Covid-19 and Football: Crisis Creates Opportunity - ScienceOpen
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The Political Quarterly, Vol. 92, No. 1, January–March 2021
Covid-19 and Football: Crisis Creates
Opportunity
KIERAN MAGUIRE
Abstract
This article looks at the financial performance and position of English professional football
before Covid-19 and the impact that the pandemic has had on the industry. It analyses rev-
enue streams in different divisions, the dependency that clubs have on them and how they
have changed as a result of the pandemic. The article also reviews key costs for football
clubs, the extent to which they can be reduced, different business models that operate, and
possible funding sources for the sport from third parties and within the industry.
Keywords: football, Covid-19, governance, US investment, ‘Big Six’
IN 2020, COVID-19 reinforced the view that foot- lockdown was followed by a pilot attempt to
ball is indeed the most important of the unim- return fans to matches via Project Restart,
portant things in life. Somehow, the professional which was subsequently reversed. Attempts
game managed to survive over the last calendar to use behavioural carrots, in the form of
year, with the only notable casualty being Mac- allowing fans to return in very small num-
clesfield Town, who were carefully stage-man- bers to parts of the country which were
aged out of existence as an English Football deemed to be tier 1 and 2, quickly evapo-
League (EFL) club.1 The administration of rated. The new variant of Covid-19 and sub-
Wigan Athletic, and mysterious activities at sequent lockdown signalled a return to
Charlton, could not legitimately be levelled at matches taking place behind closed doors.
the door of the virus, but at existing poor man- In the Premier League, matchday revenues
agement and governance.2 The record of poor accounted for 14 per cent of total income in
governance in football has attracted attention 2018/19, this varies significantly from club
over many years, from parliamentary commit- to club. In total, matchday revenues gener-
tees, individual MPs, supporters’ organisations ated £680 million for Premier League clubs
and think tanks. in 2018/19. All matches were suspended on
13 March 2020 and when they returned, it
Revenues was to empty stadiums. This has meant a
reduction of about 20–25 per cent in match-
Football clubs generate revenue from three
day revenues for 2019/20 as clubs had to
main revenue sources, plus the more volatile
area of asset (player) sales, the latter provid- refund sums to season ticket holders and
ing the most column inches and speculation were unable to sell individual tickets. This
will be amplified in 2020/21 owing to so
in print, broadcasting and social media out-
lets. Clubs across Europe have become reli- few matches attracting paying fans.
ant on player sales in the recent past, with For clubs in the EFL and below, there is
greater reliance on matchday income and so
some clubs making them a central part of
their strategy, a reliance increased by the these clubs have been hit relatively hard by
pandemic. having to play matches in empty stadiums.
Championship clubs in receipt of parachute
payments generated 13 per cent of revenue
Matchday from matchdays in 2018/19, but for the
Matchday revenues (ticket sales) have been remaining clubs, this was 28 per cent. The
hit hardest by Covid-19. The initial median matchday income for a
132 © 2021 The Authors. The Political Quarterly published by John Wiley & Sons Ltd on behalf of Political Quarterly Publishing Co (PQPC)
This is an open access article under the terms of the Creative Commons Attribution License, which permits use,
distribution and reproduction in any medium, provided the original work is properly citedFigure 1: Premier League matchday revenue 2018/9
Championship club for the 2018/19 season broadcast partners such as Sky Sports and
was £6 million. BT Sports are reliant upon a subscription
In Leagues One and Two it is more diffi- model for their own income. Subscription
cult to get a true picture because so many holidays were initially given to customers
clubs take advantage of Companies Act during lockdown as the supply of live
abbreviated accounts legislation and so pro- sports, not just football, dwindled during
duce accounts for small companies. This this period. There has been discussion with
means they do not have to publish profit or the Premier League in relation to providing
loss accounts and the key data therein, such an estimated rebate of £330 million owing to
as revenues, operating profits and wages. matches not taking place on contractually
However, from the limited data that is avail- agreed dates during the lockdown commenc-
able, clubs in the bottom two divisions of ing March 2020. To mitigate cash flow prob-
the EFL generate 35–40 per cent of revenue lems for clubs which were already short of
from matchdays. matchday income, the domestic broadcasters
appear to have agreed to spread the rebates
due to them over a three-year period.
