Coronavirus in football

[gdm]

 

Udinese owners also own Watford do they not ?

[LoveItIfWeBeatU]

I'd have thought finishing the current season is more important than starting the next season.

[Guest neesy111]

I'd have thought finishing the current season is more important than starting the next season.

 

Yeap.

[jdckelly]

would have thought so too with the probability of clubs having to return a lot of tv money if the season is cancelled

[AyeDubbleYoo]

I'd have thought finishing the current season is more important than starting the next season.

 

Yeap.

 

Like I said at the start, personally I would finish this season and then wait to start the next one.

 

Obviously it's a legal and financial disaster on many levels though.

[Yorkie]

I'll be astonished if the season is cancelled. It could potentially cripple the likes of Bournemouth/Burnley/Watford, whose turnovers are almost entirely comprised of TV money.

[Guest neesy111]

I'll be astonished if the season is cancelled. It could potentially cripple the likes of Bournemouth/Burnley/Watford, whose turnovers are almost entirely comprised of TV money.

 

Bournemouth and Watford may agree to it if it prevents relegation.

[Judge Holden]

Be good to see media darling Eddie Howe get shafted.

[Judge Holden]

[Wullie]

Be good to see media darling Eddie Howe get shafted.

 

[Nobody]

Be good to see media darling Eddie Howe get shafted.

 

Right, so there's that sorted then.

[NEEJ]

So that's where he went.

[Guest neesy111]

Be good to see media darling Eddie Howe get shafted.

 

There it is.

[Interpolic]

Don't think so personally, writing styles completely different.

[Guest chopey]

I like the idea of a Super Month for the Premier league with all games televised but played behind closed doors starting in June

[Paully]

Revealed and explained: the ‘terrible’ state of Premier League clubs’ finances

 

By Matt Slater Apr 7, 2020  161 

Famed investor Warren Buffett once said it was “only when the tide goes out that you learn who has been swimming naked” and the gravity of the coronavirus pandemic has dragged football’s tide way out beyond the pier, forcing lots of embarrassed bathers to scurry back to their beach huts.

Since the Premier League was suspended, the news cycle has been dominated by talk of bail-outs, pay-cuts and potential lawsuits, as the professional game has struggled with the greatest financial threat it has faced in peacetime.

Football is far from alone in this regard: construction, retail, travel… any sector that depends on people being able to go out, congregate and spend freely is in a fight for survival.

Getting through this will depend on a combination of luck, nimble management and what state you were in when it started. To paraphrase former British prime minister David Cameron’s favourite criticism of his predecessor, did you fix the roof while the sun was shining?

The Athletic has analysed all the Premier League club accounts filed at Companies House over the last few months and the answer for the majority of them would appear to be there has been very little DIY done ahead of this storm.

“The accounts are awful,” says John Purcell, the co-founder of financial analysis firm Vysyble. “The numbers had fallen off a cliff for some of the clubs long before this crisis.”

While Dr Dan Plumley, a sports finance expert at Sheffield Hallam University, says the financial shock of COVID-19 has “brought to light just how stretched the industry is and how many clubs live from hand to mouth”.

Crystal Palace and Newcastle United have taken advantage of an emergency measure that gives businesses three extra months to publish their year-end figures, so we do not yet know for sure what impact the 2018-19 season had on their books.

But we do know what happened at the other 18 clubs and it is the stuff of accountants’ nightmares.

________________________________________

If we use the 2017-18 figures for Palace and Newcastle, the league’s total income last season was £4.8 billion, with most clubs reporting rises, albeit mainly small ones, in all three revenue streams: broadcast, commercial and matchday. Unfortunately, as that other great business sage and former Tottenham owner Alan Sugar memorably pointed out, this money goes through clubs like prune juice.

Of the 18 teams for which we have up-to-date numbers, only Watford reduced their wage bill year-on-year. If we include the old figures for Palace and Newcastle, which are almost certainly lower than last season’s, the league’s overall staff costs topped £3 billion. This means they spent 64 per cent of their income on wages.

But that is the average. Bournemouth, Everton and Leicester all spent more than 80 per cent of their turnover on staff. In fact, exactly half the league spent more than 70 per cent of their income on wages, a level that automatically raises red flags for European football’s governing body UEFA.

According to Deloitte’s Annual Review of Football Finance last May, the wage/turnover ratio was rising across Europe’s “big five” leagues — England, France, Germany, Italy and Spain — with the Premier League’s figure rising from 55 per cent in 2016-17 to 59 per cent 12 months later.

 

The wage/turnover figures for three promoted teams, Aston Villa, Norwich City and Sheffield United, are even worse at 175 per cent, 161 per cent and 195 per cent, respectively, but that is par for the course in the Championship, which is a disaster zone for those who like balanced books and tidy profits. Just to underline what those figures mean, Sheffield United spend £1.95p on wages for every £1 that came in.

