Football's Magic Money Tree

[Chester Perry]

yet more financial penalty clauses emerging in those Premier League TV contracts - You cannot say the broadcasters didn't have themselves some good lawyers - the Premier League on the other hand do not look as good a negotiating as once had been presumed - from the Guardian


Premier League clubs fear impact after learning of extra broadcast rebates
TV companies due £36m for each week season runs after 16 July
Some clubs concerned this could lead to redundancies

Jacob Steinberg - @JacobSteinberg - Wed 20 May 2020 13.19 BST

Premier League clubs fear there will be huge financial ramifications in the likely event that broadcasters demand heavy refunds even if the season is completed.

Top-flight clubs were told last week they will have to give between £300m and £350m back to TV companies even if the 92 games still to be played take place and their anger deepened after discovering broadcasters are due an extra £36m in rebates for every week the 2019-20 season extends beyond 16 July. It is understood some clubs are concerned those demands could lead to severe cost-cutting and job losses.

Harsh financial realities caused by the coronavirus pandemic are at the heart of the league’s push to return to action, with a bill of £762m due to Sky, BT Sport and international broadcasters if the season is cancelled. Although clubs took the first steps towards resuming the season after beginning small group training on Tuesday, the expectation is that games are unlikely to be played before 19 June and that 26 June may be a more realistic start date. Managers and players are opposed to a proposed return of 12 June because of fitness concerns after a long hiatus. With games expected to be spread over six or seven weeks, the season will likely run for at least three weeks after 16 July.

The later it starts, the greater the cost could be to the clubs. As first reported by the Daily Telegraph, there is a sliding scale of payments due depending on when the season finishes. Full details of the rebate model will be presented to the 20 clubs when they hold their conference calls next Tuesday and Thursday.

Although the cost of not playing would be even worse, clubs used a meeting this week to voice displeasure about broadcasters seeking money even if the season finishes. A penalty of at least £300m applies because they would not be able to fulfil contractual obligations around the timing and delivery of a product played in empty stadiums, and the prospect of additional rebates has caused further disquiet among senior executives. One executive warned that a demand for refunds would cause financial problems and could force some clubs into redundancies. Another club has told the Guardian they are braced for a 25% loss of turnover in one three-month period.

Clubs are unhappy with the TV companies given that they are prepared to grant broadcasters greater access and more live games when the season resumes. There is a feeling that broadcasters want to pay less despite being able to show more football. Yet with the terms of the contract favouring the broadcasters, the clubs will find it hard to negotiate a new agreement.
--------------------------------------------------------------------------------------------------------------------------------

EDIT - In a number of ways that was an apt piece for the 4000th post on this thread

[martin_p]

yet more financial penalty clauses emerging in those Premier League TV contracts - You cannot say the broadcasters didn't have themselves some good lawyers - the Premier League on the other hand do not look as good a negotiating as once had been presumed - from the Guardian


Premier League clubs fear impact after learning of extra broadcast rebates
TV companies due £36m for each week season runs after 16 July
Some clubs concerned this could lead to redundancies

Jacob Steinberg - @JacobSteinberg - Wed 20 May 2020 13.19 BST

Premier League clubs fear there will be huge financial ramifications in the likely event that broadcasters demand heavy refunds even if the season is completed.

Top-flight clubs were told last week they will have to give between £300m and £350m back to TV companies even if the 92 games still to be played take place and their anger deepened after discovering broadcasters are due an extra £36m in rebates for every week the 2019-20 season extends beyond 16 July. It is understood some clubs are concerned those demands could lead to severe cost-cutting and job losses.

Harsh financial realities caused by the coronavirus pandemic are at the heart of the league’s push to return to action, with a bill of £762m due to Sky, BT Sport and international broadcasters if the season is cancelled. Although clubs took the first steps towards resuming the season after beginning small group training on Tuesday, the expectation is that games are unlikely to be played before 19 June and that 26 June may be a more realistic start date. Managers and players are opposed to a proposed return of 12 June because of fitness concerns after a long hiatus. With games expected to be spread over six or seven weeks, the season will likely run for at least three weeks after 16 July.

