Football’s bubble has burst, but all is not lost
Posted on May 29, 2020
FOR some years, critics have predicted the end of top flight football’s growth trajectory, a landscape dependent on mass spectator interest, spiralling broadcasting revenues and globalisation.
Public interest is, arguably, at an all-time high as are player wages and admission prices. Attendances in some leagues have never been healthier and the top clubs generate vast sums of money, creating a world in which the rich are exceedingly wealthy and the also-rans live hand-to-mouth.
On one hand, football has rarely been more compelling, affluent and exciting but by contrast, the imbalances characterise an industry that has been dancing on a volcano. The volcano has now erupted and it might just be a Vesuvius moment for the sport.
It would be simple to dismiss the impact, long-term or otherwise, that the coronavirus crisis may have on football as a financial crisis. But it is much more than that.
As always, the game has had a disproportionate amount of attention given it is, after all, not one of the necessities of life to a lot of people. However, it is clear the absence of football has been one of the defining elements of a locked-down world for fans, particularly those that support teams that were on the brink of success when the flight to the bunkers came.
A global issue
Football may be able to solve its own problems, but it is so dependent on a broad range of influences that have been placed in deep freeze. Some of the consequences will outlive the restart of matches and even the development of a vaccine. They could change the way we live, and in that, is how we derive pleasure, gather in public places and how we spend our money.
Let’s consider the overall damage of this crisis as a severe challenge to the human race. Of course, we have experienced financial downturns and they have usually been the result of cyclical markets, market abuse, war or loosely-applied regulation. The last major incident was 12 years ago and frankly, the economic and political environment of today has been shaped by that period. Coronavirus has stopped trade and production in its tracks, with the World Trade Organisation’s good trade barometer falling to 87.6 (anything below 100 is a downturn). This crisis is different from 2008, but without digital capability, we would have been transported back to the relative stone age of the 1970s.
The global economy is so inter-connected that it is no longer a case of “when America sneezes, Europe catches a cold”, it is, “when a major economy is feeling unwell, concern flies around the world.” Football was a product of the industrial revolution, but modern football is the entertainment for the globalised world. In other words, whatever happens, anywhere in the world can trouble the game.
Football clubs all over the world are anxious right now after two months of inactivity. This shows the economic structure of the game is fragile, despite being cash-rich and attracting huge crowds at the top level. Too much of the cash generated by clubs is disposed of, mostly to the players. When a club can earn close to € 1 billion and be on the brink of a crisis, something is seriously wrong. But then, the club in question pays out 70% of income to its first team squad. Do clubs provision for something actually going wrong?
When things are going well, be it in football or more broadly, then financial institutions are relatively relaxed about lending. When the mood changes, banks and other houses are quick to close ranks. When borrowers are flush with cash, servicing debt is not a problem, but if an unforeseen incident occurs, default is a possibility.
Britain has long been a country saddled with personal debt, hence the well-worn statement that most people are a couple of missed paydays away from losing their home. It would seem, to a certain extent, football clubs are not too far removed from that kind of scenario, particularly in the lower leagues and non-league.
Nobody would be surprised if small clubs went into administration or even bankrupt during this crisis – look at their income, you will be shocked at how small their turnover is – but clubs like Barcelona, Manchester United, Juventus are all feeling the strain in different ways. Some club chairman have been sending signals that range from paranoia, scaremongering or just sheer, good old fashioned caution. Is this aimed at preparing football authorities or governments for what is to come, or are subliminally telling fans to expect the worst? There is a school of thought that the Football League could be bailed out, but how much of clubs’ financial problems are attributable to the virus and how much is legacy? Some clubs just don’t make ends meet and one glance at the Championship’s wage-to-income ratio should send shivers down the spines of fans of the second tier of the English game.
A new era?
There’s little doubt the gravy train that the Premier League has been riding could be grinding to a halt, albeit temporarily. The very good times could be over, but it could herald the beginning of a more sustainable and realistic era. Estimations about the overall loss to the top five leagues in Europe vary, but the Premier, with its very lucrative broadcasting deal, could be losing around € 800 million, a figure that could have risen to € 1 billion if the league did not restart. As it stands, the Premier looks set to return on June 17, 2020. In total, the big five leagues could be € 4 billion short of income, with Spain losing € 600 million, Italy € 450 million, Germany € 400 million and France € 200 million. These figures are very much a moveable feast, but the sums are significant.
The disruption caused by the virus could render the transfer market dormant. Clubs may not have much cash to spend and lenders, provisioning for an economic slump, will not be so enthused about developing creative financing schemes. We’ve already heard that Kylian Mbappe of Paris Saint-Germain has pledged his immediate future to his club largely because the opportunities may not be there when his contract expires. He’s young and can bide his time. A closed market could seriously compromise clubs that rely on player trading as a substantial part of their income, such as Ajax, Benfica and Porto, who all provide a regular flow of talent to major clubs, earning large transfer fees.
France decided early on to terminate its Ligue 1 programme, but since then the Bundesliga, La Liga, Serie A and Premier League have all started or announced a start date for completing their campaigns. While these games will be behind closed doors, going forward, there will come a time when the turnstiles will click once more. Will fans be apprehensive? It would seem likely if the results of a poll run by Game of the People are anything to go by. In the short-term, supporters may be a little nervous of being part of a crowd, but this will surely subside with time. Although few commentators have pointed out that a football crowd would be the ideal place for the second coming of CV-19, a pragmatic approach would be to reduce capacities for a while.
Similarly, away fan travel may have to be restricted in order to limit the possibility of the virus being transported from one end of a country to the other. It may take time to restore confidence in stadium hygiene and public transport.
We can all explain away the virus as a tale of the unexpected, but the world is being exposed to the unexpected on a fairly frequent basis. We can no longer take anything for granted, from the financial stability of the world to climate change and geo-politics. The politics of the world’s major nations are extremely worrying. The lockdown, nevertheless, has been a time of reflection and realisation – how many people have been missed from their jobs? How much of what you did before being confined to home has been yearned for? Can this time of introspection help us to live better, more fulfilled lives?
For football, this should have been a chance to examine how wayward it has become in terms of its financial base and its somewhat hedonistic culture. The game is a standard bearer for conspicuous consumerism, for creative accounting, for the accumulation of debt, for wage inflation, for intermediary intervention and high admission prices. And most fans care little about who owns their club, ignoring human rights records, dubious corporate structures, political affiliations and personal agendas in the hope their club will join the trophy-collecting minority. For every club that has gone down the road of value-driven fan ownership, there are waiting lists for season tickets, queues outside club mega stores and love-struck tribes spending huge amounts of their disposable income on merchandise. This bubble may have deflated, may be losing air slowly, but it will need people with foresight, social conscience and common sense to create a better football world.
Here’s a thought, though. Now we have added a new word to our everyday lexicon, “contagion”, will we ever feel the same about how we watched football in the past?