There is much uncertainty about the future of the newly promoted A Lyga club FK Riteriai as news begin emerging of potential insolvency, threats of bankruptcy, internal strife, unpaid salaries to players and coaches, and mutual finger-pointing between the new and the old owners.
FK Riteriai, who spent the previous season in Pirma lyga after being long-term tenants at the top tier, have already been on financially shaky ground for some time, with players not receiving full pay throughout last season and there being real concerns during pre-season about whether the club will even meet the financial requirements to secure this year’s A Lyga license. Eventually, they did meet the requirements as a takeover by Singaporean investors – Red Card Global – was announced at the beginning of March. Since then, Riteriai reinforced their squad and made a decent showing of themselves at the start of the season under the new head coach Nicolas Vitorović, proving a difficult opponent even for the largest clubs. While results are yet to materialise as Riteriai find themselves towards the bottom of the table with 2 points to their name, the club is playing some perky and entertaining football.
This week, however, something snapped inside of the organization of ‘The Knights’, immediately exposing the difficult and contradictory state of affairs that was festering just underneath the neon-yellow surface of their colours.
The Prelude
It all began when their Sports Director – Vytautas Masaitis – resigned. This was announced by the club on their social media but then promptly deleted. While the exact reason for Masaitis’s resignation, or whether he is, indeed, fully resigned is yet to be disclosed, it seems to have much to do with the non-payment of player and coaching staff salaries since at least February. Indeed, it seems that very little has been paid out in staff costs at all, with player lodgings going in arrears as well and, as was reported earlier in the week by the popular Lithuanian football podcast ‘Padkastas’, foreign players having to borrow money from their teammates in order to make ends meet.
With the resignation of Masaitis things seem to have reached a tipping point as there was, allegedly, a meeting between players and Riteriai’s former owner now President Jan Nevoina earlier in the week. During what was reportedly an emotional exchange, Nevoina denied any knowledge or involvement in the financial matters, referring players to the new owner – Sasikumar Ramu – as the sole owner and operator of the club, at least in so far as the finances are concerned.
According to Nevoina and to a press release issued by the club yesterday that shed much light on this story, the Singaporean investors failed to transfer the first instalment of cash in full, falling EUR 50,000.00 short of the agreed upon EUR 150,000.00, which is why the club is now in financial and existential peril.
In an interview to tv3.lt, the President of the Lithuanian Football Federation, Edgaras Stankevičius, revealed further details about these payments:
The situation is not good. I have to communicate with Jan [Nevoina – previous owner], last night I had a conversation with the main investor in Singapore. There is some truth on both sides and interpretations in my favor. I am now modeling various options on how to help the Riteriai, but the financial situation is not good, and the obligations that were guaranteed… one part has been transferred, but it is not enough, it has already been spent. There is a problem with payments, settlements with players, coaches. Yesterday the coaches called me, today the head coach wants to meet, asks for mediation and help. This whole week I had to think about the Riteriai every day
According to Riteriai, with one part, the EUR 100,000.00 sent over and spent, and the remaining amount not received, the club is in the danger of facing insolvency.
The uncomfortable details
There are, however, some details that do not fully align with this version of events. First, even a passing look into the Lithuanian public registry of companies does not list Red Card Global or any other Singapore-based entities on the list of owners of Riteriai. Indeed, the owners of the club as of last week were three companies previously involved with running of the club and all affiliated with ‘the old regime’ – Lit-Invest, of which Jan Nevoina is the CEO, Zetus and Ecoil.
Furthermore, according to sources close to the events, EUR 150,000.00 had, indeed, been transferred into the Riteriai bank account. The allegedly misplaced EUR 50,000.00 upon which the existential fate of Riteriai now allegedly rest, however, had been sent over to Lit-Invest right away. Still, the club had close to EUR 100,000.00 in its bank accounts at the start of season, which raises questions about why neither salaries nor lodging for players had been paid.
This is where facts become somewhat obscure and difficult to verify but from conversations with different sources, the following picture begins to emerge:
- at some point in April, Riteriai Director Vladimiras Buzmakovas issued a letter of notice to Red Card Global, where he stated that the club is yet to receive the full amount of the first instalment, reminding Red Card Global that they purchased club equity from Lit-Invest and are thus both liable and responsible to stand by their commitment. In the event of non-transfer of the remaining EUR 50,000.00, Buzmakovas threatened to begin bankruptcy proceedings;
- Red Card Global, perplexed by this ultimatum, launched their own investigation into the financial affairs at the club, reportedly uncovering almost EUR 2,000,000.00 in previously undisclosed loans from before the acquisition;
- furthermore, Red Card Global also discovered that they are yet to be registered as legal owners of the club, despite what was agreed upon with previous Riteriai owners;
- upon learning of the above, Sasikumar Ramu, decided to put a stop to Red Card Global’s involvement with the club. As Vytautas Masaitis was the liaison between Riteriai and Red Card Global, he seems to have resigned at some point around this time;
- with next of Singaporeans likely withdrawing, players confronted Nevoina about unpaid salaries and about club’s future. Nevoina, however, denied any responsibility on the grounds of not being an owner any longer (contrary to what the Register of Companies show).
The questions
All of the above raises questions about where did the remaining EUR 100,000.00 had gone. It is unclear why Lit-Invest claimed the EUR 50,000.00 of this first batch of investment but the fact that they did does not seem alarming – after all, this could have been the payment, or part of payment, for equity sold; the amount certainly seems in line with what one could price an A Lyga license. But what of the rest? This is where questions begin to overshadow answers – if no salaries had been paid and no other major investments that were publicly disclosed took place, was the EUR 100,000.00 used towards those alleged loans that Red Card Global uncovered? If so, where were those loans from and why are Lit-Invest, Ecoil and Zetus, the latter of which deals explicitly with financial services, still listed as club owners? And, most importantly, what will happen to Riteriai, their players and staff next?
Worst case scenario is that club declares bankruptcy already next week. It seems difficult to see how Red Card Global could continue such a relationship without there being mass resignations and withdrawals of Lit-Invest, Ecoil and Zetus interests from the club. But the three have been around Riteriai since the beginning and are closely intertwined into the operational and ideological fabric of the club, so a sudden cutting of ties is difficult to envision.
Alternatively, a bridge loan could be issues to the club by, perhaps, one or all of the three companies that are still listed on the registry of owners. Why would they do that? Perhaps to attempt to recover the funds later, should Red Card Global transfer the remaining EUR 350,000.00. Will the club make it to the end of the season under such an arrangement? It would certainly not be unheard of for players to go on without pay for such periods of time in the Baltics.
Finally, new investors could be found, although Riteriai is hardly hot property on the best of days but, with the dirty laundry being aired publicly by the club on their official website, the rationale for investing would be dubious to say the least.