The later it starts, the greater the cost could be to the clubs. As first reported by the Daily Telegraph, there is a sliding scale of payments due depending on when the season finishes. Full details of the rebate model will be presented to the 20 clubs when they hold their conference calls next Tuesday and Thursday.

Although the cost of not playing would be even worse, clubs used a meeting this week to voice displeasure about broadcasters seeking money even if the season finishes. A penalty of at least £300m applies because they would not be able to fulfil contractual obligations around the timing and delivery of a product played in empty stadiums, and the prospect of additional rebates has caused further disquiet among senior executives. One executive warned that a demand for refunds would cause financial problems and could force some clubs into redundancies. Another club has told the Guardian they are braced for a 25% loss of turnover in one three-month period.

Clubs are unhappy with the TV companies given that they are prepared to grant broadcasters greater access and more live games when the season resumes. There is a feeling that broadcasters want to pay less despite being able to show more football. Yet with the terms of the contract favouring the broadcasters, the clubs will find it hard to negotiate a new agreement.

Surely the broadcasters wouldn’t kill the goose that laid the golden egg?

[Chester Perry]

Surely the broadcasters wouldn’t kill the goose that laid the golden egg?

they are certainly using their position of power to try and get even more, without paying extra and that is upsetting the big six, who as we know do not like to give anything away

https://www.independent.co.uk/sport/foo ... 24001.html

[huw.Y.WattfromWare]

The power is still with the clubs. Next round of negotiations just tell Broadcasters involved you are not welcome. There are plenty of alternatives who would love to get their hands on the PL.

[Chester Perry]

The power is still with the clubs. Next round of negotiations just tell Broadcasters involved you are not welcome. There are plenty of alternatives who would love to get their hands on the PL.

Are you sure? I cannot think of any who would provide the current income levels, certainly not amazon or their ilk, the only recourse the Premier League have is to go into a self distributed model and they are probably 2 cycles (6 years) away from that on a global (possibly even domestic) level and the broadcasters know it.

I would be interested to read your thoughts on it

[huw.Y.WattfromWare]

Are you sure? I cannot think of any who would provide the current income levels, certainly not amazon or their ilk, the only recourse the Premier League have is to go into a self distributed model and they are probably 2 cycles (6 years) away from that on a global (possibly even domestic) level and the broadcasters know it.

I would be interested to read your thoughts on it

You know far more than me on finances, CP. I was thinking more worldwide distribution and the recent merger involving Vodafone but I wouldn’t be arguing with you.

[TVC15]

Not looking good for the likes of Burnley is it CP ?

We have to hope the season gets finished for starters - will still cost us but feels like we can just about cope with this initial hit.
But then it becomes about next season and it’s difficult to see a way out for a club like Burnley without selling some of our star assets (including our manager and his team)

I’m not sure trying to persuade players to renegotiate contracts is even a starter in this day and age. There are clubs with far deeper pockets than us who will see this as an opportunity knowing we are going to struggle to survive without selling players etc. And I’m not talking about the United, Liverpool etc - at least 80% of the clubs dwarf Burnley in size in terms of their owners wealth, access to finance (sugar daddy finance that is !!)

The other option is to sell the club and be taken over by somebody prepared to subsidise us like the other clubs. Whilst there may be a chance to go down this road we are not the most attractive or obvious investment vehicle for billionaire owners plus whilst we like to do our business quietly as a club there has been never anything of real substance around serious takeover talks / rumours.

And the irony of all this is is not lost on the fans - one of the best ran clubs in the country (if not the world) now in one of the most precarious positions.

[Chester Perry]

You know far more than me on finances, CP. I was thinking more worldwide distribution and the recent merger involving Vodafone but I wouldn’t be arguing with you.

You should never fall into the trap that I (or anyone for that matter) has a definitive answer - it is not the way things are, people can have opinions and by sharing and discussing them we can all learn and if we are humble enough even reconsider our own perspective - I would be nowhere without the input of Roy, Aggi, Tall Paul, TVC15 and many, many others along the way. By adding you thoughts you are enriching and deepening the conversation - that can only ever be a good thing.

[Royboyclaret]

Chester, have you by any chance spotted the name of the newest member of this messageboard today?

Can't just be coincidence, surely, can it?

