Discussing the implications for top-flight football of the Coronavirus pandemic, the suspension of matches and the possibility that the season is cancelled
How things can change and change quickly. A few weeks ago, we were contemplating a strong finish to the season and the prospects of European football… Clearly there are far more important matters than football at present; however, such is the investment in football from a society perspective, it is impossible to ignore the potential implications of what is unfolding before us for football generally and Everton specifically. Most prudent boardrooms will be modelling their future finances based on different outcomes.
Let’s start with the issue of what happens to the 2019-20 season? The postponement of football until 4 April is just a time-buying exercise by the Premier League. It allows time for all the interested parties (Premier League, EFL, Uefa, broadcasters and sponsors) to plan different scenarios depending upon the impact of the Covid-19 virus in the coming months.
There is no prospect of competitive football returning at that date. I suspect the Premier League and EFL will plan a number of scenarios based on best-case, then working down through gradually worsening assumptions.
Best case scenario (extremely optimistic):
Best case would be that all teams could confidently predict that in the near future (end of April?) they can present full squads of fully fit players, all of whom have either been tested positive and been quarantined for the 14 days and fully recovered or are currently testing negative (and probably taking extreme steps to minimalise future infection). This might allow games to be played behind closed doors. This would also require domestic broadcasters to offer all games to UK viewers free to watch at home thereby minimising the gathering of crowds. Overseas broadcasters would have to follow the advice of their own domestic authorities.
Such a scenario might mean that the domestic season could re-start in May or June and run for a maximum of two months to fulfill all fixtures. That would impact the start of the following season, pushing it back by one or two months to start in October with a later finish than normal.
This would require the co-operation and agreement of all the major European Leagues (who would have to follow subject to the conditions in their own countries at the time) and Uefa. It would obviously mean that the 2020 Euros would be cancelled or moved to the following summer, although that might be problematic if the 2020-21 season finish was late. It would cause the least interruption, provide a relatively fair sporting contest, thereby maintaining sporting integrity, minimalise the financial impact (more on that below) and reduce the impact of contractual year-ends ending 30 June 2020. Those with expiring contracts could agree to short-term contract extensions for the purpose of concluding the season.
The financial impact would be as follows: loss of matchday income, loss of perimeter advertising revenue, loss of merchandising, food & beverage sales, potential penalty clauses in shirt sponsor and other sponsor contracts & potential penalty clauses within broadcast contracts.
For Everton, it is difficult to calculate the losses of revenues because the contract terms are not known nor is the potential for mitigation under Force Majeure or the legal argument of frustration leading to the termination of contracts.
Matchday revenues at Everton are somewhere around £700,000 per game – with 5 home games potentially played behind closed doors, that would equate to £3.5 million lost. If sponsor penalties came into play and were calculated on a pro-rata basis, we have played 76% of a full season, therefore loss of commercial and sponsorship income could be as high as £10 million (on a pro-rata basis) although, if matches were shown on television as usual, the penalties would be lower. The assumption here is that broadcasting revenues remain unchanged. On the positive side, our operating costs would probably reduce. If they reduced by 10%, that would be a £3.5-4.0 million saving.
Overall impact would not be helpful but would be sustainable.
I have to stress that this is the very best scenario and one that personally I feel is extremely optimistic.
Season ends un-concluded
The next best scenario is that conditions make it impossible to conclude this season but have improved sufficiently for season 2020-21 to start at the usual time.
The question, and it would be open to legal challenge whatever decision would be made, is how to deal with an incomplete season?
My own view is that we cannot award titles, nor settle relegation and promotion on the basis of how the tables stand currently. Whilst I accept entirely the claims of unfairness by those impacted by such a decision, there is no alternative if sporting integrity is to be maintained.
Thus, in my opinion, season 2020-21 would start with everybody in the same position as they were at the start of 2019-20 in terms of which division and also European qualification. Quite possibly any on-going legal cases might render this impractical.
What would the financial implications be?
