Future of football clubs

[oxford blue]

With a shutdown likely to follow PL I can see may cubs within the Football League structure folding with no income coming in. Many were struggling before this crisis, and I can see a fair number going under. Bury went last season, Bolton not far away and others this season have struggled to pay wages. Similarly in non-league semi- professional structure where there may be no income other than on match days. Locally - to Oxford - , Didcot (Southern League Central Div 1) have already launched a crowd funding appeal which somehow seems unlikely to be successful in current economic situation.

 

The Football League pyramid may be very different next season whenever that starts...

[brucey]

No different to tens of thousands of other businesses around the country really.

Difficult to particularly care about this right now while many more lives are being lost.

[grobyfox1990]

It's awful, I feel terrible for the jobs and lives of so many people. It's long been whispered around the city that the lives lost via the economic costs of this virus may be far far worse than the virus itself. In the case of football, the big clubs have to step up and donate to clubs lower down the pyramid.

 

A huge piece of irony in the evening standard yesterday, the main story in sport stated non league clubs need a cumulative £17m to survive. The box out next door was Mino Raoila claiming Pogba could move to a big club this summer for £150m. There's your answer.

[Voll Blau]

The top clubs (us included) really need to step in financially to aid the game at all levels once the impact becomes clear. It will no longer be good enough to just claim that the well-run ones have survived, and tough luck to the rest.

[Fox92]

The pyramid will be fine next season and ... back to 24 sides in league one. Thing is, Bury were spending so much that they couldn't afford anyway so just like business they couldn't afford it in the end. Bolton have been chucking money around for the past decade, it's not just something that's crept up.

 

There are plenty of football league teams who rely on matchday income and selling their best players to survive. Rishi Sunak has already said the government will support football league clubs like they will any other business although I tend to take what MPs say with a pinch of salt. Football clubs won't just die because of this.

[fuchsntf]

A New First Division might Take off, Elitism & PL might Not rule the roost or even exsist...

 

Egyptian-epoch,Greek-empire,Roman Empire, Titanic, WWI,the SE crash,WWII British-Empire,seen many changes...Each Time in history,something Knocks on the door,and the Status quo changes..

[Dan LCFC]

The potential dispute over Premier League money being claimed back could have serious consequences for the game. I doubt that'll happen but I do get the impressing something significant may have to give here. For all we are very well off at the minute you do wonder if it's going to remain that way.

[MC Prussian]

I think every team in every division is more or less affected the same. With bigger clubs come bigger wages and other, higher costs. I suppose there is some kind of disproportionality, but let's not pretend the big clubs don't suffer, as well.

 

There are several options in order to either keep costs down or find a mutual agreement in order for players and/or staff to forego their respective wages, for example.

Also, a superfund may be a good idea. But the FA in this case would have to act quickly.

[oxford blue]

https://www.bbc.co.uk/sport/football/52052650

 

English clubs should do the same

[Father Ted]

RIP Coventry City FC 🤞

[Fox92]

PL has given football league and national league £125m.

 

Can't knock them for that, fair play.

[StanSP]

23 minutes ago, Fox92 said:

PL has given football league and national league £125m.

 

Can't knock them for that, fair play.

And £20m to NHS which is a great gesture.

 

[SemperEadem]

 

[UniFox21]

7 hours ago, SemperEadem said:

 

If anything, this corona pandemic may cause a massive change in the financial stability of football. Can see a lot of changes and restrictions being brought in

[KingsX]

The author of Soccernomics * just posted a vid on “football club insolvency in the COVID era”.

 

Link is below, but it’s a long college economics lecture.  As someone used to such things (BA in Econ), I took one for the team and watched it, and for those with an interest, his main points are illuminating.  (short version just read my bold sentences)

 

EFL clubs are insolvent by nature.

 

By every measure (cashflow, profit/loss, and balance sheets), Championship, League One and League Two teams are money losers which would not continue to operate if conventional businesses.  Wages alone are substantially higher than revenues across these leagues.  EBITDA (profit) and net assets are negative.

 

Clubs are financed via loans from their owners, which are rarely repaid (call in the loan, and you destroy your own asset).  This is the cost of owning the toy.  Chelsea owe Roman Abramovitch ₤1.167 billion.  (This -- more than anything in their trophy cabinet -- is what made them a “big club” in 2020.)

 

Banks stopped lending to nearly all clubs in the 1980s.  (So unlike conventional businesses, commercial lenders do not force clubs into insolvency.)  Wages and transfer fees are protected (they get priority in a winding-up) and the FA binds clubs not to sue each other.  So, HMRC is the one thing that forces clubs into insolvency.

 

The major unsecured creditor for clubs is HMRC.  Taxes are only 2% - 5% of liabilities for most clubs.  If they can pay that percent, they can keep operating.  And so they do -- even while they are insolvent -- albeit with drama and changes of ownership.  The proportion of English clubs that declare insolvency is not higher than in France or Germany.

 

And so clubs enter insolvency (or fold) due to external shocks, not (as conventional wisdom has it) through indiscipline.  “Indiscipline” -- operating on the edge -- is just part of the business plan.  Most of the time, hard-pressed owners either shell out, or find somebody else to grasp the hook, and sell.

