Football finance expert and Price of Football author Kieran Maguire talks to Sporting Life about how the coronavirus crisis will affect football clubs and players - with the warning that even Premier League clubs are not above being in financial trouble.
Football is obviously not the highest concern at the moment as the entire world continues to fight against the coronavirus outbreak, but jobs are at stake in the sector that is often under scrutiny for having too much money floating around in it.
A number of clubs have been using the government’s furlough leave scheme to maintain non-playing staff jobs but pass on the expense – most notably Tottenham. Discussions are also underway about players taking wage cuts while football is suspended.
The lack of matchday income is a huge hole to fill and the spectre of TV companies wanting rebates for lost games could also cause havoc in football’s finances.
University lecturer and author Kieran Maguire explains in more detail…
“Any business which is regularly earning three to four million pounds from an event, which is what a Premier League game is, is going to have consequences for the business,” Maguire told Sporting Life.
“Some clubs are in a stronger position than others in the Premier League – I appreciate they all get significant sums from the broadcasting deals but matchday income is still important. Take a club such as Spurs, which has borrowed a lot of money and was depending on the new stadium to generate significantly higher cash flows. It’s all about cash flow really.
“For Spurs, not only do they have a magnificent stadium but what was also interesting is just how much money they make from hospitality – they make £800,000 per home match just from catering sales, and that’s before hospitality on top of that. So they’re missing out on huge sums from that revenue stream.
“It could be that the Premier League might agree to come up with a situation similar to the EFL and advance money to clubs but at present the clubs will be OK for a few more weeks, but then things could become a bit more complicated.
“Whether the Premier League would advance money if the broadcasters decide there’s been a breach of contract and want some of their money back, that’s a further complication.”
Premier League teams aren’t cash rich – West Ham a worry
“Two-thirds of the Premier League teams are actually losing money, we saw recently that both Chelsea and Everton posted operating losses in excess of £100m each. Under those circumstances you usually look to sell players, which isn’t in either team’s masterplan, or you are reliant upon owners.
“Obviously Roman Abramovich is a very wealthy person and Farhad Moshiri is in a similar position at Everton, but some of the other owners aren’t as well off and they will be monitoring things a lot more closely.
“I think actually nothing indicates that any of the clubs are in dire straits at the moment – but the first thing you look at for going forward is the situation of the owner and how much money they have to try and dig the clubs out of trouble.
“You have clubs who don’t have wealthy owners such as Burnley, but they, in my opinion, run the tightest ship in the Premier League. I’d be a bit concerned about West Ham if you were looking at anyone, simply because you’re never quite sure with the people in charge if they’re willing to pump further money into the club.
“Plus the longer it takes for football to return the more complicated it becomes to stage matches for them as tenants in that stadium and other people have priority in the summer months in terms of what goes on at the London Stadium."
Financial implications of not finishing fixtures
"Having seen some of the numbers quoted in terms of a potential rebate to Sky and BT they were eye watering so you can understand the league’s desire to fulfil the fixtures of the current season.
"Everybody knows Liverpool will be champions, but they are the least of the problems as it’s the remaining places in terms of Champions League and relegation that are the major financial issues that need sorting out.
"The Champions League is so valuable and to qualify for that is critical to the teams like Leicester Chelsea, Man Utd, Sheffield Utd and Tottenham, who are chasing two to three places depending on what CAS says about Man City.
READ: French Ligue 1 loses TV revenue over unplayed games
"If places were ruled on how it stands now teams would be very unhappy and you’d expect litigation incoming and complaints.
"Equally in terms of relegation it’s three from six and it’d be particularly harsh on Aston Villa who have games in hand, then dropping into the Championship with Leeds and West Brom they’d be extremely unhappy if they were denied promotion – and even if they were given it you’ve got the play-offs to sort out.
"Nobody wants to give up their place in the Premier League and the legal approach would be the first option given some of the egos of the people who own these clubs."
Could the Premier League help out the EFL?
"For all of the criticism levelled at the Premier League it does already give substantial payments to clubs in the EFL in the form of solidarity payments and then there’s the parachute payments, so clubs in the Championship are already getting £4.5m a year from the Premier League and there’s about a tenth of that for League Two.
"In terms of additional funds, it would be nice, but my understanding is that the vast majority of TV money has already been allocated to clubs and there’s not really a lot left in the pot.
"And from the perspective of the bigger clubs, if they don’t know when football is going to return then how can they hand out money to others when they don’t know if they’ve got money coming in even in six months’ time?
"There has to be common sense from all parties, the owners have to be honest as to what extent they can support the club, nobody wants clubs to go out of business – even if you’re a supplier waiting to get paid if they’re wound up you don’t get paid and you have no further business with them so you’re only hurting yourself."
Football industry living on borrowed time - and money
"I do think the football industry, which has been living on credit and living on owners subsidising clubs for many years, was in a very, very weak position if any a relatively small shock hit the industry, but this is obviously far more than that.
"Football is not well placed to deal with this, it is a house of cards that we operate on and we all kind of accept that as well.
"For instance, operating losses in the Championship were round and about £600m last season. Nobody is denying that the clubs are losing the money but it’s always just accepted with a nod and a wink that somehow they’ll muddle through on the basis that there’s another match soon and they’ll get some money from that.
"Everything depends on the owners – if you’re Stoke City for instance you’re not worried at all because their owners are fabulously wealthy, but if you’re owned by the owner of a local company who puts in £200,000 to £300,000 a year to keep the club afloat then obviously you’re at much greater risk.
"If everybody acts together then I think the majority of clubs will get through this, but if some are going to break then it will not be good for all concerned.
"Ultimately this is a public health issue so we’ve got to follow the advice given to us by public health people. It could be that social gathering is still frowned upon at which point matches will have to be played behind closed doors.
"If the clubs and broadcasters are then sensible then we can get the money back flowing into the game. Clubs have databases of their season ticket holders – you could get codes to be able to watch your team play on TV for no extra cost, or you could buy tickets to watch the games.
"There are some significant revenue streams denied to clubs if we were to take things behind closed doors but it’s better than nothing.
"Whether that’s enough to make sure all clubs survive is open to question, but the first thing we need to do is to get some money coming into clubs."