[Chester Perry]

Chester, have you by any chance spotted the name of the newest member of this messageboard today?

Can't just be coincidence, surely, can it?

I seem to have missed that Roy

just looked

if that really is Paul - he is more than welcome, I have a lot of time for the work he puts into his website

[Royboyclaret]

I seem to have missed that Roy

just looked

if that really is Paul - he is more than welcome, I have a lot of time for the work he puts into his website

I'm sure it has to be.

Now we await a post on this thread.

[The esk]

Evening Clarets - for what it is worth I am "the esk". Life long Evertonian, "the esk" is a nickname from school, my Great Grandfather played in the first game at Goodison in 1892, hence me being an Evertonian. Thank you for your kind comments - for those of a certain age, Martin Dobson was one of my favourites - such an elegant player.

Happy to answer questions if I can......

[The esk]

I seem to have missed that Roy

just looked

if that really is Paul - he is more than welcome, I have a lot of time for the work he puts into his website

Thanks Chester!

[Royboyclaret]

Evening Clarets - for what it is worth I am "the esk". Life long Evertonian, "the esk" is a nickname from school, my Great Grandfather played in the first game at Goodison in 1892, hence me being an Evertonian. Thank you for your kind comments - for those of a certain age, Martin Dobson was one of my favourites - such an elegant player.

Happy to answer questions if I can......

Welcome on board, 'The esk'. A number of us were more than impressed with your Football Shorts (part 1) article, so a couple of related questions from me:-

a) Who is the Everton player featured at the beginning of the article?

b) We have debated long and hard on here the potential future figures from both domestic and overseas broadcasters and, of course, with greater relevance now as a result of the current pandemic. Clearly the chart within your article shows the effects of reductions from 20% to 50%, but what is your opinion as to the likely percentage reduction?..........Very important to our Club in particular since our matchday receipts are only some 4% of Total Revenue and we are highly dependent on Broadcast Income, probably moreso than the majority of other Premier League clubs. Anyway, interested to hear your views.

[Chester Perry]

Going back to the origins of this thread and as it moves rapidly towards it's 4000th post, Thursday sees the publication of Man United's 3rd Quarter results and an Analyst briefing call where they would be legally obliged to outline the financial impact of Football's pause. It will provide us with the clearest insight into the costs and revenue pressures particularly from broadcasting rights and commercial sponsors.

One thing for sure is that the media will be paying close attention and they are likely to sprouting some very loud headlines from it, especially if the news is particularly bad.

That Manchester United quarterly update is making the headlines as predicted

https://www.dailymail.co.uk/sport/sport ... id-19.html

https://www.theguardian.com/football/20 ... oronavirus

https://www.espn.co.uk/football/manches ... 30-million

I have to say I was hoping for much more info than that on the impact of the pause and the ghost games

this is a bit better

https://www.manchestereveningnews.co.uk ... d-18288587

https://www.businesswire.com/news/home/ ... 1005296/en

https://www.thebusinessdesk.com/northwe ... -programme

You have to say that that is a large drop in revenue for just 2 weeks of lost activity in the quarter, they must have been heading for a loss anyhow

We are now clearer that the tv refund is £15m on a sliding scale from league position.

https://twitter.com/sistoney67/status/1 ... 6131163139

The good news is that if that is the total liability then we are likely to maintain a sizeable portion of our cash position when the next season payments kick-in, though that may not be clear in the accounts as schedules change.

There is also the prospect of similar reductions next season if it's a ghost season

https://twitter.com/sistoney67/status/1 ... 4188603392

EDIT Though Simon Stone has a different interpretation of refunds in this article he has produced - which one is it?

https://www.bbc.co.uk/sport/football/52759246

[Chester Perry]

This is a strange one - a FIFA Council Vice President doesn't see a problem with domestic league games being played overseas - it is against FIFA statutes which have been upheld by CAS

https://twitter.com/sistoney67/status/1 ... 5313371136

[Chester Perry]

A third new kit supplier (following Watford and Rangers), a return to the Premier League for Hummel, and a third new record deal - this is not how I foresaw post pandemic deals

Everton have a new Shirt supplier, it is a big deal for both club and supplier but just goes to show how far behind the 14 are to the big six in this market place.

