COVID-19: Hundreds of clubs face the threat of bankruptcy

Professional football faces its biggest problem in its entire history — a pandemic that is restricting not only its stadium ticket sales, but also threatens TV rights money with the potential of suspending the season.

Around Eruope, there are estimated to be a couple of hundred clubs that are facing the imminent potential for bankruptcy, with many more struggling beyond that. When you look at the average Championship salary for example, even though it’s not the top league in the UK, payroll is seriously high.

When dropping down the leagues to say league 2, clubs are operating on even thinner margins with TV money not being anywhere near that of a Premier Club. This means that a higher percentage of their income is reliant on ticket sales — something that is essentially banned due to lockdown measures.

Profitable clubs like Arsenal are even making redundancies to ensure they can continue operating without vast losses. Clubs lower down the leagues have fewer redundancies to make, and are struggling to bring in any revenue.

Many believed football to be the bubble that is yet to be burst, with inflated salaries and vast agencies fees. What no one saw coming was that a pandemic and a lack of revenue would be what brought the industry to its knees.

Dennis Gudasic, Zagreb’s director, stated there could be a “drastic situation whereby we have maybe 100 or 200 clubs go bankrupt in September or October”. This really poses an existential threat to football, because its entire cash flow model is utterly compromised with very few work-arounds. We’re likely to see an “adapt or perish” situation where clubs, or in “companies” to be more precise, will have to find new revenue streams through their branding prowess. 

Again, smaller clubs have fewer ways to monetise, but the great thing about football is its loyalty. Clubs with even a 10,000-strong fanbase can potentially find ways to survive these turbulent times.

Potential measures

With cases rising rapidly across Europe, there seems to be little hope for international club games, like Europa league, which is another large source of revenue for clubs. Every week, there are more players revealed to have been tested positive. Most recently, this has been West Ham boss David Moyes along with Issa Diop and Josh Cullen. 

It feels that we are going to see a repeat of last year, with cases forecast to rise, and games likely to be suspended as a result. If enough games become suspended, or if the UK goes into a national lockdown again, then scheduling is rendered redundant and unmanageable.

Some innovations have been effective to bring in money. For example, AFC Bournemouth are offering games to be streamed on their website for a fixed price. This is something smaller clubs will be reliant upon given that ticket sales have flatlined. We may also see an increase in debt to see through this bad period, under the presumption that it’s a 1-3 year issue. Any longer, and we will be witnessing an exacerbation in the number of bankruptcies.

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