Systemic clubs – who would we save to preserve football?

SINCE the world locked down, there has been an upswing of interest in dystopian novels, films and radical theories from desert-dwelling hermits predicting the downfall of the human race from their caravans as they polish their weapons and count their tinned tomatoes.

But what of the football industry? How is this going to look when it finally resumes business? And can we honestly say the world of inflated investment, spiralling transfer fees and multi-millionaire footballers will continue? The fallout in the global economy has yet to be truly taken on board by the public, but there’s little doubt we face a crisis every bit as seismic as the 2008-09 earthquake.

It’s a sign of the times that whenever large companies become bankrupt there are calls for bail-outs and government help. It is not inconceivable that, in extreme cases, a football club of the size of, for example, Manchester United, could be bailed-out by the state. Whether that is right or wrong is another issue, but the morale-boosting properties of football should not be underestimated. When the UK bailed-out the economy by underpinning the banks, the government set a precedent to some extent, but people have found it hard to differentiate between saving the economy and saving banks.

Football clubs are not vital for the economy, but as far as “soft” issues are concerned, the game is vital to the working man. Indirectly, the kudos a government would get from saving the national game could be substantial, although the opposition – whoever they may be – would naturally object. Nobody actually wants to be linked to closing down a football club, whatever the political narrative.

In the worst case scenario, in other words football imploding, which clubs could be deemed to be essential to the structure of European football? This is not just about performance, it is also about the gap that club would leave if it was to suddenly disappear. Obviously, any club being wiped off the map leaves behind a lot of heartache in the local community, but if it became a “Noah’s Ark” discussion, which clubs would need to remain if a country wanted to preserve its national game?

Each would will have its national icons, but let’s assume that a pan-European body, such as UEFA, wanted to save the continent’s football, the clubs that are essential to the structure would be so because of a number of reasons. These would be, primarily, clubs that would be missed and their absence would be akin to taking a vital brick out of a broad structure. They could be clubs that are renowned player factories, producing young talent on a conveyor-belt basis. Furthermore, they will surely be institutions that have the critical mass needed to be influential – large attendances, high levels of sponsorship, appeal to broadcasters.

The most essential clubs are not necessarily the richest or recently successful. For instance, are Paris Saint-Germain vital to Europe or merely vital to their owners and supporters? PSG are Jean-come-latelies, as are Chelsea and Manchester City, clubs that represent the modern model of inflated investment. English and French football did without these three clubs being phenomenally successful for decades, so in theory, if it was to stop, would the rest of the football world care? If you recall how the traditional giants of English football reacted to the threat of “new money”, it was also reflected across the many constituencies of the game, with some fans claiming these clubs had “no history”. Putting myopia aside (I am a Chelsea fan, by the way), clubs became historically dominant for a reason and the addition of clubs like City and Chelsea was, to a certain extent, artificial insemination. The corporate world has long made it difficult for organic growth and now we see that football has gone the same way.

In Spain, Real Madrid and Barcelona are obviously the most important clubs. The attendances of these two clubs account for 25% of all La Liga gates. An even more unbalanced situation can be found in Portugal, where Benfica and Porto’s attendances represent 46% of the overall Primeira Liga total. And if you add Sporting to the equation, this rises to 62%. Benfica and Porto also have a strong reputation for player development and trading, hence their position in the Portuguese game, not to mention Europe and links with South America, makes them systemic clubs beyond their domestic environment. A similar argument could be made for Ajax in the Netherlands.

Italy’s “essential” clubs would surely be Juventus and either/or Inter and AC Milan, while Germany would obviously champion Bayern Munich. Scotland, although not in the same category, would point to the Glasgow duo, Celtic and Rangers, veritable giants that are responsible for 55% of Scottish Premiership attendances.

Somebody, somewhere, has a list of the clubs that are pivotal to maintaining the European football structure, just as the world bank and European Central Bank will have a list of the banks considered to be “of systemic importance”.

This is an exercise that will hopefully not be tested, but when clubs can generate hundreds of millions in revenues but have a problem after a couple of months of financial inactivity, it does make you fear for the future of the game. Time for that screening of “28 Weeks Later”.

@GameofthePeople

Photo: PA

An hour in, I realised I had abandoned social distancing: A return to football

HOW great it was to return to a football stadium and watch a match. Admittedly, it was non-league football step three but regardless, being part of an event with 400 other people and watching live action was very stimulating.

The club did all the necessary precautionary measures: temperature checks, sanitiser at the entrance, plenty of visor-headed and high-vis clad stewards on hand and a few arrows here and there. It was instructive but not over-bearing, certainly not as intimidating as the gang of night club bouncers the club used to employ to act as “security”.

And people were pleased to be back. There was an air of lightness, of optimism and friendliness about the ground – if a certain 70s pop singer wasn’t verboten on playlists these days, the chant, “it’s good to be back, it’s good to be back” would have been playing out of the loudspeakers.

As if in response to the welcoming of fans once more to proper games, the home team obliged with five goals, their latest crop of academy defectors and lower division hopefuls playing bright, attacking football that delighted the crowd.