https://www.sportbusiness.com/news/ever ... agreement/

Paul or The esk predicted this move earlier in the year and it demonstrates the surge in commercial growth at that club - there is still a huge amount of room to catch up on though

[Chester Perry]

Filings at Companies House have stirred interest around the ownership structure of Sheffield United

https://twitter.com/tariqpanja/status/1 ... 5108894720

causing speculation about the Saudi backed takeover of Newcastle United - but it could just as easily be a tidy up following the end of the Legal tussle for ownership with the McCabe family

https://twitter.com/KieranMaguire/statu ... 3852803073

EDIT - The club have released a statement to clarify the confusion (which they created through late filings - Prince Abdullah remains the owner

https://www.bbc.co.uk/sport/football/52763580

[The esk]

Welcome on board, 'The esk'. A number of us were more than impressed with your Football Shorts (part 1) article, so a couple of related questions from me:-

a) Who is the Everton player featured at the beginning of the article?

b) We have debated long and hard on here the potential future figures from both domestic and overseas broadcasters and, of course, with greater relevance now as a result of the current pandemic. Clearly the chart within your article shows the effects of reductions from 20% to 50%, but what is your opinion as to the likely percentage reduction?..........Very important to our Club in particular since our matchday receipts are only some 4% of Total Revenue and we are highly dependent on Broadcast Income, probably moreso than the majority of other Premier League clubs. Anyway, interested to hear your views.

Thanks Roy, that's very kind of you!

The photo is a player called Sam Chedgzoy who played for us before and after WWI.

Regarding broadcasting revenues if next season is played behind closed doors I would expect considerable discounts to be negotiated (even though domestic viewing figures would increase). I also suspect several of the current licence holders overseas will go out of business or at least be unable to meet their commitments. I'd suggest a reduction of 15-20% overall.

Looking forwards to 2022, I haven't had time to do a full analysis yet but in total I wouldn't be surprised if rights fell by 25%. A lot will depend on the extent and length of the global recession

second part of my article will be out over the weekend!

[The esk]

A third new kit supplier (following Watford and Rangers), a return to the Premier League for Hummel, and a third new record deal - this is not how I foresaw post pandemic deals

Everton have a new Shirt supplier, it is a big deal for both club and supplier but just goes to show how far being the 14 are to the big six in this market place.

https://www.sportbusiness.com/news/ever ... agreement/

Paul or The esk predicted this move earlier in the year and it demonstrates the surge in commercial growth at that club - there is still a huge amount of room to catch up on though

The financial improvement is nothing like what is being quoted by some media. Some claimed a doubling, five to ten million. The Umbro deal which was renegotiated a year ago paid over £8 million (close to £9m). The new Hummel deal is about 20% better at most and driven by the relationship with Fanatics

[Chester Perry]

Looking forwards to 2022, I haven't had time to do a full analysis yet but in total I wouldn't be surprised if rights fell by 25%. A lot will depend on the extent and length of the global recession

second part of my article will be out over the weekend!

Which makes you wonder a about that 6 year deal the Premier League signed with NENT for a reported £2billion starting in 2022 - it marked a large increase, though it covers all 4 Nordic regions for 1 supplier rather than the previous 3 and 1 with different suppliers.

I thought it surprising at the time

I posted a little while ago that the Premier League had issued it's first tender for the next rights cycle and that unusually it was for a 6 year period - in the Nordic region - well we have a winner - just do not know how much they have agreed to pay as yet

https://www.nentgroup.com/news/press-re ... year]=2020

commented on this before - Given that we are just past halfway in the first season of the current 3 year cycle it does seem a little strange to be selling off the next 2 cycles already - is it hedging or guaranteeing the best price in a mature market

EDIT - More detail - the tender was for a 3 or 6 year bid - so looks like the Premier League are testing the water for fixing income over a longer period

https://www.sportbusiness.com/news/nent ... s-nordics/

raises more questions as to the thinking - is it as much for the stability of the broadcasting partner, is it to stabilise or boost revenues in specific regions all interesting stuff

[huw.Y.WattfromWare]

I also suspect several of the current licence holders overseas will go out of business or at least be unable to meet their commitments. I'd suggest a reduction of 15-20% overall.