Frankly no-one knows. I’ll assume merit payments are paid on the basis of current League standings. However, more importantly, the absence of football for the remainder of this season, would clearly give the broadcasters and sponsors scope to claim compensation for the remainder of the season (let’s ignore the potential for damages). From a planning perspective, that might mean that Premier League clubs could lose 25% of their income (based on a pro-rata basis).
For Everton, that would be significant. A reduction in revenue of perhaps £45 million would seriously increase our projected losses. It might also impact our ability (outside the generosity of Farhad Moshiri) to arrange future credit facilities.
Such a scenario would significantly affect all clubs. Whilst most Premier League clubs are likely to survive such a scenario, the implications further down the Football League, even in the Championship, would be extremely dire. Without some form of guarantee scheme (perhaps offered by the Government) many, if not most, full-time professional clubs would not survive.
If this scenario was played across football in Europe and globally, it would also materially affect the transfer market, reducing activity and no doubt reducing the transfer values of all but a very small number of players. Loan deals with options to buy might become more attractive although selling clubs in difficult financial circumstances might resist such deals.
A reduction in the potential for future player trading profits would have a huge impact on the business models of many Premier League clubs, including Everton. Perversely, the impact would be greatest with those clubs with the most expensively acquired squads. I would imagine there would be significant write-downs of player values – impacting both Profit & Loss, and the balance sheet.
The loss of perhaps 25% of turnover, a write-down of player values, and a reduction in future player trading would cause major problems and would require a complete re-think on player contract terms when due for renewal. The boom days for clubs and players would, in my opinion, disappear quickly.
In such a scenario, the Premier League’s Profit and Sustainability rules and Uefa’s FFP rules would have to be relaxed for a considerable period. The discretion built into both the monitoring and sanction elements of both bodies would have to be fully utilised.
Worst case scenario
Not only season 2019-20 remains unfinished but conditions have not improved sufficiently for season 2020-21 to start on time.
Now we really get into unchartered territory. Although broadcast deals and most sponsorship deals are multi-year in their duration, even if no legal action had been taken with regards to season 2019-20, the validity of existing contracts relating to 2020-21 would surely be questioned.
In this scenario, all clubs would face significant cash flow issues, many clubs would require recapitalisation (support from shareholders) or extended credit facilities. The Premier League and Uefa financial regulations would have to be waived for a number of years.
The inflationary cycle of ever-increasing commercial deals, broadcasting rights, sponsorship increases and most important player trading values would cease. The impact on the game would be as severe as the impact the financial crisis had on banks in 2008. Without support, most clubs could not operate in the manner they have in recent times.
The New Stadium at Bramley-Moore Dock
Clearly no-one can predict the degree of disruption to football and the financial cost of such in coming months. The more severe the impact, the greater the long term implications are for the game and of course, capital projects such as the new stadium at Bramley-Moore Dock.
I think all that can be sensibly said is that, with the scenarios painted above, the best case would have few major implications, but might make budgets tighter and may impact slightly the cost and quantum of borrowing. It might also slightly delay the final decision by the club – my opinion only.
The mid-scenario has implications in line with the financial costs of the disruption which again would impact budgets and almost certainly impact financing costs. I say this because, from a risk assessment perspective, football looks a much less solid business to lend to than it did even 6 weeks ago.
If we get into the third scenario and the potentially deflationary conditions mentioned above, then reluctantly, I am of the opinion the possibility of the Bramley-Moore Dock stadium being delayed or, in the worst case, not implemented, starts to grow very quickly.
We are living in extraordinary times. What seemed impossible weeks ago is now very real and no-one really knows to what extent the disruption will be, be it short and relatively mild (although every victim is a personal tragedy, of course) or much more significant.
What is clear is that football is not immune financially – nor more importantly at a human level. We trust that those in charge of the game, and particularly all at Everton, make the decisions that reduce the impact of events to a minimum, keeping all involved healthy and safe and leaving the game (and club) we all love in a position to continue to enthrall us all for years to come.
Whatever will be, as Blues, we will look after each other, I’m sure, and be there to support our club in the future.
