Football's future: 'Pubs and clubs won't bounce back for many months'
Football is by far the most important sport on TV. If you’re going to spend money on rights it’s got to be on football and it’s got to be the Premier League first, then the Champions League. Before the crisis hit, however, you were getting to a position where broadcasters were beginning to lose money on football. In the UK, Premier League rights had gone so high that BT and Sky Sports were looking to control their costs.
The next round of Premier League rights were therefore expected to go down a bit, as they had in the previous round. But a collapse was not being expected. Demand was still there from customers and broadcasters would still pay out for these rights.
At this moment it’s hard to see that things have massively changed. Yet while we’d like to all think things will be back to normal soon, there’s no guarantee. Pubs and clubs, which are a reasonably serious part of the economics, are not going to bounce back for many months. Sky has stopped taking money from these customers while there’s no sport to show and I imagine this will continue. Residential consumers have also been given a fairly easy online pause mechanism; following the logic that if you get people to pause they will come back, but if you cancel you will have to chase them.
So expect some bounce-back. To some extent there’s a protection to payTV and particularly sports. In Europe, during difficult economic times, sports is what we go back to. But that’s not necessarily the case outside Europe and outside your domestic league within Europe. If pay-TV companies are struggling around the world, nondomestic rights is what they’re going to cut first. A consumer-led recession could also impact on the economics at BT and Sky.
There is another aspect to the economics, however. Big Premier League clubs have fairly diversified income. They get a bunch from broadcasting, a bunch from commercial sponsorship and a bunch from matchday. It’s not far off a third of their total revenues each. A club at the bottom end of the Premier League, meanwhile, typically has a much smaller stadium and much less commercial activity. They are more dependent on broadcast income but also less dependent on overseas commercial deals. In the aftermath of Covid-19, this might have the effect of evening the playing field a little bit.
James Barford, director of telecoms, Enders Analysis.
If I had a wish it would be that we retain the togetherness and collective spirit that seems to have been fostered by weeks behind closed doors, with us only emerging in public for our legally sanctioned exercise and interviews on Zoom. If we went into lockdown on one side of the us/them divide then some of those divisions seem to have been blurred, if not removed, with clubs and journalists treating each other with far more compassion and respect. It would be great to imagine we’ll all remem
ber just how understanding we’ve been with each other and take that as a new starting point.
James Cooper, Sky Sports News correspondent.
Sponsorship
The full implications of the coronavirus pandemic for sponsorship are starting to emerge and resolving some of the likely issues could be crucial for some clubs’ hopes of surviving. There are two sides to any contract: football clubs not delivering their obligations in terms of not being able to promote sponsored products because they aren’t playing matches and also for the sponsors not being linked to the football club. There is a potential breach of contract from the club’s point of view but equally they may have relatively watertight contracts and feel that if they are not being paid then there are problems at the other end.
Whether that means sponsors may ask for some of the money back, much will depend on what each club is committed to do. A lot of the time it involves players travelling to the sponsor and having photos taken in their kit and things of that nature. That element of the contact can’t be fulfilled so sponsors may be asking for their money back or they may be physically unable to pay. We saw that with West Ham’s sleeve sponsor finance firm Basset & Gold [which went into administration in April].
The Premier League clubs aren’t out of the woods given their significant wage bills. But lower down the pyramid in Leagues One and Two where clubs rely more on income from match days, they are really hurting at present. The nature of the sponsors at that level also tends to be different; they aren’t global companies like Chevrolet at Manchester United for example or betting companies like you see in the top two divisions. If you are being sponsored by a local business then that business itself is likely to be suffering as a result of the pandemic and therefore will not be able to pay its next instalment.Kieran Maguire, senior teacher at the University of Liverpool’s Management School and specialist in football finance. Follow him on Twitter.
Corporate hospitality
Our expectation is that when the green light is given for crowds to return there will be a strong desire to attend games which will fuel demand for corporate hospitality. The Premier League attracts demand for corporate packages from around the world and this market will take a lot longer to recover as there is likely to be a restriction on overseas travel and a reluctance from certain nationalities to come to the UK as we appear to be a hot spot for the virus within Europe. While Eventmasters services are offered on a match-by-match basis, as is the case with other major suppliers, we are contracted with clubs on a seasonal basis and we’ll need to consider our level of commitment to them due to the uncertainty regarding a return. We do believe football’s hospitality market will recover far more quickly than other major sports’.
Denise Sheasby, CEO of corporate hospitality specialists Eventmasters Group.