Welcome the esk. I’m not as financially savvy as you guys could you give your thoughts why the overseas license holders will go out of business, please. This has surprised me.

[Chester Perry]

Welcome the esk. I’m not as financially savvy as you guys could you give your thoughts why the overseas license holders will go out of business, please. This has surprised me.

take a look at the highly leveraged/venture capital funded OTT industry, that was struggling to get enough subscribers to cover costs before the pandemic. that include DAZN (whose balance sheet looks like pure folly to many observers) and Eleven sports. Recent seasons have seen both La Liga (overseas) and Serie A (domestically) have distribution deals collapse and be retendered as the rights holder found the economics didn't add up and walked away. Even the major media organisations like Comcast (Sky, NBC Sport) and Disney (ESPN) are haemorrhaging subscribers and recently reported major losses in revenue.

Then remember they are financed by discretionary spend - subscribers and advertisers, and the global economy is on a nosedive when it crawls out from lockdown. Failures are inevitable at some point.

[Chester Perry]

An article from Omar Chaudhuri of 21st club - explaining why transfer fees are about to take a tumble, why that has negative consequences and the opportunities detailed analysis (of the type his organisation offers) can provide

https://www.sportbusiness.com/2020/05/f ... rity%20era

[Chester Perry]

A third new kit supplier (following Watford and Rangers), a return to the Premier League for Hummel, and a third new record deal - this is not how I foresaw post pandemic deals

Everton have a new Shirt supplier, it is a big deal for both club and supplier but just goes to show how far behind the 14 are to the big six in this market place.

This article indicates the chasm in kit deal revenues between the big six and the 14 - the writer is for some reason not aware of the Watford announcement from last weekend

https://www.dailymail.co.uk/sport/footb ... -deal.html

[Chester Perry]

A strange pairing have got together with a plan to rescue football - it is making headlines but is it anything near the right solution as it doesn't address the structural problems

A Way Forward for Football
By Damian Collins MP and Charlie Methven, co-owner of Sunderland AFC

We may only have a few weeks to save professional football in this country as we know it.

The shock of the COVID-19 crisis has badly exposed the weak financial position of clubs in the English Football League (EFL), many of whom were already on the edge of bankruptcy. If nothing is done, clubs with old and famous names will almost certainly go into administration within weeks. More communities will go through the agony that Bury suffered last year and see a beloved cultural and sporting institution taken from them.

The reason the situation is so urgent is because clubs in the English Football League are almost entirely dependent on the money they make from playing matches in front of paying fans. As things stand, no-one knows how long it will be before we see even a half-full stadium. The financial burden this brings falls most heavily on the clubs with the smallest resources. For the giants of the Premier League, more than eighty percent of their income comes from the money they make from the television companies who broadcast their games to a worldwide audience. However, for clubs in Leagues 1 and 2 revenue from broadcasting is often less than ten percent of what they earn in a year. This means they are almost entirely reliant on income from ticket sales, sponsors and advertisers, merchandise and hospitality, all of which are inextricably linked to football as a live mass attendance event.

Since the lockdown and the suspension of matches, Football League clubs have had to cope with losing match day income whilst still having to pay their players, though, things are going to get worse. In early June the money clubs would usually receive from advance season ticket sales - which is what keeps them going during the summer months - will dry up without the realistic prospect of spectators being allowed back into football grounds in August and September.

It is that loss of a large chunk of forecasted income, rather than the small number of matches lost at the end of this season, which will push some clubs over the edge. The consequences will not just be felt by club owners and supporters. At the end of June, we will see 1,400 players who are out of contract released, not because they lack ability but because clubs won’t be able to afford their wages in a world with no foreseeable matchday income.

Some clubs who cannot pay their bills will go into administration, but under the League’s Football Creditors rule they are required to settle in full all their football debts, including outstanding player salaries. These costs are by far the largest bills that the clubs have to pay, and those that cannot find the funds to do this face insolvency and expulsion from the league, just like Bury. The Football Creditors rule is itself long overdue reform as it places the greatest financial burden on other community businesses that support clubs when they go into administration. They often get pennies in the pound for the money they are owed whilst football bills are honoured in full.