Reader Comments (58)
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1 Posted 14/03/2020 at 17:00:50
This season will be abandoned. Liverpool will call themselves champions and may well even er have that endorsed by the Premier League... but, when we do resume top-flight games, I'd be surprised if we don't go to the pre 2019-20 season status with everyone in the same leagues as now.
2 Posted 14/03/2020 at 17:35:42
3 Posted 14/03/2020 at 17:51:00
This is only the beginning and there's no putting the genie of hysteria back in the bottle. Authorities feeling they need to be seen doing something will exacerbate the situation.
4 Posted 14/03/2020 at 17:56:29
The only way I can see this season being completed is if all games are played on Subbuteo pitches. I bet Carlo would be flicking fantastico!
5 Posted 14/03/2020 at 18:31:52
6 Posted 14/03/2020 at 18:57:49
But that assumes there are other clubs with access to funds required to make purchases, ie, clubs with cash reserves (are there any of those?) or wealthy benefactors able to throw money in without the present constraints of FFP. The problem there, of course, is that most of the wealthy benefactors have seen a sharp decline in their wealth in the past week.
While their losses will be recovered in due course, many will adopt a risk-averse approach to their football investments. A few may see the situation as an opportunity to take advantage of low prices in a period of light-touch regulatory policies. Which approach will Messrs Moshiri and Usmanov take?
7 Posted 14/03/2020 at 20:44:01
So it is not entirely up to the Premier League to take a decision in isolation. Governments of individual countries will have a input as well. In my opinion, this could run for a while.
9 Posted 14/03/2020 at 22:24:04
Therefore, the Champions League and Europa League are suspended for a year. Preliminary European qualifiers start in early July.
Cancel/freeze everything. Tough on Leeds, West Brom and other divisions. A benefit to those currently struggling and fighting relegation; however, what is more important? Health or football?
10 Posted 14/03/2020 at 22:31:36
Well, what if they put the Euros back to 2021, as it seems likely now, the Premier League would finish later and cross with the rearranged Euros next season..
I cannot see players going straight into the Euros without a break.
11 Posted 14/03/2020 at 22:33:50
12 Posted 14/03/2020 at 22:42:42
Pandemics usually cause social disruption and can change the way we live our lives and what we value; therefore, football as a business may have to work a lot harder in order to attract the money that they currently take for granted.
In the future, they may have to give more consideration to us, the supporters, when they decide to make top-down decisions.
13 Posted 14/03/2020 at 22:43:14
14 Posted 14/03/2020 at 23:04:35
15 Posted 14/03/2020 at 23:49:31
This is going to get very rough by all accounts. As Carlo has said, football is very secondary to what's currently going on.
All of you guys do the best you can to stay safe and protect yourselves and your families.
16 Posted 15/03/2020 at 06:00:59
It just needs to be wrapped up.
17 Posted 15/03/2020 at 07:07:04
Good job, well written. Timely timing. Really difficult to assess when we might be back to safe practises.
However, in these days of gloom and doom, I'd like to mention a front-page article in this week's Weekend Australian newspaper entitled:
"Corona code cracked, now to cure."
I'll just give the drift of it because, although this is generally good news, the whole article is too long to write here. It starts:
Day by day, they're edging closer to a vaccine for COVID-19 but there can be no cutting corners, no half measures when millions of lives are at stake. In a very real sense, these 3 Brisbane scientists have the weight of the world on their shoulders. Keith Chappell came up with the idea to hijack the virus's own fearsome infectious properties with revolutionary "molecular clamp" technology, and, since January he has worked around the clock with colleagues Paul Young and Trent Munro to put it into a jab to inoculate the population. After experiments with 250 different formulations, they have settled on a candidate vaccine, this is being tested on laboratory mice at the University of Queensland as a prelude to human trials by mid-year. "In terms of getting a vaccine that we think will work, we think we are already there," said Dr Chappell, 38.
Keith Chappell came up with the idea to hijack the virus's own fearsome infectious properties with revolutionary "molecular clamp" technology, and, since January he has worked around the clock with colleagues Paul Young and Trent Munro to put it into a jab to inoculate the population.