Travel costs, utility bills, repairs, insurance, paper clips…they all add up and pretty soon they started nibbling into the overdraft. The cumulative pre-tax loss for the 18 clubs to have filed their accounts is nearly £300 million.

“Lots of the clubs are in a terrible state,” says Purcell. “I’m not picking on them but I was not surprised to see reports this week that West Ham are looking for extra financing of £30 million. It’s so predictable.”

The use of averages and totals also irons out perhaps the most obvious point to make about the state of the industry before the pandemic struck: the Premier League is not a collection of equals.

The six richest clubs account for nearly £3 billion, or 61 per cent, of that total turnover. Arsenal, who have slid in recent seasons to sixth in the big-six mini-league, earned £367.5 million in 2017-18 — £176.8 million more than West Ham’s best-of-the-rest total of £190.7 million. That deficit is about the same as Bournemouth and Aston Villa brought in between them, as you can see below.

 

Manchester United, the league’s biggest earner, turns over more than three times as much as West Ham and exactly four times as much as Crystal Palace and Southampton. Manchester City and Liverpool, second and third in the money list and as competitive off the pitch as they were on the pitch that season, earn four times the amount Bournemouth bring in.

The only way the clubs further down the economic ladder can even hope to compete with the big-earners on the pitch is to spend a higher percentage of their income on salaries and ask their owners to keep topping up the shortfalls. These clubs also tend to be more reliant on the league’s main source of income: broadcast rights.

If there was one economic marker that tells the story of English football’s rise from the ignominy and tragedy of the Bradford City fire and Heysel Stadium disaster in 1985 and Hillsborough in 1989, it would be the incredible amounts companies around the world have been willing to pay to televise it.

When the Premier League split from the English Football League in 1992, the top flight’s domestic rights were worth less than £40 million a season. Nobody even noticed what the international rights were worth.

This season, the clubs will share about £2.5 billion in broadcasting rights between them, with the rest going in parachute and solidarity payments to the EFL, assorted good causes and central costs. These rights deals have been negotiated centrally, usually on a three-year basis, and distributed more evenly than any other big league in Europe. The best clubs still get more than the worst but the margin is tighter than in France, Germany, Italy or Spain, creating the idea the Premier League is more competitive.

The key landmarks are the back-to-back increases of 70 per cent the Premier League managed to persuade domestic rivals BT and Sky Sports to cough up in 2012 and 2015. The two broadcasters declared a truce before the 2018 rights auction, resulting in a slightly reduced return for the league, but nobody really minded as the appetite for English football abroad means the international rights are now nearly as valuable as the domestic ones. With a 30 per cent increase from overseas deals, the overall 2019-22 broadcast pot is eight per cent up on 2016-19.

Before the current crisis, Deloitte estimated that Premier League clubs would earn £5.25 billion this season, £2 billion clear of the totals in the Bundesliga and La Liga. But English clubs spend twice as much on wages as German clubs do and 50 per cent more than Spanish sides.

Kieran Maguire teaches the Football Industries MBA at the University of Liverpool and is the man behind the popular “Price of Football” blog and podcast. He sees an industry that did not believe the cheques would ever stop arriving.

“Broadcast income accounts for about 60 per cent of Premier League clubs’ turnover but if you are that reliant on a single income source and don’t have contingency plans, you will always be at risk,” he explains.

“Football is a part of the entertainment industry and like all other businesses in this sector it will be hit hard by a lockdown. The difference is football has higher fixed costs than most and these are the wages and transfer installments.

“As of last June, the clubs owed £1.6 billion in installments and had £700 million coming in. Some of this money is circulating within the division and some will be flowing downwards to the EFL, but there is a £900 million deficit. The concern is that financial problems in one league could spread throughout the industry just like the pandemic.”

The fees clubs pay for players are actually spread across the length of those players’ contracts in their annual accounts, a process known as amortisation. Maguire points out that if you take amortisation and staff costs together, they amount to 86 per cent of Premier League turnover.

“That does not leave much over for anything else and the number will be much worse for the Championship, where this crisis will cause havoc,” he adds.

A good example of how these fixed costs can cause an explosion of red ink at even the richest of clubs can be seen in Chelsea’s accounts for 2018-19. A high wage bill, a net transfer spend and a season outside the Champions League left them with a £101.8 million pre-tax loss. They at least can point to the Europa League trophy in their cabinet and return of Champions League cash to their accounts this season. Everton, on the other hand, only have an eighth-place finish in the league to show for their record £107 million loss, as you can see below.

 

And for proof of Maguire’s point about the reliance on broadcast money, you need look no further than the response of every major league and governing body to the suspension of play: every possible avenue must be explored for completing season and honouring the various contracts associated with this season.

