Football behind closed doors is inevitable, but clubs need protection
Posted on March 10, 2020
EXPERIENCE of human nature tells us that panic and knee-jerk reactions are as infectious as the Coronavirus itself, so English football may be heading for “behind closed doors” matches just like Italy’s Serie A. The same fate could await football in Germany, Spain and other countries around Italy. Whether this strategy is effective or not is open to debate, but Italy’s decision will prompt discussions in government departments across the continent. As we have seen with financial markets and supermarkets, once a trend gets started, it spreads like wildfire.
The virus has taken on something of a dystopian angle, but when it affects football and travel, people start to realise the fabric of everyday life is seriously under threat. Given that global trade depends on the free movement of people, goods and services, if borders close and transit is made impossible, the problems will be more far-reaching than the postponement of football fixtures.
However, does it need to be as draconian as closing stadiums and suspending competitions? Football is an essential component of the morale of a nation and its removal from the routine of so many people will have a very negative impact. Even the Roman Empire realised the benefit of entertaining the masses.
Furthermore, the financial status of a lot of football clubs will come under scrutiny if income suddenly dries up. If the Coronavirus does trigger a worldwide economic downturn, which is overdue, incidentally, then the collapse of trade will make things far worse than most people realise. We have already seen how feral people become as they attempt to clear supermarket shelves, stripping them of toilet rolls and soap, among other things. Restriction on trade will affect food supplies and if that happens, the scramble for extra-soft tissue will pale into insignificance.
There have been ominous signs this season that the bottom end of the football food chain is not in good health. Bury went out of the EFL and Bolton, Macclesfield, Oldham Athletic, Southend and Morecambe have all been in the news over their financial condition. If these clubs are in a parlous state how much will it take to send them over the edge?
Some clubs spend far too much of their income, leaving little margin for error. Southend, for example, paid out £ 5.6 million in wages from a turnover of £ 6.2 million in 2017-18. League Two’s wage-to-income ratio was over 70% in 2018. The Championship is regularly over 100%. The combined revenues of League Two clubs in 2018 was just £ 91 million, a mere fraction of a single club in the upper echelons of the game.
As the crisis gathers momentum, clubs in Leagues One and Two must be having sleepless nights. Wages account for most of a club’s income and there is little scope for manoeuvre if matchday income is suddenly suspended, even if season ticket sales are healthy and therefore, money has been paid up front. But given the size of crowds in the lower leagues, is ground closure really inevitable? Stadium utilisation rates are 57% and 40% respectively in Leagues One and Two. There is room to breathe at most grounds. Why not cut the capacity to allow more space between fans and therefore, limit the risk of infection? In the Premier, the utilisation rate is 97%, so some work would need to be done, but at the same time, it is unlikely the top division will run into difficulty.
Aside from these measures, clubs need to start talking to their banks and providers now to anticipate a possible worsening of the environment. The crisis could spark off a credit crunch and also, supply chains will start to clog-up. Negotiation over payment terms may become necessary. Banks don’t like to send a club to the wall, regardless of what fans might think. In the modern business paradigm, reputational risk is as important as credit and counterparty risk, so the negative PR would not be welcomed by any bank CEO.
Clubs may also need to offer discounting for season tickets for next season if the disruption means fans miss out. The Football Association/UEFA/FIFA needs to work together to find solutions for clubs that get into trouble.
This is, for most people, an unprecedented crisis that is rapidly becoming science-fiction in nature. Some things will surely change in our daily lives when the panic subsides. We may not be so keen to be in crowded places and we may better provision for travelling in packed trains and buses. We may no longer shake hands so willingly. Let’s hope the affect of the virus doesn’t bring an end to football crowds – after all, football without fans is nothing.