Attracting finance from potential new owners in situations like these will be almost impossible. Who would want to take on the liability of an insolvent football club, that was already trading at a substantial loss before the coronavirus hit, and that has now had its principle source of income taken away from it?

So, the short-term problem is clear to see. With no clarity over the future of live matchday attendance likely anytime soon, clubs will go bust unless they are bailed out somehow. The government has already given a £16million emergency loan to Rugby League to help protect that sport from precisely the same problem, and EFL clubs are also going to require some form of public funding.

Yet whilst acknowledging and dealing with that need, we also need to recognise that football’s financial crisis has not simply been caused by the coronavirus. Rather, the lockdown has brought to the boil a situation that has been simmering for too long. The majority of EFL clubs have been run unsustainably (and often irresponsibly) for decades. If taxpayers’ money is going to be brought to bear then this needs to be the moment when the national game is forced to change.

Clubs might have the structure of a private company, but they are also social institutions. Their current owners are not merely running a small business – they are the custodians of a treasured and often totemic part of a community’s history and values. That is why football clubs carry an outsize importance in UK society.

To safeguard them from abuse, there are two crucial sets of rules already in place. One is an Owners and Directors Test (OADT), which is supposed to prevent clubs from being bought by those not fit and proper to run such important institutions. The other is the Salary Cap Management Protocol (SCMP), which is supposed to prevent owners of League 1 and League 2 clubs from spending unsustainable amounts of money on players’ wages (in the Championship, this has been replaced by a crazed rule that “limits” owners to losses of “only” £13million a year).

Leaving aside the obvious fact that the Championship – where clubs are at their most unsustainable - should be brought into line with the Salary Cap Management protocols, rather than encouraging owners to lose vast sums, what is the problem? The rules seem sensible enough.

The problem is in their lack of enforcement, and the reason for this is that the EFL itself is a members club which is presided over by executive officers who are given their jobs by the same people they are then supposed to regulate. As a result, it is perhaps unsurprising that not many prospective owners fail the OADT and that clubs have consistently refused to obey the rules of their own governing body. In a 2019 report by Deloitte, it was revealed that far from spending under 60% of revenue on players wages - as the SCMP requires – League 1 and League 2 clubs were spending an average of 90%. In the Championship, the number is north of 100%.

The case of Bury demonstrates just what the problem is. It was acquired by an owner who simply refused to submit to the Owners and Directors Test let alone try to pass it. When he took over, Bury’s accounts had not been signed off by their auditors and they were clearly already operating in breach of the SCMP. Yet the EFL did not feel in a position to act until it was too late, at which point all it could do was to end Bury’s 120 year Football League existence.

If public money is going to be used to bail out football clubs, we have to introduce reforms to their governance so that they are run in a more sustainable way in the future. That is why we are setting a six-point plan to rescue football and protect these community assets for future generations to enjoy.

1- A ‘Football Finance Authority’ (FFA) scheme should be created by the Football Association - but working with and backed financially by the government - to provide financial assistance to EFL clubs.

2 -Funds should be provided by the FFA to allow clubs to meet their short-term liabilities and provide them enough breathing space to restructure their finances, but couldn’t be used to invest in recruiting new players or improving the club’s infrastructure. Rather than being offered as loans these funds would instead be exchanged for a minority shareholding in the club, of between 10% to 49% depending on the level of investment required and the value of the club.

3 - Independent directors would be appointed to the boards of clubs as representatives for this minority shareholding. These directors can be nominated by either a registered Supporters Trust or by the relevant local government authority, but they must be non-political and subject to approval as Fit and Proper by the FFA.

4 -These Independent Directors shall have real time access to the financial records of their club and can report their concerns back to the FFA. Clubs that continue to trade outside the rules of the EFL would be put into a form of administration by the FFA, where a credible plan would be implemented by independent auditors to bring the financial affairs of the club back in line with the League’s rules.

5 - Either a recognised Supporters Trust or a local authority can subsequently acquire the FFA shareholding in their club at a discount to market value, and funds raised in this way would be returned to the government to help repay the public investment in this scheme.

