How football is managing the virus crisis – The Property Chronicle
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How football is managing the virus crisis

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The Covid-19 crisis is a tough time for everybody: family, friends, business, we’re all suffering in different ways. In England people are only just having to get used to living in lockdown and it is likely to last a few more weeks yet. The crisis will get worse in the UK before it gets better. So despite the pressure of some desperate football club owners there will have to be great concentration on health issues before any consideration of football business issues, although the two subjects are of course intertwined. Looking back a couple of weeks it does seem utterly crazy that Liverpool were allowed by Government to play Atletico Madrid in front of 50000 people, including 3000 from Madrid where the Covid19 crisis was already in full swing. Having said that it probably served the misguided ‘herd immunity’ policy perfectly. It also seems extraordinary now that National League Board did not follow the belated lead of other sporting bodies and cancel their league programme on 14th March. Perhaps they actually believe that Shankly was right ?

Football people and their businesses are now having a real struggle. Here you have to differentiate between the bigger professional clubs, such as those in Premier League and Championship and those in lower professional leagues or in the semi-professional divisions. I’ll come to them later. In all cases the immediate challenge is to get through the next three months or so, during which it is extremely unlikely there will be any competitive football. Those clubs in Premier League and Championship will find their income streams have suddenly been cut off with one exception: the Sky Sports TV and international media deals. These deals provide huge sums of money for Premier League clubs and explain why Championship clubs are so keen to break the bank in order to get promoted. Smaller Premier League clubs like Bournemouth earn 80% or more of their annual turnover through media payments. Right now Sky are committed to a deal till 2022, so unless they file for bankruptcy any time soon or the prolongued crisis leads to break clauses in the Sky contract being triggered, the massive income stream to clubs will continue. Clubs and the Premier League as a whole are desperate not to upset the applecart here and that explains why they are still talking about fiinishing this bed-ridden season off rather than closing the curtain on it and going home. Most of these top Premier League and Championship clubs are financed by owners with very deep pockets so they should be in a position to survive for a good few months and longer. Moreover, in 2018/19, even the Championship clubs were able to sustain combined losses of more than £300 million so they clearly have means. But you can understand why these club owners are now so keen to see the current season extended and finished as soon as is reasonably possible. Even if it means playing matches behind closed doors. It’s all about the TV money. They are desperate to limit losses because they will inevitably find other sources of income used to subsidise football clubs are under pressure. Given the fact that for most of them their main football club income stream is TV rights you can understand that getting as many matches as possible played in front of cameras is more important than waiting till fans can once again enjoy going to football and creating an atmosphere. If there were more than seven days a week the Premier League clubs would be filling the extra days up with fixtures, you can be sure of that.

Some Premier League clubs will find the media rights income covers most of their cost base. They will have some long-term committments to players beyond the season end but in many cases there will be some expensive player contracts terminating this season, so it should be possible to cut costs at that time if necessary. We have already seen announcements by some clubs in EFL, like Leeds Utd and Birmingham that their players will take pay cuts or deferrals in order to help their clubs pay non-playing staff and get by. We have seen overseas clubs do something similar, most notably Barcelona, whose players are reported to have accepted a 70% pay cut. At the time of writing this the Premier League had still not made an announcement about a league-wide decision on wages for its players. For the longer-term the problem will be adjusting to lower revenues across the board as sponsors and commercial partners feel the pinch in the next few years. Player wages and associated costs will have to slide downwards to match this. If however these top clubs really start to feel the pinch they could attempt to renegotiate player contracts. There is likely to be some deflation of these going forward, so players might be open to renogotiate lower salaries in return for longer contracts and greater security. The general public will expect players to support their clubs in this respect and there will be few tears shed for top players, who may have to accept reductions in their £5 million per annum salary packages or say goodbye to some of their Bentleys. For what it’s worth, the government income support package applies to all these clubs too, at least so it seems. However, the ceiling of £2,500 per month of wage support will only really help non-playing staff at these clubs, whose salaries are less astronomical.

There is a totally different picture when you come to consider the smaller clubs, of which my own, Maidstone United, is one. From EFL League 2 (Division 4) down to National League South and North (Division 6) the season has ended not with a bang but a wheeze. Except that it hasn’t ended yet as far as the National League is concerned. Until yesterday they were still trying to hang on to the notion that it might be possible to finish the season in an attempt to copy what the Premier League and EFL are doing. This is based on a misguided fear that by not so doing they might be cut off from the established pyramid structure and cast out to sea without as much as a single promotion place.

In reality the National League and the top Premier League and EFL clubs are on different planets. The Premier League and Championship clubs could envisage playing matches ‘safely’ behind closed doors, in order to finish the season off, if the government in its wisdom allowed them to, because of their TV deal. In the National League there is no meaningful TV deal. Trying to copy the big boys might bankrupt National League clubs, for whom playing behind closed doors would be economic suicide – players to pay but no income. Additionally trying to complete the season at a date still unknown is hugely challenging because we don’t really know when it will be safe to go outside again, let alone get together in cramped changing rooms and on crowded terraces. In which case how do our clubs manage their players’ contracts? In much of non-league football playing staff contracts finish at the end of April. If the current season were to resume in June or July how on earth are we supposed to retain or reassemble a playing squad? My view is that this season is unfortunately contaminated and has to be isolated for good. The FA agree and have said that the season will be EXPUNGED. This may be the least worst of the solutions available because firstly, if this current season were to be completed, say in July or August, it would not be fought over by the same clubs who started it. Some may have gone bust in the meantime, some will have lost their playing squad and may have no money left to pay wages to complete the old season. If on the other hand promotion is decided on current placing in the league table it is a false basis because the remaining quarter or so of the season is an unknown quantity and things change. The FA rules on abandoned matches have always embraced this principle and require an abandoned match, say due to floodlight failure, to be replayed even where one team is winning 2-0 with 5 minutes to go. This ‘expunge the season’ decision (well at least the Coronavirus crisis will have taught us some new words like ‘expunge’ and ‘furlough’…) has upset some disgruntled club owners, whose clubs are leading their leagues and feel hard done by. They are even threatening legal action against the FA, which does seem to be rather inappropriate and inelegant given that the country is facing its gravest health crisis since the flu epidemic of 1918. Not too many people will feel these clubs’ hardship is more than just bad luck and may well feel like telling them to « bloody well shut up and take it on the chin ».  

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About Oliver Ash

Oliver Ash

Oliver Ash is a Commercial Property Developer and Investor, based in Paris since 1983, Director of Brive Rugby Club and Maidstone United FC.

Articles by Oliver Ash

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