Broadcast Increasing the number of matches made
The Premier League broadcast deal is the available to broadcasters, with no additional
world’s most lucrative in the football indus- fees, also helped the relationship between
try. It generates just over £3 billion annually the Premier League and its partners.
and is spread relatively democratically International broadcast deals have been
between clubs. In addition, four Premier Lea- more complicated. The Premier League’s
gue clubs qualify for the UEFA Champions three-year deal with Chinese broadcaster
League annually, and others for the UEFA PPTV, due to expire in 2022, was terminated
Europa League. This can be worth up to after the broadcaster failed to make due pay-
€110 million in broadcast rights for a club ments. The PPTV deal was worth an esti-
that wins the Champions League. mated $700 million over the three-year
Broadcasters’ reaction to the cancellation period. It has been replaced by a one-year
of matches has been mixed. Senior domestic agreement with Tencent, but while the
COVID-19 AND FOOTBALL: CRISIS CREATES OPPORTUNITY 133
© 2021 The Authors. The Political Quarterly published by John Wiley & Sons Ltd on behalf of The Political Quarterly, Vol. 92, No. 1
Political Quarterly Publishing Co (PQPC)Premier League has not revealed the value, One and 8 per cent to League Two. There
it is likely to be worth substantially less than has been a reported £7 million rebate agreed
the one it replaces. with Sky Sports as a result of Covid-19 and
Ten clubs in the Premier League are reliant lockdown.
on broadcast revenues for 75 per cent or There was an attempt to introduce pay-
more of total revenues. It was therefore per-view (PPV) for Premier League matches
imperative that matches took place in some in 2020/21. This resulted in a backlash from
shape or form, or higher rebates could have fan groups—not because of the principle, but
severely hit those clubs. The reliance upon the price point of £14.95 was deemed to be
broadcast income and fear of further rebates too high. However, PPV does exist in the
is a major factor in Premier League clubs EFL via the iFollow service and seems to be
wanting to fulfil fixtures in the 2020/21 sea- accepted by fans at £10 per match. Cultur-
son. ally, fans of Premier League clubs resented
Those clubs who participate in UEFA com- paying so much when, in their opinion,
petitions will also be subject to a reduction clubs were already generating large sums
in broadcast payments. This is partially from existing revenue sources and many
because of matches not taking place on fans had subscriptions with broadcasters.
agreed dates, but also a reduction in the
number of matches played. This is owing to
UEFA making some knockout matches one- Commercial
legged instead of two. Most commercial deals are done on a club
The EFL broadcast deal is worth about by club basis and individual financial deals
£119 million a year, approximately 5 per cent tend to be scarce. Therefore, it is difficult to
of the value of the Premier League deal. The quantify the impact of Covid-19 on this
deal is broadly split 80 per cent to clubs in income stream. However, we have seen that
the Championship, 12 per cent to League West Ham’s sleeve sponsor, Basset & Gold,
Figure 2: Premier League broadcast revenue 2018/9 [Colour figure can be viewed at wileyon
linelibrary.com]
134 KIERAN MAGUIRE
The Political Quarterly, Vol. 92, No. 1 © 2021 The Authors. The Political Quarterly published by John Wiley & Sons Ltd on behalf of
Political Quarterly Publishing Co (PQPC)went into administration in April 2020, while reversed utilisation of the furlough scheme
Southampton’s front of shirt sponsor, LD following the negative response.4 This is fur-
Sports, abandoned the club in August 2020. ther evidence of the different level of scru-
Many clubs in the Premier League and tiny and comment that appear to apply to
Championship have sponsorships from bet- football clubs when compared with similar
ting companies—the extent of which has sectors.
been controversial, but betting companies In the EFL, the position has been more
are fully aware that football audiences, both challenging. Clubs competing in the Champi-
at matches and broadcast, are in line with onship have for many years been running at
their target demographic. Nevertheless, long- a loss because their wages have exceeded
term financial planning is also difficult: in revenues. Therefore, even pre Covid-19 these
the EFL many front of shirt sponsor deals clubs were very vulnerable to any form of
were only agreed just before the 2020/21 economic shock. Covid-19 is the most signifi-
season began. cant macroeconomic event in generations
and as such has amplified the fiscally cava-
Costs lier way in which clubs at this level have
been managed.
The most significant costs for football clubs The response of Championship clubs to
relate to players—both wages and transfer Covid-19 has been mixed. Some have
fees. wealthy owners who have historically under-
written operating losses and they have con-
Wages tinued to do so during the pandemic
because they have the resources. For them,
In the Premier League, wages have increased Covid-19 has been an opportunity as much
from £97 million in its first season, 1992/93, as a threat, as they can leverage on their
to £3,120 million in 2018/19. This is an financial advantages. Other clubs, with less
increase of 2,811 per cent, compared to an wealthy owners, have been more enthusias-
increase in the RPI over the same period of tic to use the furlough scheme and arrange
108 per cent. wage deferrals with players.
