annual loan for the next three years which has prevented the FAI from insolvency and a resulting raft of redundancies.
But despite acknowledging that the government had secured the FAI’s future, Sport Minister Shane Ross was insistent that the rescue deal was a simple financial arrangement, and not a bailout. Is he right?
The Claim
Minister for Sport Shane Ross said that the FAI’s ‘Financial Rescue Package’ is not a bailout.
Speaking about the rescue deal to reporters yesterday, he said:
It’s certainly not a bailout. There are strict conditions. We are increasing the funding we are already giving. It’s quite the opposite to a bailout, it’s a highly conditioned loan and grant.
The Facts
First of all, let’s look at what exactly is meant by the term ‘bailout’.
Here’s the Collins English Dictionary’s definition: “A bailout of an organisation or individual that has financial problems is the act of helping them by giving them money”.
We also asked two economists to define the term and to describe how bailouts work.
Jim Power, Chief Economist at Friends First, explained that the financial situation of the business, organisation or state being bailed out is important to the concept.
He told TheJournal.ie:
A bailout is what happens when an organisation is in terminal trouble, and somebody steps in and injects the finance to keep it going.
Power pointed to Ireland’s economic bailout by the International Monetary Fund in 2011, when the State couldn’t pay back its debts, and the government’s recapitalisation of Irish banks in 2008 as examples of bailouts.
“If an organisation is in terminal trouble to the point that it won’t be able to survive, but it receives money to keep it going, that is a bailout,” Power added.
Professor David Jacobsen, Emeritus Professor of Economics at Dublin City University, also explained that a bailout is what happens when an organisation receives money because it is in such a perilous financial state that other forms of funding are not available.
“It’s a situation where special financial allowances are made because banks are not willing to continue to fund or lend to a borrower at ongoing interest rates, whether that’s a government, an agency, or even a corporation,” he said.
Although Bank of Ireland – the FAI’s main creditor – were involved in the package announced yesterday, it was clear that they were not willing to help the organisation up to this point without the government’s support.
In addition, the loan arrangement between the organisation, the government and the bank comes with a preferential interest rate that would not have been agreed in normal circumstances.
Funding the FAI
Next, we’ll look at what the FAI’s rescue deal entails and how it came about.
Last month, the organisation revealed that it had debts of over €62 million, following a year of turmoil off the pitch after it emerged that former chief executive John Delaney had given it a €100,000 “bridging loan”.
That revelation eventually led to the removal of the FAI’s annual Sport Ireland grant in April.
In December, Ross said no funding from his department’s Sports Capital Programme would be provided until corporate governance and financial control issues had been resolved to his satisfaction.
All this time, the organisation was kept afloat by the early drawdown of Uefa funds due to it.
Last month, the FAI asked Ross for €18 million as it attempted to negotiate a refinancing package with Bank of Ireland, its main creditor – something Newstalk’s Off the Ball reported at the time was described as “a request for a bailout” by Ross himself.
The organisation needed the money to meet short-term debts and remain solvent, and news soon emerged of talks between the government, the FAI, Uefa and Bank of Ireland to save the association.
Those talks culminated in yesterday’s announcement.
The package is made up of €20 million in funding over three years, including a doubling of annual State funding to €5.8 million and an annual interest-free loan of €2.5 million.
In a press release detailing the package, Ross described how it had secured the future of the FAI. Said Ross:
It has been a difficult journey to get to this place, where we can heave a sigh of relief knowing that Irish football has a future. Today we are delivering for all those who depend on football for their livelihood…
Despite insisting that the package was not a bailout, Ross acknowledged that the future of the organisation was made possible because of the funding.
Economic analysis
As well as providing a definition of the term ‘bailout’ earlier, both Power and Jacobsen analysed the nature of the organisation’s rescue package.
“In the case of the FAI, it would have folded if the government didn’t intervene,” Power said. “That to me is a bailout.”
Jacobsen analysed the deal in similar terms, drawing an analogy with the IMF’s bailout of the Irish government in 2011.
“This is definitely a bailout,” he said. “To say it isn’t absolutely contradicts what happened when the Troika gave money to the government in 2011.”
Verdict
Shane Ross said that the rescue deal given to the FAI was not a bailout.
According to the standard dictionary definition and the opinions of two respected economists a bailout is a financial package that is given to an organisation, company or country which is in such a bad financial position that it requires an injection of capital to avoid bankruptcy.
The money is required because an organisation, company or country cannot secure finances from any other lender.
The FAI said last December that it required at least €18m to secure its future, and the government’s package was heralded by both the Department of Sport and Shane Ross yesterday as having done so.
Therefore, we rate Shane Ross’ claim: FALSE
As per our verdict guide, this means: The claim is inaccurate.
TheJournal.ie’s FactCheck is a signatory to the International Fact-Checking Network’s Code of Principles. You can read it here. For information on how FactCheck works, what the verdicts mean, and how you can take part, check out our Reader’s Guide here. You can read about the team of editors and reporters who work on the factchecks here.
