In happier times, the Premier League’s battles took place on the pitch and enormous financial rewards were shared off it. Revenues at teams in English football’s top division reached a record £4.8bn last season. The value of clubs increased. Player wages rose.
But Premier League executives, wealthy club owners and multi-millionaire players have become engaged in a blame game over how to absorb the losses being incurred from the suspension of fixtures due to the coronavirus pandemic.
The Premier League, the world’s most valuable domestic football competition, wants to cut costs. The largest is staff salaries, worth a collective £2.9bn and representing 59 per cent of all revenues, according to consultancy Deloitte.
For some teams, the issue has become critical. Burnley chairman Mike Garlick has said his club will “run out of money” by August.
“It’s a completely unprecedented situation,” he said in a statement. “It’s now not just about Burnley or any other individual club any more, it’s about the whole football ecosystem from the Premier League downwards and all the other businesses and communities that feed from that ecosystem.”
Negotiations over pay cuts between the top tier Premier League, the English Football League, which runs the professional divisions below, and the Professional Footballers’ Association, the players’ union, are mired in mistrust between the parties.
One person involved said the intervention of politicians — health secretary Matt Hancock is among the MPs calling on footballers to “play their part” and accept salary reductions — has led talks to take a “weird” turn. Instead of dealing with the financial crisis, players have become focused on defending their reputations.
The Premier League has called on players to accept wage reductions worth up to 30 per cent of their annual remuneration. The PFA, led by chief executive Gordon Taylor, responded by saying that would result in £200m less in taxes to the UK’s National Health Service. Jordan Henderson, Liverpool captain, is spearheading a private plan for players across the league to make charitable contributions, but league executives worry this does little to help clubs facing a cash crunch.
The PFA has resisted cuts, instead seeking deferrals so that player contracts are realised in full after the shutdown. The union is also demanding more money for struggling lower league clubs, while asking for detailed information about the financial position of individual clubs to assess what concessions — if any — should be made on salaries.
“There are a lot of footballers on a lot of money but equally there are thousands of footballers at the lower levels staring at the financial abyss,” said Tim Crow, an independent sports marketing expert.
With no across-the-board agreement between the Premier League and the PFA, individual clubs such as Manchester United and Arsenal, have begun negotiations to come to their own settlements with players, according to people familiar with the discussions.
The approach of some billionaire club owners has also been called into question. Retail magnate Mike Ashley at Newcastle United and Bahamas-based businessman Joe Lewis at Tottenham Hotspur are among those to have said they will use the UK government’s furlough scheme to fund the wages of non-playing staff. On Monday, Premier League chief executive Richard Masters wrote to MPs to defend clubs using the taxpayer-funded scheme, saying it was “meant for the whole economy”.
However, a person close to the PFA said: “If you have just achieved tens of millions of pounds in profits, why do you need to seek to furlough staff?”
Liverpool chief executive Peter Moore apologised on Monday, saying the club had come to the “wrong conclusion” when it opted to use the scheme. After fierce criticism from supporters’ groups, Liverpool reversed its stance and said it would find other ways to pay staff. Manchester United and Manchester City have renounced the scheme altogether.
Others are seeking alternative ways of plugging the revenue gap. West Ham United wants to raise £30m from a private rights issue, offering additional shares to existing investors, according to a person with direct knowledge of the deal. The club did not respond to a request for comment.
The Premier League is not alone in grappling with the financial consequences of the abrupt suspension. La Liga, Spain’s top football division, said it would lose €150m in revenues from the ongoing lockdown, with the figure rising to €1bn if the season’s matches cannot be completed.
Javier Tebas, La Liga president, said attempts to agree a pay cut with Spain’s players’ union have proved “impossible”. Instead, eight top tier Spanish clubs, including FC Barcelona, have used emergency provisions within local laws to cut player wages by 70 per cent. “We have to survive for the future,” Mr Tebas said.
Other European teams have secured voluntary arrangements: players at Germany’s Bayern Munich agreed to a 20 per cent cut, while those at Italy’s Juventus waived their salaries for four months.
In the Premier League, the salary negotiations began last month after the heads of the 20 member clubs were presented with a dire calculus if the season was cancelled with no further matches played. League executives were told this would result in a £762m reduction in broadcasting payments, with losses rising to £1.1bn once lost ticketing income from unplayed matches is taken into account.
According to people close to salary discussions, the Premier League has asked for immediate wage cuts worth 10 per cent to cover lost match day income, with a further 20 per cent deferred until later this year and only paid if matches are completed this summer in empty stadiums.
Over the coming months the Premier League plans to advance a part of some of the payments clubs typically receive at the end of the season, in a move to alleviate cash flow concerns. The agreement was reached at a shareholder meeting last Friday, according to a person with knowledge of the matter.
Playing matches “behind closed doors” would sacrifice ticketing income but allow the league to protect broadcast deals. UK broadcasters Sky and BT are due to make their next payments to the Premier League in July. Last week, broadcasters beIN and Canal+ paused payments to France’s Ligue 1 due to the lack of games.
While some clubs are rich enough to ride out a prolonged shutdown, many, even at the highest levels of the game, are not. “Anyone who hasn’t managed the balance sheet properly is going to be in trouble,” said one adviser to a leading English team. “There are clubs out there who will not come out the other side. This is going to be the end of the game for a lot, including in the Premier League.”
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