Teams down the league pyramid can expect short-term cashflow problems following the postponement of fixtures due to the coronavirus pandemic as they look to “keep the wolf from the door”, according to leading football finances expert Kieran Maguire.
Top-level English and Scottish football has been suspended until April 3 at the earliest as sporting events across the globe continue to feel the impact of the virus.
This season has again seen several clubs lower down the divisions struggle to balance the books, with Bury having been expelled from Sky Bet League One in August last year after continuing financial problems under owner Steve Dale and the collapse of a late takeover bid.
Gate receipts remain key for teams outside the Premier League, which are supported by lucrative broadcasting deals.
Maguire, a senior teacher in accountancy at the University of Liverpool’s Management School and author of ‘The Price of Football: The Finance and Economics of the Beautiful Game’, fears a lack of money through the turnstiles could have major implications down the line.
“If matches are postponed rather than the season cancelled, then what we are dealing with is a cash-flow issue rather than anything else. Ultimately the clubs will get nearly all of that money back when the matches are rescheduled,” Maguire told the PA news agency.
“I certainly do not see any problems as far as the Premier League is concerned. Overall Premier League clubs get 13 per cent of their income from matchday, so they should be able to absorb those shocks.
“I don’t think they would be under any more strain than they would be at this stage of the season where their preoccupation would be avoiding relegation, because that is a far greater financial shock than anything to do with COVID-19.
“However, when we drop into the EFL things start to become more precarious.”
Championship operating losses total £648 million (some clubs have not yet published results for 2019 so using 2018) pic.twitter.com/kg1lw7Hfsa
— PriceOfFootball (@KieranMaguire) March 11, 2020
Maguire continued: “If you take a look at those clubs who are not in receipt of parachute payments in the Championship, some 31 per cent of their income is from matchday. When you drop into League One and Two, broadly it is around a third of money which is coming from the fans.
“Clubs have probably got five or six home matches remaining this season, so you are probably looking at a minimum of £150,000 in gate receipts for clubs at the rear end of League Two, then upwards to sort of £700,000 or £800,000 for clubs who are pressing for promotion in League One.
“Can they survive? Some of them are in a strong position and some aren’t.
“This season we have already seen Macclesfield and Southend fail to pay wages in February. It is difficult to see how they are going to pay their wages in March if they have got no income being generated.
“All of the TV money has already been received for this year, sponsors will already have paid up in advance, so they are therefore reliant upon matchday income as a means of keeping the wolf from the door.”
Maguire is in no doubt “the trickle trickle down effect will be significant”.
He said: “At the stadium you have lots of people working there who are reliant upon a four-hour shift once a fortnight, and that is the difference between paying some bills and not paying some bills.
“While the matches might be rescheduled, there is that two-to-three month cash-flow issue.
“I don’t know how that’s going to be addressed. I can’t see the banks reaching out to people to give them emergency overdrafts and things.
“In terms of personal finance, I think a lot of people are going to suffer.”