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Michael Healy Rae is far cuter than people (around Dublin) give him credit. He knew the media would lap up his ‘send in the army’ jibe, now something might actually be done about it – news articles on other invasive plant species!
All while the Healy Raes own a local Plant Hire company!
Barra, only man power – saws and weed killer – will get rid of the rhododendron. Plant hire won’t be hired – so Healy Rae won’t earn from that one (he does from much else mind you – like getting hedge cutting season extended by 3 months!!).
Bloody hell John! Can’t have prisoners do it, they’ll have no time to sit on their arses, watch the footie and play on their Xbox’s, come on man have some sense!!
Send in Enda and his crew they destroy everything in sight. Complete devastation!!!!!!
@Steven Hillert:
The article above this one is about contraceptives.
See can you get a party political broadcast into that as well.
Rosebay Willowherb is a very useful plant for bees, is it classified as an invasive species? Surprised to see Sycamore on the list as invasive. What is not mentioned is Ragwort, Senecio jacobaea, which is proven to be harmful to livestock and I dont think that there has ever been a prosecution for lack of control under the Noxious Weeds Order, 1937.
@Dara Kilmartin:
And there never will be a prosecution on the noxious weeds act, because the prosecuting authority, the county councils, are the worst offenders, the sides of country roads.
Their not going to create a rod to beat themselves with.
@Dara Kilmartin Invasive species are non-native. Both Sycamore and the Rosebay Willowherb were introduced to Ireland. The Ragwort is native.
Gunnera tinctoria is currently considered invasive on the west coast of Ireland, It is considered to be having a significant impact on Achill Island, where is has spread throughout.
Would be useful if they had pics rather than Latin names…
Be the Holy man tonight, let’s not hope the Asian Hornet comes to destroy our native bee population
@Mercurial One: There were hornets in the South of England last year I believe… But the U.K. has the Arthurdendyus triangulatus already and they are dangerous…
http://invasivespeciesireland.com/most-unwanted-species/established/terrestrial/?pg=2
@Alois Irlmaier: Another invasive pest is the Ragondin. Only answer to this nuisance is the pit bull terrier.
Ragondin ? In French? What’s wrong with Coypu?
@Mercurial One: Not here? But the EU wanted to reintroduce the Wolf and the lynx back to Scotland and the farmers were not happy at all.
Build a wall and send them back whence they came
The potato is an invasive species, imported from South America.
Nearly wiped us out.
Here’s an app that one can use to highlight Japanese Knotweed to alert it’s presence to the council and thus help stop the spread (by hedge-cutting or soil removal). http://waterfordcouncil.maps.arcgis.com/apps/CrowdsourceReporter/index.html?appid=9c41e4c2f33e4f1eb2d8ab2c1740ea30
Ecologist Ryan” rosebay willowherb is a native wildflower and one of the most beautiful. Glyphosphate on the other hand has long term implications for soil and habitat.
I see in this article no mention of ‘Winter Heliotrope’ (Petasites fragrans). I am an amateur botanist living in Leinster, and as far as I can see ‘Winter Heliotrope’ is by far the biggest threat to the native flora (in the East of Ireland anyway). In the last 10-20 years it has spread enormously, colonizing roadsides, grasslands, woodlands, riversides etc. In the areas it colonizes, it smothers out the other plants, out-competing them below and above ground, and then once established, being a perennial, it is basically there for good, preventing anything else more or less from growing in that area. Inch by inch, yard by yard, it is gobbling up the Irish countryside botanically.
There must be a national effort to control the spread of this invasive, or the consequences for the irish flora will be severe.
Send in the Special Branch, do they still exist?
Japanese knotweeds makes great pies, jams and wine but it will destroy the place it is in…
http://www.irishexaminer.com/lifestyle/outdoors/dick-warner/new-species-of-animals-and-plants-probably-wont-destroy-our-ecosystem-304261.html
“The zebra mussel did not clog up all the inlets to our power stations and water purification plants.
The American mink did not exterminate all our water-hens and pheasants…. another name for them is Chinese barking deer…
http://www.thejournal.ie/in-pictures-irelands-most-unwanted-list-of-invasive-species-347768-Feb2012/
A foreign species is taking over from the native species all without one drop of blood being spilled, this is accurately described as invasion. And yet the foreign clams do not directly attack or eat the native ‘clans’, nonetheless, the results of this invasion are the same for how we normally envision an invasion involving bloodletting. It shows there are different types of invasion, all however have the same end-result, the native species loses out and may become extinct.
To illustrate how a stealth invasion is no different in outcome to an overt invasion is this quote from an article in the Journal.ie relating to an invasive clam species:
“It can reproduce and spread, and out-compete native species “, “the Asian Clam an “aggressive alien invasive species”
We know this happens to other native species – the Red Squirrel being out-competed by grey squirrels, and the above native flora being overtaken by Rhododendron. Again not a drop of blood is spilled, no overt immediate perception of a physical struggle, but a long term stealth attack resulting in the very real physical acquisition and domination of territory and resources of that territory by one species over the native species. With the inevitable end-result of the replacement of the native species by the invader species.
With what other native species does this type of long-term stealth take-over take place?
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