Covid-19 and cashflow - how will Scottish clubs get through this?
Entry posted by hislopsoffsideagain
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It's been, what, two weeks without football? The withdrawal is already so bad that I gave in to the Football Manager 2020 free trial; after 12 years on the wagon I'm now obsessing about how to get Weymouth out of the National League South. Either I pay full whack for the game or I face being locked in my childhood bedroom for a week being fed nothing but pea soup. Choose life, choose a job, choose a career, choose '4-2-4 wing play custom route one'.
But my tremors and nightsweats are nothing compared to those of the people who actually run football clubs. Forget the crazy schemes like secluding Premier League squads in the midlands for a month to play matches behind closed doors in order to keep the nation from cracking each other's heads open to feast on the goo inside. It'll be fecking months before we're even allowed jumpers for goalposts again.
That's if, in the post-covid 19 world, there's actually any football to go back to. Given that giants such as Barcelona and Juventus are having to agree wage cuts/deferrals with players, what hope is there for Scottish clubs? Will they all have gone bust by the time we return to a semblance of normality?
The challenges they face are pretty similar: paying wages (and other outgoings like council tax) whilst having no income.
The sums involved are of course a bit more modest than those regarding Leo Messi and co. At one extreme end of the SPFL scale there is Celtic, whose staff costs for 2018/19 were £56.4m. Only Rangers and Aberdeen also have staff costs above £10m/year. Hearts and Hibs are not far off that, while most of the other Premiership clubs are under £5m/year. The smallest full-time sides, in the Championship and at the top of League One, are at closer to £1m or even less.
At the other end are the part-timers. Winger, teacher and blogger Danny Denholm, now plying his trade at East Fife, wrote in the December 2018 edition of Nutmeg Magazine that the average League One wage was between £100 and £300/week. There are some players *cough* Rory McAllister *cough* who will be on far more than that.
There's also the awkward situation with player contracts, many of which will expire in May or June at a point that is still some way away from a return to football. It's likely that FIFA and/or UEFA will agree a blanket move to extend contracts a few months. If this doesn't happen there will be a few clubs disadvantaged, as some players will surely take the chance to jump ship and join another club as per usual. Those however will be dwarfed by the number of players who are released to save money and who will find it very difficult to find another team until the footie actually starts again.
In one sense the smaller clubs might be better protected. The government's furlough scheme, which clubs should be eligible for, will pay 80% of wages up to a total of £2500/month. That should cover any player earning £3,100/month or less - which extrapolates to about £700/week, a figure that should be cover most players from the Championship (those not based in the City Of Discovery, anyway) down.
Maybe that's how Caley Thistle - not exactly awash with cash - can pledge to pay staff who earn under £24,000/year - essentially those who would be covered by the government scheme - in full with higher paid staff taking a 20% cut, and Partick Thistle can guarantee all staff wages up till the end of May.
Yet there's still Raith Rovers, one of League One's full-time clubs, starting a fundraising drive, while Peterhead, Montrose, Dumbarton and Elgin City are amongst the part-time teams whose players are taking wage cuts. The bottom line is that these clubs have very little cash in terms of cash reserves in the bank and are heavily dependent on gate money - even more so at this time of the season when season ticket cash has long been spent.
At the other end of the scale are Hearts, whose players have been asked to take a 50% pay cut or terminate their contracts. Defender Clevid Dikamona, who took the chance to return to his family in France but holds out hope of returning next season, is so far the only player to take the latter option. I may be being harsh but I feel like a business with an annual turnover of £15m should be more resilient. Then again, the Jambos were supposedly paying some players a crazy £6,000/week.
Most Premiership players will be on deals which, while not as daft as that, are more expensive than that covered by the government and therefore only a smaller percentage will be covered. So whilst no other top flight sides have yet commented publicly on wage cuts, it would be a surprise if it didn't happen sooner or later, possibly in agreement with PFA Scotland. After all, Aberdeen have admitted they'll lose £1.2m a month as it stands.
We're also coming into the period of the year where season tickets for next season normally go on sale. Some clubs are already cracking on as per usual, hoping fans won't mind paying full whack even when it's not clear how many games they'll be watching and when they'll be. You'd think that sales will be markedly lower both for this reason and because plenty of fans have their own money worries right now.
So which clubs should we be concerned about?
All forty-two have at least cleared the first (admittedly, not very high) hurdle of paying March's wages, though some of the above-mentioned clubs may have implicated cuts as part of this. But we're only a fortnight into this. The situation will be far clearer in a month's time.
It is a bit simplistic but not entirely unreasonable to assume clubs who have a rich sugar daddy - the Dundee clubs, Ross County and Hibernian come to mind - have more resilience. And if you have £39million just resting in your account, you'll be fine. By the end of this, Peter Lawwell may be sleeping on a smaller pile of money, mind.
It might also be presumptuous to conclude Hearts are in trouble given their swift actions. Perhaps they're just the ones quickest off the mark. Or perhaps I'm being overly generous.
There's also the red, white and blue elephant in the room. It's only a few months since Rangers stated that they required £10m to get them through the season. Their Europa League run will certainly have helped there but it seems that hopes of significant outside investment have evaporated. There are still some very wealthy people involved there though who have not been shy of providing interest-free loans that end up as equity further down the line. And there's also a huge fanbase who will surely not hold back when season ticket sales commence.
So with a bit of common sense and a combination of prudence and government support, hopefully everyone will come out of this if not unscathed then only slightly wounded. Here's to hoping, anyway...
Lawrie Spence has whinged about Scottish football on Narey's Toepoker since September 2007. He has a life outside this blog. Honestly.
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