After experiments with 250 different formulations, they have settled on a candidate vaccine, this is being tested on laboratory mice at the University of Queensland as a prelude to human trials by mid-year.
"In terms of getting a vaccine that we think will work, we think we are already there," said Dr Chappell, 38.
"But getting a vaccine that's available for 7 billion people on the planet means we have to move to scale and that's a very different proposition.
Without going in to too much detail, the article goes on that discussions with the USA Therapeutic Good Administration and the European equivalent to fast track are taking place. They hope to have the vaccine available by the end of the year. So, as you mentioned, timely timing.
I hope this helps some readers to be at least a little more positive.
18 Posted 15/03/2020 at 08:21:45
Football, with its top-heavy wages and unsustainable format, is going to change very rapidly. The never-ending stream of TV money is no longer going to fund its excesses. Many clubs will go under.
We will possibly be left with 2 professional divisions and the rest will go semi-pro. The crazy wages will be severely cut as the lifeblood of sponsorships and TV rights is reduced.
As in the rest of society, it will take years for it to get back to where it was, but I suspect that football will never be the same.
19 Posted 15/03/2020 at 08:51:16
By all accounts, there is one positive with CV19, which is the speed of infection. This thing is not going to be around for years given it will go through the population very quickly. There will be casualties but the vast majority of people who have it/will get it will have very minor symptoms (apparently 1 in 5 will have no symptoms at all). So I'm not sure the extreme scenario you're painting will come about. (I do however agree the money is insane at the top of the tree.)
I can see the worst being over in 2-3 months and then its a question of reorganising and trying to get back to normal. Many clubs will experience short term cash flow problems so main issue for me is how to support these clubs in the next 2-3 months as I cannot see how you finish this season.
Personally, I think the season should be scrapped and we plan for next year. Or at least make that decision in April when it will be clear no games can happen in the foreseeable future.
Btw - I'm currently holed up at home with this thing - like having mild flu. I feel for the older population who are at greater risk.
20 Posted 15/03/2020 at 14:26:00
21 Posted 15/03/2020 at 14:59:18
Have you actually tested positive or are you assuming you're infected? Do you live locally or in one of the more severely affected countries?
22 Posted 15/03/2020 at 16:15:24
Let's hope for sanity. We had to cancel a family party for our Golden Wedding yesterday as one of my sons works in an office where there's been a confirmed case.
23 Posted 15/03/2020 at 16:32:45
Where are you? How were you diagnosed?
24 Posted 15/03/2020 at 17:02:22
25 Posted 15/03/2020 at 17:02:44
26 Posted 15/03/2020 at 17:10:47
One of the symptoms wouldn't be a nose "running like a glassblower's arse" would it ?
(never got that particular Scousism !) 💙
27 Posted 15/03/2020 at 17:38:58
The football calendar includes the Womens euros in 2021, to be held in the UK. There is also a potential Olympic competition in the fall, (has the copa America been cancelled yet) taking players away from our leagues, butt this up against a winter World Cup, the next truly free date is summer 2022.
Throw in the fact other activities used football stadia in the summer, grounds need to be revamped and pitches reseed etc. you are just ploughing through, not understanding that summer activities will be hit if you play the remaining games in this period. Cricket, Rugby league and all manner of things need just as much support, if not more.
Playing games in this period will have a huge knock on effect, could a country cricket game compete with a premier league game? It would do more harm than good.
Its being pointed out a that we supply entrants to European competition, so it you are to keep that intact then all of Europe should make the same call.
That call should be to void the season. At least starting again has lesser knock on effect than trying to shoe horn everything in without understanding the consequences it has to the wider sporting world and beyond.
28 Posted 15/03/2020 at 18:16:24
29 Posted 15/03/2020 at 23:55:21
30 Posted 16/03/2020 at 09:49:43
As such, I can't say 100% we have it (wife and one of the kids also under the weather) but we all have coughs, fevers and the usual breathing symptoms being described and recently came back from northern Italy. So, we either have it or have something with the exact same symptoms. Either way, having come back from Italy we have to self isolate for 14 days as it is. We're down but not out but thanks again for the messages.