The Premier League has already spelled this out to its clubs, saying their broadcast partners could ask for £762 million back if the remaining games they have paid to broadcast are not played. And if that sounded too theoretical when that message was delivered two weeks ago, streaming service DAZN, which has the live rights in Brazil, Canada, Japan and Spain, has since confirmed it will not be sending any more money until the action resumes. BeIN Sports and Canal+ have made similar moves in France.

 

The good news for the Premier League, however, is the final year of a three-year broadcast cycle usually results in losses, and most clubs return to profit when the cycle starts again.

“We’ve been tracking the data since 2009 and you can see these three-year cycles in the accounts are tied to the new TV deals,” says Purcell. “So, in 2014 and 2017, there are these walls of money that arrive in year one but by year three, most of them are losing lots of money again.”

The bad news is that there has been a deterioration over time.

“This set of accounts is a real shocker,” explains Purcell. “The tail-off over the previous two cycles wasn’t as bad as this time.”

Unlike most other analysts, Purcell’s firm uses a measure called economic profit, which is all the usual things analysts measure plus the cost of equity or, in other words, the cost of investing in this particular business as opposed to any other.

“We think it is a better reflection of how much money the owners are putting into these clubs every year to keep them afloat,” he says. “If we look at the previous three-year cycle, from 2013-14 to 2015-16, there was a league-wide deficit of £380 million. But with 18 of the 20 accounts now in, the deficit from 2016-17 to 2018-19 is £624 million. We’ve never seen anything like that before.

“Of the 18, only five have posted an economic profit. Since 2009, we believe the Premier League has made an economic loss of £2.74 billion.”

Sheffield Hallam’s Plumley also ties the league’s cost-control issues to the revolving door of bumper broadcast deals and the players’ demands for their fair share of that booty.

“Costs have been the issue for football for more than 20 years: you can trace it right back to the start of the Premier League era,” he says. “Whenever a new broadcast deal has been announced, most of the clubs have immediately pushed the envelope in terms of what they can afford.”

Ramon Vega enjoyed a 13-year career as a professional footballer in his native Switzerland, Italy, England, Scotland and France, playing for sides such as Celtic, Spurs and Watford, before retiring in 2003 and becoming an asset manager and sports business consultant.

“Ten years ago many of the Premier League clubs were bankrupt from a balance sheet point of view but then they got those two big TV deals in a row and it lifted them all out of the red,” says Vega.

“Those huge increases really saved them. OK, nearly all of that money has gone to the players but, as an ex-player myself, I don’t blame them at all. If you’re offered it, you take it. You’d do it, too, that’s human nature. But as a businessman, I’d worry about the wage to turnover ratio. Were the clubs prepared for this crisis? No. Was any other industry? No.

“The strange thing is most of these guys are very good businessmen away from football but very few of them run their clubs like their other businesses. I think Mike Ashley at Newcastle is the exception but even he does haven’t lots of money in reserve.”

Purcell agrees. “Who signs these contracts on behalf of the clubs? It’s not the players or their agents. It’s the owners,” he says.

“You’ll never find a bricklayer who refuses a wage because it’s morally reprehensible. This isn’t the players’ fault. Good luck to them. This about the ambitions and agendas of the owners.

“Of course, nobody predicted this particular crisis but good businesses can and do predict a crisis. Football should have been able to model some kind of shock to the system that would have an impact on broadcast income because they’re all on such a fine tightrope. Any shock would see some of them tip off that tightrope.”

Dr Dan Parnell is a senior lecturer in sports business at the University of Liverpool’s Management School and the chief executive of the Association of Sporting Directors. For him, football’s cost-control problems could be sorted out at a stroke if the big calls were left to the experts.

“There are lots of good, well-intentioned people in the game who desperately want to make good decisions for their clubs but all too often those people are either not making the final decisions or those intentions go out of the window when the owners get involved,” Parnell explains.

“You can see it in the Sunderland ‘Til I Die documentary (on Netflix), where you have the manager and head of recruitment saying, ‘don’t pay any more than this for that player’ but then go ahead and do it anyway. It’s like they’re playing with a new toy.

“This is where a really good sporting director can help. Look at Stuart Webber at Norwich. OK, it looks like they’re going down but nobody can say they are not in better shape as a club than when he started.

“He’s overseen the new training ground, he’s changed the way they recruit and develop players and he’s got them on a secure footing financially. Any player he will have signed this season will have been signed with the thought that they might go down and his contract will have to work in the Championship. It’s a more honest and sensible approach than lots of other clubs.”

Maguire, Parnell, Plumley and Purcell all told The Athletic they hope the Premier League will learn something from the current crisis, either bringing in a salary cap, increasing the amount it shares with the EFL or simply persuading the owners to let their staff get on with it.