 

The only time in 35 years when football club insolvency ran higher than general-business insolvency, was when ITV Digital went belly-up.  The “shock” (unplanned loss of revenue) was too big to cushion.  Creditors (taxes) went completely unpaid.  17 clubs (LCFC included) declared a form of insolvency following that event.

 

COVID is the biggest shock since WW2.

 

What worse revenue shock than a completed, unexpected shutdown?  Even for the “healthy” PL, it’s a bloodbath.  If the season is not completed, its clubs lose:

               - ₤150M in matchday revenues

               - ₤762M in TV revenues

               - ₤249M in commercial revenues

That’s about a ₤1.2 billion hit, compounded by the loss of season ticket renewals and transfer fee payments.

 

In the other leagues, where most clubs are already operating at a loss, and those ST renewals are spring’s lifeblood, this will be the end of the road for many.  Unless things change, bigtime.  Either an injection of cash from above (but the PL is also hard hit) or something more radical.

 

Szymanski’s proposal is to mutualize clubs’ debt and secure it against future TV revenues.  He lost me there, not sure how you do that when the debt is to the owners.  He also states players will have to come to the table, because wages cannot be “protected” if many clubs are failing at once and there are no buyers.

 

 

* professor at a fourth-rate institution better known as That School Up North

 

 

[oxford blue]

I see Lockeren, a Belgian club face bankruptcy:

 

https://www.bbc.co.uk/sport/football/52361457

 

If as suggested by Michael Gove, pubs could stay closed until December

 

https://www.dailymail.co.uk/news/article-8235181/Pubs-UK-shut-Christmas.html

 

then presumably anywhere where there are people in close proximity - football grounds for example-  would also remain closed.

 

How many clubs could survive such a lengthy closure?

 

[LinekersLugs]

Football needs a good shake up

 

its about time they understood that they need to stop being indulgent poorly run organisations 

 

I think 60 professional teams is enough 

 

 

[Corky]

I think we could be in for an overhaul of the lower leagues. Time to regionalise the bottom two divisions, cut the ridiculous 300 mile midweek trips, you'll get more away fans attending, travel costs will reduce hugely and more derbies will be played. Yes, it may take a couple of years before the leagues even out to an extent but a North/ Sputh split, possibly with some teams going part-time to save money, could be the way forward.

[Leeds Fox]

11 hours ago, Corky said:

I think we could be in for an overhaul of the lower leagues. Time to regionalise the bottom two divisions, cut the ridiculous 300 mile midweek trips, you'll get more away fans attending, travel costs will reduce hugely and more derbies will be played. Yes, it may take a couple of years before the leagues even out to an extent but a North/ Sputh split, possibly with some teams going part-time to save money, could be the way forward.

You’re meaning Leagues 1 and 2? 

[Footballwipe]

12 hours ago, Corky said:

I think we could be in for an overhaul of the lower leagues. Time to regionalise the bottom two divisions, cut the ridiculous 300 mile midweek trips, you'll get more away fans attending, travel costs will reduce hugely and more derbies will be played. Yes, it may take a couple of years before the leagues even out to an extent but a North/ Sputh split, possibly with some teams going part-time to save money, could be the way forward.

Matt Scott mentioned this on the Athletic's Future of Football Podcast last week, and I get it. Football is ever increasingly unsustainable in the bottom divisions, and regionalisation would be a good way of solving the ridiculous trips and generating more interest.

 

I think it's worth a go, League 1 North, League 1 South. Top team promoted from each division, four from each go into an eight-team end of season tournament for the one remaining spot (or have four go down from the Champ and playoffs for each individually.)

[Corky]

7 hours ago, Leeds Fox said:

You’re meaning Leagues 1 and 2? 

Yes.

[Leeds Fox]

22 minutes ago, Corky said:

Yes.

I was just looking at the tables then, depending on where you draw the North/South divide. The teams are pretty much split equally in each division. 
 

Could be a great idea however I feel League One is too high to be ‘regionalised’. 

[oxford blue]

2 minutes ago, Leeds Fox said:

I was just looking at the tables then, depending on where you draw the North/South divide. The teams are pretty much split equally in each division. 

For teams in the middle of the divide, they can change leagues each season when they finish outside the promotion/relegation spots. Oxford City, for example, have played in both Vanarama leagues North and South over recent seasons. I am not sure of the exact rules, but I remember a few years ago a mutual transfer was agreed so they were in south division. 

 

It would have to be agreed whether the divide would be solely on latitude or on distance to be travelled.

[Corky]

23 hours ago, Leeds Fox said:

I was just looking at the tables then, depending on where you draw the North/South divide. The teams are pretty much split equally in each division. 
 

Could be a great idea however I feel League One is too high to be ‘regionalised’. 

Oh it won't be straightforward, especially when you consider you could have a team just relegated from the Championship playing sides in the bottom half of League Two. It will take some adjusting to, no question.

 

But it has to be considered- football needs to look at ways of saving money currently whilst getting people in when they are allowed back- shorter journeys more often save on travel costs and should increase average away followings.

[oxford blue]

The Mail picks up on story that no crowds would be allowed for football matches (and other large gatherings) until there is a vaccine:

https://www.dailymail.co.uk/sport/sportsnews/article-8276165/Football-matches-played-closed-doors-season.html

 

That would be disastrous for clubs outside PL as matchday revenue so important.