Corona-chaos: Is a perfect storm heading the way of the EFL

The world of professional football has been blighted by the Coronavirus. Eliminating the virus is of paramount importance as I'm sure all sports fans will agree.

However, this hiatus carries with it huge financial implications, particularly for less stable clubs.

Might this mark the beginning of the end for a number of clubs outside the Premier League?

Focus of the Coronavirus in Football

The hot topic in Football at the moment is what the leagues plan to do regarding promotion, relegation & crowning a champion.

Will Liverpool be denied their first title in 30 years? Are Leeds finally returning to the Premier League? Is it fair to relegate the current bottom three after 29 Game weeks?

All this uncertainty has sparked debates which will no doubt be done to death in the weeks leading up to the Premier League & EFL announcing their decision.

In short, this is what the majority of football fans are interested in. However, this is also the area of the game which will be least affected by the Coronavirus and subsequent suspension of fixtures.

The Premier League and many clubs in the Championship will be able to survive this period with ease. A New Sky TV deal struck in 2018 ensures that Championship clubs receive a hefty chunk of money from the sale of broadcasting rights.

This figure is astronomical in the Premier league! Alongside this, the value of their assets and billionaire owners means they have very little to worry about in terms of the longevity of their clubs.

In the 2017/18 season, 8 of the 10 highest net-profits in the football league were made by Premier League clubs.

In the previous season it was reported that more than half of Premier League sides could have made a pre-tax profit playing games in an empty stadium. AFC Bournemouth being the least reliant on matchday revenue as the TV money made up 91% of their turnover that year.

Conversely, the 10 clubs which relied on matchday revenue the most in the 2017/18 campaign were all outside of the Premier League. With League one side at the time, Sheffield United being most reliant as 69.6% of the clubs turnover coming from matchday revenue.

The pattern was the same when looking at staff costs as a proportion of a clubs turnover, Bolton Wanderers (also of league one that season) came out on top with salaries amounting to 153% of their annual turnover.

Financial implications down the EFL

Turnover

There are less revenue streams

On the whole clubs further down the pyramid have less methods of making substantial amounts of money.

Smaller fan bases mean that merchandise sales are a drop in the ocean when compared to that of their Premier League counterparts.

As discussed earlier, much less of the revenue earned from the sale of broadcasting rights filters through to the lower leagues.

Alongside this, stadiums are often smaller and/or not as well attended so gate receipts are also lower despite making up a higher proportion of their annual turnover.

For example in 2016, Manchester United’s turnover was equal to that of 23 clubs’ revenues in the football league combined.

Cost

Still have to pay players, coaches & backroom staff

This is obviously still true of Premier League clubs, it could even be argued that because the wages are much higher it poses more of an issue for top flight clubs.

However, I disagree. The amount of money from TV rights that clubs of this level receive makes this a non-factor.

Another equally valid point is that the Premier League is arguably world football's most desirable league to play in. Meaning there is less of a competition element in terms of wages, look back to the rise of the Chinese Super League who were willing to pay players from the premier league astronomical wages.

The CSL was unable to draw any of the top talent away from the Premier League, the highest profile players to make the move being Ramires & Oscar who were not really missed.

The Lower leagues on the other hand have to pay players above their market value in order to hold onto them. Or risk them being cherry-picked by leagues above them.

The “Behind Closed Doors” proposal

This makes more sense at the top end of the football pyramid but becomes more ludicrous the further down the leagues you look.

If this is the way that the powers that be decide to go, it would have a catastrophic impact on the finances of clubs in League 1 & 2.

The whole of the football league has to move in unison in order for promotion and relegation to be honoured. So that means if the Premier League restarts, all other football leagues must follow suit. So that promoted clubs can move up the leagues and relegated clubs can drop down.

If the pressure put on the Premier League by the media, fans and most importantly the broadcasters becomes too much. They might be forced to call for games to go ahead but behind closed doors. They would do this to fulfil the scheduling commitments they made when selling the broadcasting rights.

This is an action which would have to be mirrored throughout the EFL, having a drastic impact on the finances of many clubs.

We have already discovered that clubs further down the football league are more heavily reliant on matchday revenue and clubs higher up are more reliant on the TV revenue. This is where the conflict lays and why the decision making process is likely to be a very long one.

For me the teams further down the pyramid have to be prioritised here as the stakes are much higher.

Clubs have been struggling financially at this level before the Coronavirus. For instance Bolton went into administration and were docked points, Bury were expelled from the Football league for financial mismanagement, Macclesfield and Southend were also found guilty of failing to pay their players. It’s not easy for these clubs to stay afloat at the best of times.

David Bottomley, the CEO of League 1 Rochdale AFC said that "I would fear for a lot of clubs who are probably living very hand-to-mouth and rely on gate receipts".

Fellow League 1 side Tranmere Rovers’ Chairman Mark Palios was also in agreement stating that it would cost his club up to £500,000 if their remaining games were played in empty stadiums.

Another League 1 side Portsmouth would also struggle if games were to be played out behind closed doors. Mark Catlin their CEO, explained that their 14,500 season ticket holders would have to be compensated, meaning the club may incur losses of around £100,000 per game. He also stated the impact on League 1 & 2 would be “devastating” and could “tip clubs over the edge”.

It’s not all doom and gloom…

Although on the surface it looks whatever decision is made some aspect of the game will have to suffer. The essential information to make a fair decision is not yet available (information such as how long this hiatus will last). Until then speculation like this will rule. We do not have the answers now and it’s unlikely we’ll have them in the near future.

We can still take comfort from a number of things, first of all that the authorities appear to be doing the right thing from a safety perspective and who knows how much of a positive impact banning a couple of weeks of fixtures could prove to be in containing the virus.

Secondly, that 5 out of the 6 Vanarama National League fixtures that went ahead over the weekend saw an increase in attendance. Providing a financial boost for clubs that need it even more than the ones discussed above.

And Finally, there is still a wafer-thin chance that Liverpool will not be crowned Premier League Champions for another year!