Bulgarian football champions CSKA Sofia has incurred losses amounting to millions of euro, not to mention serious damage to its reputation and pride, following revelations of unpaid taxes and other debts.

Bulgaria's most successful football club, with 60 years of history behind it and a record 31 domestic league titles, was denied a licence to play in Group A of Bulgaria's professional football league next season. June 2 was the deadline for football clubs to submit their papers to Bulgarian Football Union (BFU) and receive licences for next year.

On June 3, BFU's licensing committee head, Krassin Krustev, told a news conference that the organisation had decided not to award the licence because the club had failed to meet various financial obligations. Without the licence CSKA could now revert to being an amateur club, forced to play in the third division Group V - where it would face teams from small towns and villages - rather than in the second division Group B.

BFU's decision also means that CSKA would be barred from playing in the Uefa Champions League tournament, a particularly savage blow to the club's management. As champions, CSKA would normally expect to play in the world's richest club tournament. "It's up to Uefa to decide whether CSKA will take part in the tournament," Krustev said. The best that CSKA can hope for is that Uefa may grant them an extension to enable the club to overcome its financial problems.

Such an outcome is unlikely, however, because it would mean Uefa having to make the Bulgarian champions into a special case. This would also delay the draw for the tournament's first leg, hardly a sacrifice that Uefa would be willing to make on CSKA's account.

CSKA's financial problems are not news to Bulgaria's sporting world. For years arch-rivals Levski have been claiming that CSKA had failed to honour payments to the state, particularly mandatory social contributions worth millions of leva. Levski president Todor Batkov has also consistently alleged that CSKA received special treatment from the state and had defaulted on its debts. 

Indeed in 2006 the club managed to sign a contract with the National Social Security Institute (NSSI) to postpone payments, which was then accepted by the BFU. In 2006 CSKA had just been bought by Indian tycoon Pramod Mittal, also the buyer of Bulgaria's largest steel maker Kremikovtzi. At the time the club had great plans, with club president and Kremikovtzi's executive director Alexander Tomov promising a bright future.

When Bulgaria became an EU member in 2007 BFU's licensing procedures became very similar to Uefa's ones. This was one of the reasons for BFU's June 3 decision to deny CSKA a licence.

"If we don't deny CSKA a licence we're facing a general Uefa-imposed ban on Bulgarian football clubs," Krustev said. Currently, Levski Sofia, Lokomotiv Sofia and Litex Lovech are Bulgaria's representatives at the Uefa Cup tournament. The country also has the right to issue a representative for Uefa's Intertoto tournament.    

After the news was announced, Tomov held a hasty news conference to try to cool things down. However, his appearance was upstaged by angry fans who interrupted proceedings and shouted insults at Tomov. Police eventually had to escort him away after fans became aggressive and broke two windows.

Tomov, however, said he was sure that CSKA had no unpaid debts to NSSI. He did acknowledge that the club had other financial obligations to the National Revenue Agency of about 900 000 leva. These were debts inherited from the previous owner. Tomov said that BFU experts had made mistakes in their audit of the club and that losses of millions actually constituted revenue, "depending on one's point of view".

On June 4, CSKA financial director Alexander Garibov told private broadcaster Nova Televisia that CSKA would adopt urgent measures to clear its debts within a few days. 
He said that once all debts were paid, the club would limit its spending on buying new players.

Many of CSKA's problems have been attributed to the club's extravagant spending. Millions of leva have been spent on little-known players,  mainly from Brazil. According to Batkov, CSKA has been paying enormous salaries. "We're talking about 25 000 euro a month, totally unrealistic amounts for Bulgaria," he told Nova Televisia. "CSKA's salary policy has created a big problem for other clubs, including Levski, since players invariably discuss wages among themselves," he said. Not taking part in Uefa's Champions league will cost CSKA at least 260 000 euro. Advancing to the group stage would have given CSKA a further three million euro and 600 000 euro for every match played. In total,  CSKA could have hoped for 2.4 million euro in revenue, a colossal sum for Bulgaria.

The final word on CSKA's future will have to come from Uefa.