Football finance expert paints bleak picture for lower league clubs
The coronavirus pandemic has decimated the sporting calendar.
Football finance expert Kieran Maguire says lower league clubs have been “taken out at the knees” by the coronavirus pandemic, having seen income streams dry up as the possibility of empty stands until 2021 looms large.
Sport, like all industries, is scrambling to get a grip on the Covid-19 crisis, which has led to the decimation of the sporting calendar and pressure increasing on clubs and organisations.
The Premier League is working towards a mid-June return, but there remains plenty of unanswered questions in the EFL as leagues and clubs attempt to navigate through these choppy waters.
There have been countless warnings about clubs going to the wall and League Two side Bradford revealed on Friday they had been informed that there is the “ever-growing possibility of supporters being unable to attend matches until 2021”.
A lack of matchday income for that length of time would irreparably hurt some clubs and Maguire, a lecturer in football finance at the University of Liverpool, paints a bleak overall picture amid this uncertain backdrop.
“The clubs in the lower leagues, most of them have got fairly precarious finances to begin with and have operating on a week-to-week basis in terms of meeting their financial obligations, paying the rent, paying the wage bill, paying the council tax and so on,” he told the PA news agency.
“And that’s during a season when they were having regular fixtures.
“Both Macclesfield and Southend failed to pay wages in February. Oldham didn’t pay their March wages until, I think, two days ago, so there’s a backlog in terms of wages being paid.
“How clubs can address that is beyond me if there is no money coming in through the turnstiles, which accounts for around 40 to 50 per cent of total income for some League One and League Two clubs.
“In terms of the TV deal, I think Sky have been pretty generous to date. But for 2021, they’ve got to have a product before they can pay.
“It’s not fair on them because they’ve got no subscribers themselves. They’ve effectively given everybody a subscription holiday, so their income flows are being impacted.
“Until the EFL have a product which is watchable, then the broadcasters aren’t going to pay for it.
“Matchday income – nothing until we resume. TV – undecided until we’ve got some form of football taking place. And then the third form of income for clubs is sponsors – well, you can’t sponsor a football match which isn’t taking place.
“The industry has been effectively taken out at the knees as a result of the pandemic.”
If the supporter shutout does last the rest of the year, Leyton Orient chief executive Danny Macklin believes income from streaming games could save some EFL clubs.
Clubs currently get 80 per cent of subscriptions to the EFL’s iFollow platform and Maguire believes Sky Sports, UK rights holders, would be flexible enough to negotiate an agreement on that as “they can see the big picture”.
But while that might help plug the gap in League One and Two, already huge losses in the Championship would surely only increase given the current situation.
“The game was living at the edge before the pandemic,” Maguire, the author of ‘The Price of Football’, said.
“If you take a look at the losses in the Championship – there’s a couple of clubs that haven’t published their results, Sheffield Wednesday and Derby – I think we’re looking probably at a cumulative operating loss of around about GBP 650million in the Championship.
“That’s not a sustainable business model unless you have sugar daddies, who are prepared to write out those cheques for GBP 20-30million a year – which to give them credit, most of them have been keen to do for reasons nobody has ever quite managed to fathom out why.
“But if we now move to a situation where there’s no money coming in, those losses of GBP 20-30 million a year in the Championship could easily extend.
“And we will find the sugar daddy owners, they don’t have income in because a lot of them are operating in other industries and there are huge losers, especially in the service sector, in terms of the ability of organisations to make money.”