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Begbies Traynor Red Flag Alert Football Financial Distress ReportEnglish Football League – May 2020
Football Financial Distress Report
Just a handful of British clubs in peril before the shutdown but majority of clubs now face unprecedented financial distress in wake of coronavirus pandemic
However the impact of the coronavirus pandemic and the social distancing regulations that have caused all play to be suspended since mid-March looks set to have far-reaching consequences for the game, with the English Football League (EFL) clubs hardest hit.
Football finance expert Gerald Krasner, a partner at Begbies Traynor and former chairman of Leeds United, said that the suspension of football during the pandemic had caused a financial crisis and that for clubs’ survival the EFL must resume playing matches, behind closed doors, as soon as possible to avoid long-term disaster for the sport.
“...the suspension of football during the pandemic had caused a financial crisis...”
“We’re unlikely to see the wealthy clubs in the Premier League succumb to profound financial distress as long as they continue to be bolstered by large television revenues. But what is absolutely essential, especially for the EFL clubs, is that they finish the season by playing the remaining matches behind closed doors,” said Mr Krasner.
“The reality is that people have managed without football for more than a month now and there’s a real danger that unless the momentum can be regained and fans can begin to watch matches on TV again, the impetus will be lost and the draw of football will be diminished in the long term. If that was to happen, the television money would soon desert the game too.”
02English Football League – May 2020
Football club finances were continuing to grow in stability by March this year, with only five clubs in financial distress across the 71 clubs that make up the English Football League (EFL) since Bury FC’s expulsion in August 2019, according to the eighth annual Football Distress Report, produced by insolvency specialist Begbies Traynor.
“Like with so many other sectors of the economy, a new business model is required for football if it is to survive. Nobody knows what that looks like yet but it looks set to change the landscape of the game.
“Fans are likely to be asked to dig deep and contribute even more to their clubs, but in turn that could give them more say in, and control over, how their clubs are run.”
Mr Krasner added that he estimated that even with a rapid restart there were as many as half a dozen clubs in divisions one and two that were in danger of financial collapse. “Unfortunately those clubs with wealthy foreign owners may not necessarily be immune from disaster either. Overseas owners will be forced to respond to the effects of the global pandemic on their own finances and business interests, and for some that could mean that ownership of an English football club is simply no longer viable.”
He added: “With rigorous testing and as much social distancing as is practical, there is no reason why the season shouldn’t restart in the first week of June, with two televised matches a week scheduled, so that it concludes by the end of July. The new season could then kick off with a delayed start.”
While the Premier League clubs look financially secure enough to cope with the consequences of the pandemic, Mr Krasner said the Championship clubs and those below them were in a far more precarious position due to their reliance on the revenue generated by match day crowds.
“Invaluable income for EFL clubs, which receive a far smaller proportion of their revenue from broadcasters, has traditionally been generated by the hire of stadiums and facilities for corporate and other uses, but that will also have been wiped out by social distancing requirements,” he said.
Average English League Attendances – 2016/2020 Seasons
Average Scottish League Attendances – 2016/2020 Seasons
2016/2017
2016/2017
2017/2018
2017/2018
2019/2020 (March)
2019/2020 (March)
2018/2019
2018/2019
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Source: ESPN
Source: ESPN
PREMIER LEAGUE
PREMIER LEAGUE
CHAMPIONSHIP
CHAMPIONSHIP
DIVISION 1
LEAGUE 1
DIVISION 2
LEAGUE 2
3.04% VARIANCE SINCE LAST SURVEY
-4.08% VARIANCE SINCE LAST SURVEY
-7.68% VARIANCE SINCE LAST SURVEY
-2.20% VARIANCE SINCE LAST SURVEY
1.31% VARIANCE SINCE LAST SURVEY
52.86% VARIANCE SINCE LAST SURVEY
5.89% VARIANCE SINCE LAST SURVEY
-0.61% VARIANCE SINCE LAST SURVEY
35,647 38,148
13,948
38,153
15,865 16,020 15,367
39,312 19,799 20,418
4,349
20,117 18,573
2,881 3,090 3,022
7,749
555
7,754
854
8,643 8,756
751 1,148
4,601
506
4,431 4,400 4,659
498 489 486
18,000
9,000
12,000
15,000
6,000
3,000
0
03
Football Financial Distress Report
English Football League – May 2020
Football Club Distress – 2014/2020 Scottish Football League
Football Club Distress – 2014/2020 English Football League
9
4
8
4
6
5
1
2 10 00
1 1
3
7
8
6
4
4
5
3
3
2 1
2
1
00
Mar
14
Mar
14
Mar
15
Mar
15
Mar
16
Mar
16
Mar
17
Mar
17
Mar
18
Mar
18
Mar
19
Mar
19
Mar
20
Mar
20
Number of clubs in distress Number of clubs in distress
Source: Red Flag Alert Source: Red Flag Alert
For Further InformationIf you would like to discuss any of the issues raised in this survey or would like further details about the services we provide to help underperforming businesses, please contact:
Alternatively, please contact:
Sarah Hone at Appeal
T: 01423 569999 orE: [email protected]
Gerald Krasner Partner
T: 0191 269 9820M: 07836 607 782E: [email protected]
Ref: BTG 5559/05.20
Offices across the UK. www.begbies-traynor.comBegbies Traynor (Central) LLP, a limited liability partnership, registered in England and Wales No: OC306540. Registered Office: 340 Deansgate, Manchester M3 4LYA member of the Begbies Traynor Group: Specialist Professional Services. www.begbies-traynorgroup.com
Football Financial Distress Report