But one thing struck me and it should have concerned everyone in the stadium. I looked around at about 4.15pm and realised that the heat map (if there was such a thing) would have revealed a very similar distribution of bodies than any other time in the recent history of the club. In other words, social distancing appeared to have flown out of the window. Indeed, I was merely two or three feet away from the chap sitting next to me and just a yard or so from the club stalwart behind me. The chairman was barely four feet from my shoulder. Should we worry?

OK, temperatures had been checked, but a virus can hit you suddenly and can linger. It was interesting that while some people were complaining about the fact that “up north” and in Soho they had taken little notice of the lockdown and that’s why the numbers were climbing, but a beach at Scarborough a pavement café in central London and a football ground, is there really any difference?

Non-league grounds up and down the country would have been no different, so we have to ask, can clubs really control their crowds without a little bit more insistence being applied? If you cannot queue for a supermarket without precautionary geometry, how can people stand on a terrace safely? I attended a Pilates class a few days before the game and the caution of the teacher and the rest of the class was precise and an example of safety first. A football crowd expels a lot of saliva, gas, droplets and other fluids when the fans celebrate, moan, berate and cheer. I thought about that when a small droplet of spit hit my phone screen from the guy behind me.

Social distancing has been relaxed, but it is not a precise science and the instructions have been vague. Masks were in a small minority at the football ground and discipline has never been a strong point of British people, let alone football fans. A crowd cannot be trusted to adhere to the rules without some sort of guidance, therefore clubs should probably think again about how best to ensure a crowd is well distributed around a stadium that has had capacity restrictions placed upon it.

I thoroughly enjoyed the opening day of the season, and I will be adopting a more responsible approach to being a spectator. Throughout the lockdown, I have been cautious, but I cannot help feeling I let my guard down. But I wasn’t alone, many of us acted as if a pandemic hadn’t passed our way. Stay safe has to be the message – at home, at home games and away games!

@GameofthePeople

Dortmund finances hit by CV-19 – more to come?

UNSURPRISINGLY, the coronavirus pandemic has hit some of Europe’s top clubs where it really hurts. Borussia Dortmund, one of the first to reveal their 2019-20 financials, made a € 44 million loss, largely due to reduced matchday income, lower levels of profitability around transfers and higher wages.

BVB, whose share price has fallen by more than 40% in 2020, generated revenues of € 370.2 million, only marginally down on 2018-19, largely due to higher levels of merchandising. However, it has to be remembered that up until September 30, BVB’s third quarter, income had totalled over € 315 million. In the final quarter, BVB saw sales drop by 25% and the true cost of the pandemic will be revealed in more detailed figures for the full year. BVB’s early year revenue generation and their robust business model, a decade of profitability, has softened the blow to some extent.

BVB has a new kit deal with Puma that runs until 2028 but their principal sponsor, chemicals company Evonik, has reduced its stake in the club to below 10%. At the same time, the club has split shirt sponsorship between Evonik and the telecoms sector’s 1&1.

The preliminary data shows matchday revenues dropped from € 44.7 million to € 32.5 million, a reflection of games being played behind closed doors since Europe went into lockdown. In two seasons, BVB’s matchday earnings have fallen by some € 25 million. Before the virus struck, the club continued to have the highest match attendances in world football (81,171 average pre-lockdown) and were admired for their realistic ticketing policy. But with such high attendances, playing just 12 games in front of full houses at the Signal Iduna Park was undoubtedly detrimental.

Broadcasting monies for the entire year were slightly up to € 169.8 million and commercial activity rose to € 167.9 million. Again, more granularity will show how the last quarter (April-June) affected performance.

The big loss doesn’t bode well for the rest of the Bundesliga, but was attributable to a number of influences. As well as the lower matchday revenues, BVB’s profit on transfers was only € 40.2 million versus € 82.9 million in 2018-19 and depreciation and amortisation increased by € 13.6 million to € 106.1 million. Wages also increased by more than € 10 million to € 215.2 million. The wage-to-income ratio was 58%, four percentage points higher than the previous season. BVB’s players are on reduced wages until, the earlier of, the end of the year or when crowds are allowed to return. Although Dortmund finished runners-up in the Bundesliga, their wage bill was around 60% of the total paid by Bayern Munich, the treble champions.

BVB were very active in the transfer market in 2019-20, making five major signings at a cost of € 126.5 million, but recouping € 117 million in sales. The 2019-20 results suggest Dortmund might be pressured into selling their main assets, such as England international Jadon Sancho, but the club’s Chief Executive Officer, Hans-Joachim Watzke, insists that is not the case and that the past 10 years have been good, “both athletically and economically” thanks to the club’s conservative approach. “We have succeeded in generating such a high level of assets that we can withstand this pandemic for a very long time,” said Watzke.

Dortmund have already entered the market to enhance their existing squad for 2020-21, signing promising 17 year-old midfielder Jude Bellingham from Birmingham. Manchester United have been keen to sign Sancho but terms have not been agreed for both the transfer fee (€ 100 million) and player’s wages.

Another player that made headlines in 2019-20 was Erling Braut Håland, signed from Red Bull Salzburg for € 20 million in January 2020 and now valued at around € 90 million after scoring 13 goals in 15 Bundesliga games.

Dortmund will have fared better than many of their Bundesliga stable-mates, but it is likely the pandemic will merely strengthen Bayern Munich’s stranglehold on German football, leaving BVB at the forefront of the chasing pack.

 

@GameofthePeople
Photo: PA Images