Whilst it may appear that the increase in There has been no progress in applying
wages is unsustainable, football is a talent any form of wage cap in the Championship,
industry in which revenue drives costs, and which would require a two-thirds majority
the increase in revenue since the commence- of clubs (sixteen votes) for any change in
ment of the Premier League in 1992 is regulations. It is clear that there has not been
broadly in line with wage increases. enough support for any form of change from
Although wages are often discussed and the existing ‘profitability and sustainability’
seem high, they are presently lower in the rules, introduced in 2011/12, which have
Premier League as a proportion of income had little impact on cost control, apart from
than they were in 2003. The criticisms by providing much needed lucrative work for
senior politicians such as Matt Hancock of sports lawyers and accountants.
the wage levels being paid in the Premier The reason clubs have been unable to
League therefore seem misdirected.3 Football force through pay cuts is that players have
as an industry seems to be subject to a contractual wage agreements for fixed time
higher level of populist moral and financial periods. If the club breaches the terms, the
scrutiny than almost any other. player would in theory be in a position to
There have been no wage cuts for players walk away from the contract, and the club
in the Premier League as a result of Covid- would not be entitled to compensation in the
19 except at Arsenal. Executives and man- form of a transfer fee. The loss of transfer fee
agers at other Premier League clubs have would often be greater than the cash saved
taken pay cuts, and some players agreed to by a wage cut. There would also be potential
deferrals. Meanwhile, some Premier League implications for staff (player) morale, which
clubs utilised the government’s Covid-19 fur- could impact upon results in the field of
lough scheme, resulting in hostility from play. In the Premier League, each individual
fans. Liverpool, Spurs and Bournemouth all place in the table is calculated to be worth
COVID-19 AND FOOTBALL: CRISIS CREATES OPPORTUNITY 135
© 2021 The Authors. The Political Quarterly published by John Wiley & Sons Ltd on behalf of The Political Quarterly, Vol. 92, No. 1
Political Quarterly Publishing Co (PQPC)Figure 3: Wages as a percentage of Premier League income
Figure 4: Wages as a percentage of income, Championship clubs
just under £2 million, so unhappy players higher division. This could have been an
who are not giving their full effort could opportunity to look at the cliff edges
result in significant sums of money being between divisions (the average revenue for a
lost by clubs. Premier League club is £258 million, com-
In Leagues One and Two, squad salary pared to £32 million in the Championship,
caps have been introduced for 2020/21, fol- £6 million in League One and £4 million in
lowing Covid-19, as an attempt to keep costs League Two) and also within divisions
in check. In League One, the limit is £2.5 themselves, where there is great inequality
million and League Two, £1.5 million. There between those at the top and the bottom.
are caveats and clauses in relation to these
salary caps that will make it challenging for
the EFL to apply the rules. In some Euro-
Transfer fees
pean countries and in Major League Soccer During the summer 2020 transfer window,
in the US there has been greater activity in Premier League clubs collectively spent an
terms of player wages cuts. estimated £1,200 million on player recruit-
Covid-19 has highlighted the gaps ment.5 Culture Secretary Oliver Dowden
between individual divisions and the gam- questioned the wisdom of such spending
bles that club owners have taken historically when the UK government was considering
to bridge those gaps via promotion to a financial support for sport. Whilst this is a
136 KIERAN MAGUIRE
The Political Quarterly, Vol. 92, No. 1 © 2021 The Authors. The Political Quarterly published by John Wiley & Sons Ltd on behalf of
Political Quarterly Publishing Co (PQPC)valid observation, there appeared to be no offered £50 million to clubs in Leagues One
appetite from Premier League clubs for and Two, with extra funding in the form of
financial support from central government grants which will help these clubs meet their
during 2020 other than a desire to be able to obligations over the rest of the season.
generate revenue from having fans attend Whether this will prove to be sufficient is
matches during periods when the level of uncertain, given that there are additional
infections was relatively low. Reductions in Covid-19 related costs, such as testing and
VAT from the present level of 20 per cent transport (social distancing means that play-
were mooted, but this is an irrelevance ers cannot necessarily all travel in the same
whilst matches are taking place in empty sta- coach, for example). The Premier League has
diums. also offered a £200 million loan to Champi-
It should also be noted that if Premier Lea- onship clubs to help them pay outstanding
gue clubs spent £1,200 million in the transfer employment taxes owed to HMRC. How-
window, then some other clubs must be in ever, this has created some resentment from
receipt of the same amount of money. Signif- those Championship clubs which had not
icant sums were received by EFL clubs such fallen behind with their payments to govern-
as Bournemouth, Brentford, and Queens ment. Meanwhile, the National League has
Park Rangers in selling their players to Pre- benefitted from central government support
mier League teams. Transfer spending in the in the form of grants, but the distribution
other ‘Big Five’ leagues in Europe (Spain, method used has resulted in controversy as
Italy, Germany and France) fell significantly, some club owners felt they have been
reflecting the greater dependence in those harshly treated.