But Vega is not so sure this will be the “enormous wake-up call” the industry needs. “I don’t think football people ever learn,” he says. “The game is so geared up around today. Nobody thinks about tomorrow.

“That’s why they’re panicking now. You can see that they’re not thinking straight with these decisions to furlough non-playing staff. How much money is that really saving them? But with no Champions League income, no matchday, maybe they have to repay some of the broadcast money…they’re thinking, ‘shit, what do I do?'”

Not everyone is quite so sure football has arrived at this point in such terrible shape. Not compared to any business sector, anyway.

Dr Stefan Szymanski teaches sports management at the University of Michigan and is the author of the best-seller Soccernomics.

In an exchange with The Athletic this week, he said: “The problem is that all this analysis is in a vacuum. If you’re going to say that everything that ever goes wrong is due to incompetence without considering any other benchmarks or comparators, then there’s no defence.

“The Premier League is not perfect. But why are they held to a standard of perfection? Who else are we holding to that standard? Is there any business not in a state of panic right now? What other sport is faring better in this crisis than the Premier League?

“This is one of the most successful organisations in the world, measured by year-on-year growth over 30 years. They deliver an outstanding product for consumers. Who cares if they can’t control their costs?”

________________________________________

Szymanski is right. The Premier League has been giving people around the world what they want for nearly 30 years. But now, for reasons beyond its control, it cannot. And because it has perhaps been a little too generous with its players (and their representatives), it is not in as robust a position as a business of its stature should be.

You do not need to be an accountant to know that Bournemouth, who get 88 per cent of their revenue from broadcasters and spend almost all of that on wages, are in a tough spot. Even frugal Burnley, with their balanced books, lean very heavily on the league’s biggest backers. Getting football back on fans’ screens is of paramount importance to them.

But nobody is immune. Manchester City, perhaps, with the almost limitless wealth of Abu Dhabi behind them, will emerge relatively unscathed and Manchester United’s many mattress and noodles partners do not look so stupid now everyone is looking for other sources of income. But they, and the other big clubs, need the exposure the Premier League and Champions League give them to make their numbers add up.

 

[mrmojorisin75]

I like the idea of a Super Month for the Premier league with all games televised but played behind closed doors starting in June

 

same here, whenever it may be it's a great idea imo...just flog the fucking life out of the oxygen breathing nhs thieving cunts live on tv

[Wullie]

Interesting story coming out about Wimbledon (tennis) compared to most other sporting events who've been left looking screwed. They added a pandemic clause to their insurance after SARS and they're about to collect £100m payout on it.

[TBG]

Wimbledon, the tennis tournament founded by Spencer Gore, played at the All England Club on a grass surface with Gregory Rusedski doing analysis for the BBC

 

Still can't see the connection?

 

Spencer Gore

All England Club

Grass surface

Gregory Rusedski

 

 

[Interpolic]

Hang on...

 

TBG

King of GIF. WHAT?

General Member

 

Phew, it's areet actually.

[Interpolic]

Germany England from 2001 being shown on YouTube at 8.05pm:

 

[Shays Given Tim Flowers]

Odd that there was once a time when I didn't think Michael Owen was a massive bellend.

[Jinky Jim]

SOME OF THE OPTIONS CONSIDERED

 

Null and void the season

 

End the season now

 

Set a deadline for completion

 

Play behind closed doors

 

The season that goes on and on

 

 

They seem to have missed out another option. Finish the season now....but no relegation in any league. Leeds and WBA promoted to Premiership. Coventry and Rotherham promoted to Championship. Crewe and Swindon promoted to League 1.Barrow and Harrogate promoted to League 2. All these promoted teams are top 2 in their division by merit, teams behind do not have games in hand.

Play 2020/21 season in premier with 22 teams...more games i know, but offer Sky Sports/BBC/Prime Tv etc more games to view and some of them at 3pm..this carrot might offset them from asking for money back for 2019/20 season.

At end of season Premier league has 4 relegated teams, and championship only promotes 2 teams, thus bringing premier back to 20. In Championship/League 1 and 2 only winners automatically promoted, whilst teams in positions 2-5 have playoffs.

Personally i would hate to see this season played out just to accommodate the media, and i believe it would be unfair on teams in relegation positions to have to play games either in neutral surroundings or with no fans.....that negates all the advantages a team may have by playing at home in front of a big crowd....Anyway just an idea but i can’t see the government allowing 50000plus to gather for a match up and down the country for many months to come....and as an extra incentive..Sunderland miss out on promotion and have to spend a third season in League 1

[Ketsbaia]

Think the last thing we need next season is an expanded Premier League

[Jinky Jim]

Think the last thing we need next season is an expanded Premier League

 

Only for one season....though I agree it’s not ideal