Column: Will football suffer from "Long-COVID”?

4 January 2021

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Photo: PA Images Headcoach Sinisa Mihajlovic from Bologna looks on at the empty Renato Dall\'Ara stadium when his team faced Cagliari back in October last year.

Fans are back but how long before full stadia are seen again? Some fans could be reluctant going back to watch live-football under future restrictions.

Clubs have been able to access Government and League funding – but when will it need to be paid back?

The impact of this pandemic will last for many years but how will it impact Leagues and Clubs?

Ian Dixon, sports financial expert contact@offthepitch.com

I’ve been involved in financing sports entities for over 15 years (at Ambac, Investec, Fitch Ratings and now Aldwick Advisory) looking at the long-term risks (e.g. Arsenal Stadium in 2006 and Real Madrid in 2019 etc.) and now Leagues and Clubs need to think hard about their post COVID business.

While COVID has dominated all our lives there has been a lot going on in football around Europe: - teams have been bought, leagues have been bought, Project Big Picture proposed some significant changes, European Super League once again raised its head, EU Leagues seeking to support their clubs with liquidity, clubs seeking support from Government and some media rights deals being adjusted.

However, games continued (albeit behind closed doors) and players were transferred (but not the same level of activity as seen before.).

Football adapted to the current restricted circumstances and adjusted playing schedules to maximise TV exposure.  But are the Leagues and Clubs ready for a post COVID world and what will it mean to them going forward e.g.:

1)    When will stadia be full again?
2)    When do Clubs have to pay back the COVID funding they have got?
3)    How long will COVID impact Football?

In other words – will football suffer from “Long-COVID”?

When will stadia be full again?

Gradually governments are providing permission for games to take place with fans given the “social distancing” rules.  Permitting only 2,000 or 4,000 etc fans into a 60,000-seater stadium is not going to make a big difference but it will for lower league clubs who have much lower average crowd sizes.

It is unlikely that full capacity (for the bigger stadia) will be seen for a while – until such time as the virus is under control (i.e., infection rate well below 1).  It will take a while to achieve this given the time required to roll out vaccines as well as new variants of COVID evolving.  

However, the new stadia operating procedures needed, given fans greater awareness of cleanliness, will continue to be adopted including: - hand sanitisers and social distancing rules around the stadium and compulsory face masks will be necessary for many years to come.

However, while this funding is very welcome, such funding will need to be repaid over the next 2/3 years from club cashflows.

As fans are permitted back to stadia, clubs will be competing against a fan base who may find the above social distance restrictions less attractive and got use to staying at home by watching matches in the comfort of their living room.  Clubs could see post virus demand for tickets and attendance levels lower. Consequently, clubs may need to consider making their product offering more attractive – so wider reaching changes may come out of the current crisis.

When do Clubs have to pay back the COVID funding they have got?

During COVID restrictions, Clubs have been able to obtain funding from different sources in order to pay their operating costs.  These sources vary from VAT deferral, PAYE deferral, access to CBILs or other government funding, bank lines of credit and financial support from the shareholders (by way of shareholder loans or additional equity).

This type of funding has enabled clubs to fill gaps in their cashflow from lack of match day revenues. However, while this funding is very welcome, such funding will need to be repaid over the next 2/3 years from club cashflows. This will place certain clubs under ongoing server strain as they will not see 100 per cent recovery of their match day revenues during this period.

How long will COVID impacted Football?

The pandemic has had an impact on many things, but Club football has had less impact than other sectors (retail, aviation, hospitality etc.).  So, while playing behind closed doors has had an impact on all football clubs – those clubs who have a greater reliance on match day revenues have been impacted the greatest.

It is unlikely that match day revenues will come back to the levels seen pre COVID as it will take a while for all the reasons stated above.   However, also what has been impacted during this COVID period is broadcasting, media and associated advertising revenues.

The impact of this is we have seen is a number of TV contracts being renegotiated for a number of different reasons.  Equally, Pay Per View for the Premier League was not seen as a success.  

In this environment and with newer forms of media distribution becoming popular it is difficult to be able to predict how new media contracts will be priced as they come up for renewal over the next couple of years.

Undoubtedly, it is likely that Google, Amazon, Facebook, Twitter, Netflix and Twitch etc. will play a significant role in the distribution of football content in the future.  These platforms may provide creative content and potentially attract new viewers.  

Equally, they could take viewers away from the traditional media providers and impact on the number of viewers they can attract. The question is not if there is an audience for a football product, but the questions are more around how the audience wants to watch their football and therefore which media platforms will be able to offer the most attractive price.

How they will decide how much to pay will also depend upon their advertising revenues and where they can secure attractive sector/products as the market is currently challenged on many different fronts.  

Traditional advertisers like betting companies (gambling adverts not being shown before the watershed etc.) or holiday entities (travelling restrictions) have different issues to contend with and may reduce their advertising spend.  So new sources of advertising revenues need to be found to evolve (and they will) but it may not be before new media contracts are up for renewal.

Football will be on the TV, Laptops and Smart Phones as there is an audience for the game, but the question in a post COVID world is how much the media companies will be willing to pay for such a product.  

Broadcasting revenues will impact Leagues and Clubs and this may force changes in order to maintain the current revenues which will remain long after COVID is under control.