countries on non-broadcasting income. How- In October 2020 Project Big Picture (PBP)
ever, some Premier League clubs, such as was leaked to the press. This was an attempt
Chelsea, have the benefit of wealthy owners by American club owners to take control of
such as Roman Abramovich, whose success the English game. It was presented as a
and wealth in his other areas of business benevolent redistribution of money in the
mean his motivations are not financial and game from the Premier League to the EFL
he is in a position to bankroll spending at and a solution to the additional challenges
his club (which was approximately 20 per arising from Covid-19. A more detailed anal-
cent of the Premier League total in summer ysis revealed that PBP would have resulted
2020). in the gap in income in the Premier League
In the EFL, by contrast, transfer spending between the ‘Big Six’ clubs (Liverpool,
was very muted, Championship clubs were Manchester United, Manchester City, Spurs,
only spending money if they had already Arsenal and Chelsea) and the remaining
successfully sold players for substantial fees. clubs, which presently averages £350 million
In the lower leagues nearly all transactions a year, would increase. Furthermore, only
were loans or free transfers. six votes would have been required to
change policies in the Premier League and
other aspects of the domestic game, allowing
Financial support operational and strategic control of profes-
Central government has provided financial sional football to be concentrated in the
support to the football industry in the form hands of a few owners, whose motives
of furlough and tax delay schemes. These might be self serving rather than for the
have helped cash flow, especially in the early whole industry.
months of Covid-19. The Premier League
(via solidarity payments) and the EFL have
advanced broadcast monies to EFL clubs
Summary
that would usually be spread over the 2020/ Covid-19 has highlighted the existing finan-
21 season. Although these are not additional cial and governance weaknesses in domestic
funds, the timing is helpful, allowing clubs football and these are likely to receive con-
to meet their operational costs (especially tinuing attention from policy makers. The
wages) to date. The Premier League has also industry has done well so far to survive the
COVID-19 AND FOOTBALL: CRISIS CREATES OPPORTUNITY 137
© 2021 The Authors. The Political Quarterly published by John Wiley & Sons Ltd on behalf of The Political Quarterly, Vol. 92, No. 1
Political Quarterly Publishing Co (PQPC)loss of revenue and disruption of the sport 2
D. Conn, ‘Brutal and bizarre: the story of how
with relatively few casualties. Like many Wigan collapsed into administration’, The Guar-
parts of the service/entertainment sector of dian, 2 July 2020; https://www.theguardian.c
the economy, football is in a precarious posi- om/football/2020/jul/02/story-of-how-wigan-
collapsed-into-administration-au-yeung-investiga
tion and desperate for a successful vaccina-
tion; T. Doyle, ‘Charlton Athletic confirm Tho-
tion programme to allow a return of mas Sandgaard is the club’s new owner’, Even-
spectators to reduce the financial losses ing Standard, 25 September 2020; https://www.
incurred to date. Even so, if there is a return standard.co.uk/sport/football/charlton-athletic-
to fans attending matches this does not fc-news-new-owner-thomas-sandgaard-confirmed-
address the structural and systematic issues a4556336.html (both accessed 13 January 2021).
that presently exist in the industry. 3
‘Coronavirus: Premier League players should
take a pay cut—Matt Hancock’, BBC Sport, 2
Kieran Maguire is a lecturer in football April 2020; https://www.bbc.co.uk/sport/
finance at the University of Liverpool, author football/52142267 (accessed 13 January 2021).
4
O. Dornay, ‘Bournemouth become latest Premier
of the 2020 book The Price of Football, and co-
League club to reverse decision to furlough staff
host of the podcast of the same name. after “listening to supporters”’, talkSPORT, 14
April 2020; https://talksport.com/football/
694648/bournemouth-furlough-staff-corona
Notes virus/ (accessed 13 January 2021).
1
J. Freeman, ‘Macclesfield Town FC wound up in
5
D. Roan, ‘Premier League and EFL “close” over
High Court over debts exceeding £500,000’, BBC bailout, says Culture Secretary Oliver Dowden’,
Sport, 16 September 2020; https://www.bbc.co. BBC Sport, 19 November 2020; https://
uk/sport/football/54177582 (accessed 13 Jan- www.bbc.co.uk/sport/football/55008860 (ac-
uary 2021). cessed 13 January 2021).
138 KIERAN MAGUIRE
The Political Quarterly, Vol. 92, No. 1 © 2021 The Authors. The Political Quarterly published by John Wiley & Sons Ltd on behalf of
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