the financial impact of Covid (and other things)
by Andrew Godden
The Premier League may still be awash with television cash but for the rest of football the Covid crisis continues to bite deep. With fans excluded from stadiums for the last ten months the income for many clubs has all but dried up. Swansea City Supporters Trust Chairman Andrew Godden muses on the monetary situation for the many…….
Let’s be honest, discussions about football finances are up there with “Who’s the biggest club” in terms of topics that’ll send you to sleep.
The difference between the two is that, unlike who had the biggest crowd for a 3rd round FA Cup tie in 1954, the financial realities of football clubs really does affect a lot, from your ability to recruit and retain players, or even managers, to your ability to even survive as a club.
If there’s one thing Swans fans should have learned from our history between 1980 and 2003, it’s surely that.
As I wrote for the ATFV website when COVID was still a bit of a novelty, the finances of football clubs, particularly in the Championship, are often a bit of a basket-case with many clubs running at a significant deficit, and that COVID would only deepen that issue.
That wasn’t exactly a prediction, more a statement of the blindingly obvious, and my prediction that clubs would fold has happily not yet come to pass. The immediate threat, particularly concerning in Leagues 1 and 2, has been eased by the £50m grant provided by the Premier League.
If we want to quantify the impact, we can look at our less successful friends down the road, and the reports of a recent meeting between the club board, their Supporters’ Trust, and other fan groups.
Out of that meeting came reports of Cardiff estimating they will lose £36m this year and, arguably more critically, having a cash drain of £3m a month.
The profit or loss always gets the headlines, but it’s your ability to pay the bills that matters most. That’s clearly an untenable situation for any meaningful period, even with Uncle Vinny bankrolling you.
Also coming out of that meeting was the news that Cardiff are taking up the offer of an £8m loan from the EFL to ease their cashflow issues. This got some cheap headlines, but I don’t think it’s a big story. It’s an interest free loan, offset against future Premier League solidarity payments. Despite the PR, it’s not a gift from the Premier League (who are only contributing £15m of their own money to this £200m scheme).
I’d be surprised if every other Championship club didn’t take up the offer, as it’s cheaper financing than taking out an overdraft, bank loan or other form of borrowing. Yes, it’s kicking the can down the road, but that was already happening, with clubs in survival mode until fans can return. This becomes a bigger issue if clubs use this money to launch a spending spree, and I would hope the EFL are, for once, implementing strict controls as part of this loan. Governance hasn’t exactly been a strong point until now.
I suspect Cardiff are an extreme example, but there will be similar challenges throughout the Championship and into the lower leagues, including in SA1.
Julian Winter touched on the issue after the Joe Rodon sale earlier in the season. Let’s not pretend the sale of Joe for a reported £11m was anything other than highway robbery, the lad is going to be an absolute star.
There’s a very solid argument that the club should not have sold for so far below his true value. However, Julian made a very valid point that:
a) it provides some much-needed financial security in the short term and
b) it also allowed us to bring in a couple of additional faces.
It’s hard to argue against it being decent business, at least in the short term, given our league position.
This situation isn’t going to change anytime soon, so I expect we’ll see more Championship clubs squeezed by Premier League clubs in any negotiation. Even those clubs run prudently will face their challenges due to that depressed market, because usually they’ve relied on developing and selling on players to balance the books.
Just scroll down the list of deals done in the Championship during this January transfer window, all frees, loans and “undisclosed fees” which I’m sure are peanuts in comparison to the recent past. It’s the same in the Premier League too. This is going to be the reality for the foreseeable future.
It’s a shame it’s taken a global pandemic to bring a bit of financial reality to the running of football clubs, but it’s a start. How fans react to this will be interesting. Those calling for their respective boards to “get the chequebook out” are going to be disappointed.
Players are going to feel the squeeze when it comes to contract negotiations too. Last summer, we saw many top-level professionals ending up without a club. Our former captain, Ashley Williams, surely a shoo-in to be in the next set of inductees to the Robbie James Hall of Fame, has recently retired without a club.
I expect this coming summer is going to be quite brutal for many, especially with Leagues 1 and 2 implementing strict salary caps. As our awareness of mental health improves, I hope the footballing authorities, and clubs, have the appropriate support mechanisms in place.
I also wonder about the potential impact on player development. The Academy model, with the associated costs, does rely on them being productive enterprises, which for teams outside the Premier League means occasionally selling on your crown jewels to balance the books.
If those deals are fewer and farther between, and for considerably less money, that will have seismic effects on youth systems across the UK, especially those that aren’t as prolific as the likes of ours.
The good news on the horizon is the vaccine however, in my opinion at least, we are still unlikely to be opening up society in any meaningful way before the summer. I would hope that then we’re able to reopen the doors of the Liberty and get us all back in there. I also hope that, once we do, that some clubs don’t return to type. That can we’ve kicked down the road is going to need addressing.
Football needed a short, sharp shock to start getting its house into order. Those lessons need to be remembered in the future.