Hope everyone on TW is fine healthwise wise.
31 Posted 16/03/2020 at 09:53:31
Used the online urban dictionary [QUOTED].
From the Liverpool argot 'Scouse' - a runny nose, a pun on diarrhoea. Probably a skit at the glassblower's trade which would involve some straining, a hazardous practice for someone suffering any looseness of the bowels. (There is a traditional glass industry at St. Helen's, on the Mersey estuary east and inland of Liverpool.)
My nose is running like a glassblower's arse!"
32 Posted 16/03/2020 at 10:42:49
You painted a mental picture for me, there!
One of my favourite Scousisms is/was "don't hit him - it's Christmas"
33 Posted 16/03/2020 at 11:29:13
34 Posted 16/03/2020 at 11:32:06
35 Posted 16/03/2020 at 12:24:05
How quickly things change.
I arrived home from a holiday in Portugal last Monday. My daughter flew in from America on Tuesday,
as my son was getting married on Saturday.
On Wednesday we had a flood, completely covering downstairs! Thursday was spent clearing up after flood.
Friday my son's honeymoon was cancelled due to Corana Virus restrictions. They had been going to Jamaica. Sunday was spent trying to get my daughter on an earlier flight back to USA. Which she is now safely on.
Saturday however was a brilliant day. 😀
36 Posted 16/03/2020 at 12:27:47
37 Posted 16/03/2020 at 12:38:22
That's a week to hell and back!
Please don't tell me the dog died as well! That would put it over the top.
You must be looking forward to normal and boring!
38 Posted 16/03/2020 at 12:43:42
And yes, normal and boring sound good to me.
39 Posted 16/03/2020 at 13:09:55
40 Posted 16/03/2020 at 15:59:57
Lynn Maher, if we could bottle your attitude and outlook, we'd have Everton at the top of the League in no time. I hope things start to recover as soon as possible for you.
41 Posted 16/03/2020 at 16:17:28
“Running like a sailors knob “ always makes me laugh.
42 Posted 16/03/2020 at 16:43:51
43 Posted 16/03/2020 at 17:19:12
There are so many good people on this site.
44 Posted 16/03/2020 at 21:38:45
45 Posted 16/03/2020 at 21:48:12
Nah' forget it,
All the pundits are Red noses and they'd win every game by 50 or more goals.
46 Posted 16/03/2020 at 22:31:07
I can see the major clubs breaking away sooner rather than later and this current health crisis will provide them with a perfect opportunity.
47 Posted 16/03/2020 at 23:09:45
The London Marathon has also been moved from early April to Early October.
God knows when we might see the next PL game - and even if God had a date VAR would probably over-rule it.
... and The way things are looking Im not optimistic about the summer series of Love Island happening ( Note for Mike Gaynes - Love Island is like the Grafton, but with younger/more attractive ladies, though Rob Halligan May contradict this assertion).
48 Posted 16/03/2020 at 23:15:06
This season might be lucky to restart this time next year, depending how this virus reacts in the southern hemisphere in their winter.
49 Posted 16/03/2020 at 23:37:38
50 Posted 16/03/2020 at 23:52:51
I am 60 in sept,- wasn't planning much due to the other events, but it just shows that you can't look too far ahead. Crazy times!
51 Posted 17/03/2020 at 01:34:14
52 Posted 17/03/2020 at 11:35:46
Even a Coronavirus would think twice about going into the Grafton unless it had drunk 6 pints. There's things in the Grafton carpet that could cause it serious damage.
53 Posted 17/03/2020 at 11:46:18
55 Posted 17/03/2020 at 14:04:28
56 Posted 17/03/2020 at 14:34:00
57 Posted 18/03/2020 at 11:45:39
58 Posted 18/03/2020 at 12:30:39
“Dont let them (the women) see you limping. They go for the lame ones first”
59 Posted 18/03/2020 at 12:37:41
60 Posted 18/03/2020 at 13:11:47
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