English club football’s top officials are racing to agree a rescue package funded by the Premier League, the country’s top division, to save smaller professional teams after the UK government refused to bail out the sport.
Crisis talks were held this week between Premier League chief executive Richard Masters and Rick Parry, chairman of the English Football League, the body that runs the three tiers below.
They were triggered by prime minister Boris Johnson’s decision to abandon a phased reopening of stadiums from October due to a resurgence of coronavirus, with matches likely to be played without supporters for the next six months.
EFL clubs generate most of their revenues from gate receipts and the losses resulting from the measures pose an existential threat. Mr Parry has said they stand to lose a total of £200m over the coming months, as well as the £50m lost last season due to the lack of spectators at games.
The 20 clubs of the Premier League are in a stronger financial position, as they benefit from a share of the £9.2bn in broadcasting contracts that have made it the world’s most lucrative domestic football competition.
Over recent days Oliver Dowden, culture secretary, has been preparing a taxpayer-funded package to support many British sports groups, but has made clear no money would be provided for professional football, insisting the Premier League should “step up to the plate” and support the 72 clubs below them in England’s football pyramid.
The Premier League is reluctant to cover the EFL’s full £250m shortfall, according to one person briefed on the talks, and the bailout terms are being fiercely debated. The issue was not discussed at a shareholder meeting this week, according to people with knowledge of the discussions, as clubs are awaiting the outcome of the talks between the chief executives.
Mr Parry said last week that money given to the EFL could be secured against its TV contracts. However, he described this as a “short-term remedy” and said it was necessary to rethink the distribution of revenues in English football to ensure smaller clubs could repay debts and become less reliant on wealthy owners.
A chief executive at an EFL club said there is still disagreement over the size of the bailout and whether it should be in the form of a grant or a loan. There are also demands for the government to make some concessions, such as providing a clear timetable for the reopening of grounds.
Moreover, there is consternation within the Premier League at the suggestion of bailing out clubs in the tier immediately below, the Championship, which already benefit from so-called “solidarity payments” from the top division but are heavily lossmaking. Championship sides paid out 107 per cent of revenues in wages in the 2018/19 season, according to the consultancy Deloitte.
Top tier teams point out that their own revenues have been hit by the pandemic. “We’ve got to balance sympathy with the needs of our own business and employees,” said a senior Premier League club executive, adding that most teams in the division have resisted making pay cuts and redundancies for non-playing staff, or taking advantage of the government’s furlough scheme. “We’re not sitting on cash mountains,” said the individual.
Yet Premier League teams were able to splash out in this summer’s transfer window — the period when clubs can acquire players. Clubs had a net spend — expenditure minus player sales — of £700m, according to Transfermarkt, a German football data website.
This came despite the league saying its clubs face a £700m hit if fans are barred from stadiums for the rest of the season — in addition to projected losses of £850m last season. These were mainly due to lost match day income but also £330m returned as rebates to broadcasters after the pandemic caused a three-month hiatus in action earlier this year.
“Whilst nobody could have foreseen the pandemic we’re currently in, what this is showing is that football clubs like some high street retailers are not resilient to a downturn in trade,” said Rob Wilson, a football finance expert at Sheffield Hallam University.
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