British sport faces devastating £700m black hole from Covid-19 pandemic
The devastating financial effect of coronavirus on British sport was laid bare on Tuesday with the Football League, the Rugby Football Union and the England and Wales Cricket Board revealing they could lose more than £700m between them in the next year.
With Premier League clubs also facing a potential £750m TV shortfall if the football season does not resume this summer, the financial damage to sport from Covid-19 is likely to run into billions.
That, however, is only the tip of the iceberg with UK Sport also confirming that six unnamed Olympic and Paralympic sports are facing a threat to their solvency within the next three months because they are unable to host events and membership fees and sponsorship have dried up.
Such is the severity of the problem – first revealed by the Guardian last month – that the chair of UK Sport, Dame Katherine Grainger, has asked the government for £53.4m in exceptional funding “within weeks” to ease the financial uncertainty for Great Britain’s athletes and sports as they prepare for the postponed Tokyo 2020 Olympics and Paralympics, now to be held in 2021.
“Sports are already struggling from loss of revenues from sponsorship, membership fees and events being cancelled,” Grainger said. “So if we can give them the reassurance that their longterm funding is in place, then they will not need to make decisions that could be quite disastrous for their sports.”
But as the digital, culture, media and sport select committee was told, all sports are facing crippling costs owing to being unable to hold matches in front of spectators. Tom Harrison, the chief executive of the ECB, warned that English cricket could lose as much as £380m if there is no play this summer.
“We are still working on impact of Covid-19 across the entire game, but we anticipate the cost of no cricket this year could be as bad as £380m across all of our professional clubs and the ECB,” Harrison told MPs. “That is the worstcase scenario.”
There will be no professional cricket in England until at least 1 July and the Hundred, the governing body’s flagship new competition, has been postponed until 2021. Harrison said he still hoped some international cricket would take place behind closed doors
“with a following wind”, including England’s matches against West Indies, Australia, Pakistan and Ireland.
However, he conceded: “We staring at a £100m-plus loss this year whatever happens. We are going to have to take a good look at our cost base … and cut our cloth accordingly. We have less money coming into the sport. It is the most significant financial challenge we have ever faced.”
The chairman of the English Football League, Rick Parry, painted a similarly bleak picture when he spoke to MPs, telling them the 71 lower league clubs were facing a £200m black hole by September.
Parry said it was impossible to predict how many clubs could go under but was adamant English football would have to undergo huge changes, including a salary cap for players, to sustain itself in the years ahead.
“In the Championship wages are 106% of turnover,” he said. “That is ridiculous and it is definitely not sustainable now or in the future. One benefit of going through this pain is that we will be shocked into a more sustainable model.”
“There is a need for a reset – it’s overdue and it’s necessary. We need a rescue package and we need to address the longer term otherwise we will be back into problems in two to three years. We are heading for a financial hole of £200m by the end of September. Clubs are stacking up creditors and there are many uncertainties.”
Parry warned of a “very messy” legal battle if the Premier League tried to deny promotion to the three clubs from the Championship – adding that “lawyers are going to get very wealthy if that happens”.
Bill Sweeney, the chief executive of the RFU, said his organisation could lose £107m in the next year if England’s autumn internationals and the Six Nations Championship were cancelled.
That figure would be reduced to £85m if games against New Zealand, Argentina, Tonga and Australia at Twickenham in November were played without fans. But Sweeney warned the RFU may end up needing a government bailout.
He said: “It is a very significant loss of revenue and we are doing what we can to mitigate it. If this was to be prolonged and go through into the next summer and the Six Nations games were impacted, then there would be a catastrophic impact on rugby union in England.”
In Sweeney’s view it could take between four and six years for the RFU to recover financially from the coronavirus crisis. He also confirmed that despite cutting costs, the RFU would be reporting £15m losses at the end of this financial year next month.
In evidence to the MPs the Sport England chief executive, Tim Hollingsworth, stressed the impact the pandemic was having on grassroots sport and activity. One fact from Hollingsworth particularly cut through: that 44% of children are now doing no physical activity at all, or less than the 30 minutes recommended by the chief medical officer since the crisis began. That is up from a third before the lockdown began.