Emergency funds needed to stop clubs going bust
Finance expert warns of cash-flow crisis
MANY of Scotland’s oldest and bestknown football clubs are in real danger of going out of business in the coming months unless they receive emergency SFA and SPFL funding due to a crippling cash-flow crisis.
That was the stark warning last night from a football finance expert amid the ongoing shutdown of the professional game in this country because of the coronavirus pandemic.
The SFA/SPFL Joint Response Group took the decision to stop all domestic and grassroots football being played until further notice last Friday over concerns about public safety.
UEFA held conference calls with their 55 member associations and then with the European Clubs Association, the European Leagues and FIFPro yesterday to discuss the escalating crisis.
It has been decided to postpone Euro 2020 and play it in 2021 – creating a potential window for the Ladbrokes Premiership and other leagues to be completed during June and July.
However, medical experts anticipate the coronavirus outbreak will only peak in the United Kingdom in midJune and it remains unclear when, or even if, the 2019/20 campaign will resume.
The extended lockdown of Scottish football is set to have catastrophic consequences for the game in this country.
A UEFA report published in January showed Ladbrokes Premiership clubs earn a far higher percentage of their income from ticket sales than any other top league in Europe.
The Club Licensing Benchmark report determined that match-day revenue accounts for 43 per cent of their turnover – almost three times as much as the continent’s average.
The joint response group announced on Monday that the SPFL would make scheduled payments to their member clubs next month as planned despite the shutdown – and revealed the SFA are examining if other distribution monies can be advanced.
Kieran Maguire, a football finance lecturer at the University of Liverpool, believes that substantial handouts will be required from the governing bodies or broadcasters to prevent Scottish clubs from going to the wall in the weeks ahead.
“What football now has is a cash-flow crisis,” he said. “Match-day sales account for around half of the money taken in by Scottish clubs. They are reliant on supporters coming through the turnstiles to pay the bills.
“Even if they return to a scenario where matches are taking place behind closed doors in order to complete the season that is not going to address the problems that the clubs have.
“Having season-ticket money in will negate cash-flow issues for the bigger clubs. If you are a smaller club then your finances tend to be quite precarious.
“The lower league clubs in Scotland who are part time are just going to have to say they can’t afford to pay the wages because they are almost completely reliant on the money they get coming through the turnstiles. It is going to be a struggle.”
Maguire added: “Clubs in the Scottish divisions are, in the main, run far better than clubs in the English leagues.
“That is because there isn’t the same kind of casino promotion campaigns that we see south of the border. In England there are so many clowns in charge of clubs that it has become farcical.
“One of the advantages Scottish clubs have got is that
many of them are part time and are used to operating to a very tight budget. They can maybe survive a couple of home matches not getting played. But it’s not going to be easy for those clubs to survive in the long run.
“The longer it drags on and the longer there are no matches this season the more potential damage it can do to individual clubs. I can’t see how individual clubs can survive with no money coming in from the second week in March until August
“I don’t think the SFA or SPFL have much cash, but if some short-term interest-free loans could come from the industry it would be a fantastic gesture, a show of solidarity within Scottish football and in the best long-term interests of the game as well.
“If we can return to football or if there is some form of financial support coming from elsewhere within the industry – that could be broadcasters, who could advance some of next season’s TV money, that could be football authorities – then it will help.
“But otherwise there is no way a business can survive for that length of time without cash coming in.”
The joint response group have urged clubs to check their insurance policies, but Maguire, who runs the Price of Football podcast, is doubtful they will be covered.
“There are disaster insurance policies available,” he said. “But have clubs bought those? The first thing you do if you have got financial struggles is look at list of things you must pay, like wages, taxes, suppliers, and you look at things which are discretionary, like disaster insurance.
“The paradox is that the clubs who can least afford the insurance policies are the ones in the most precarious financial position and most likely to go bust.”
Maguire believes there is no prospect of Holyrood stepping in to bail out struggling football clubs due to the devastating impact the coronavirus pandemic is set to have on the entire business community.
“The money is not going to come from central or local government,” he said. “Football is in the entertainment industry. How can you give priority to football over people working in hotels or airlines or other tourism industries which will be affected?
“As much as football occupies the minds of football fans, I don’t think you could justify giving it a beneficial treatment. Many, many people don’t know where their next wage packet is coming from at present.”
At the same time, many, many Scottish clubs don’t know if they are going to be able to ride out the coronavirus pandemic, remain solvent and avoid the sad fate suffered by Airdrieonians, Clydebank, Gretna and Third Lanark in years gone by.