6 - The EFL’s financial regulations should be set and enforced by the FFA, the governing body of which should include representation from the EFL, the Professional Footballers Association (PFA), the Football Supporters Association (FSA) and the clubs themselves, but with an independent majority
Without the reforms of the governance of football finances, any bailout for clubs will be a short term fix. Once the pressure is off, the rules – whatever they are – will be bent and challenged by the owners of clubs intent on short-term success, at the cost of medium-term sustainability. To solve the problem, we have to diagnose first what it really is – in this case, a governing body which is simply not constituted to perform the task allotted to it in an age where all too many owners – far from the responsible custodians of aeons past – are often all too ready to gamble a club’s future on short-term glory.

We want to see a lasting solution to the previously existing problems of unsustainability, and so we see our proposals as going hand-in-hand with more permanent solutions already tabled by the Football Supporters' Association around the regulation and governance of football. The government already has a manifesto commitment to a ‘fan-led review of football governance, which will include consideration of the Owners' and Directors' Test’; the Covid-19 crisis gives greater urgency to an area of concern already crying out for action.

A further benefit of the scheme will be the gradual move towards a German model - where communities own 50% of their local club - therefore ensuring that they cease to be a rich man’s plaything and instead start to look and behave like the social institutions they in fact are.

[Chester Perry]

It has got some powerful backing especially the Football Supporters Association

https://twitter.com/tomreedwriting/stat ... 5654701057

And on the face of it you would think that those who have long been calling for reform would be broadly supportive of this plan from Cooper and Methven - They like some elements (especially point 6)

https://twitter.com/tomreedwriting/stat ... 5654701057

but recognise that it is useless if it doesn't encompass. the Premier League and some are doubtful of the need of another governing body within the FA (though @AndyhHolt and others have been calling for an Independent football regulator for quite some time)

https://twitter.com/uglygame/status/1263744565913280512

[Chester Perry]

The owners of Barnsley and FC Thun have bought their 4th European club

https://twitter.com/NewCityChienLee/sta ... 4632409088

before Barnsley they bought Nice, who they have since sold to Ineos owner Jim Ratcliffe.

I am still trying to understand the strategic model and plan, given that New City is an Investment company, there have been hints of a Moneyball/Brentford approach

https://www.forbes.com/sites/armstrongp ... lish-town/

https://www.yorkshirepost.co.uk/sport/f ... rs-1765945

but no significant investment

https://www.insidermedia.com/news/yorks ... ch-success

[Chester Perry]

@SwissRamble has a look at the 2018/19 accounts of the much admired Brentford

https://twitter.com/SwissRamble/status/ ... 0475220992

[Royboyclaret]

@SwissRamble has a look at the 2018/19 accounts of the much admired Brentford

https://twitter.com/SwissRamble/status/ ... 0475220992

No major surprises there from Brentford, they have developed a very positive reputation in recent seasons for operating at sensible levels. If only many other clubs had owners like Brentford and Burnley there would be no requirement for this proposed Football Finance Authority scheme.

Still work to be done, however, particularly on the Wages/Turnover ratio, currently at 124%, but with such a low Total Income figure it's very difficult to manoeuvre that ratio below 100%.

An interesting chart included by Swiss Ramble which highlights various player purchases and sales at the club over the last five years. Included are both Andre Gray and James Tarkowski who they signed from Luton and Oldham for £600k and £300k respectively and sold to Burnley for a combined £14.8m. Good business on their part, for sure.

[Chester Perry]

The latest blog from Vysyble looks at the financial impact of relegation from the Premier League for the current bottom 6 clubs - the title - a reference to the film Jaws - says it all "You're gonna need a bigger boat"

https://vysyble.com/blog

This is a very interesting piece particularly in the assumptions around revenue drop and how the TV refunds will be managed across the League. It does have one bit that has apparently ignored on the tv income side - and that is TV appearance money - With all the remaining 92 games theoretically scheduled for live tv - for the first time ever all 20 clubs will break the threshold for additional TV appearance money - money that is not even there consideration/discussion and has not been factored into Vysyble's refund calculation.

Other things to note and deliberately not discussed in the blog are:
- current knowm liabilities as outlined in the accounts for items like transfer stage payments and infrastructure and loans
- current rolling FFP allowance for this and next season in the Championship
- probable changes to FFP rules in the Championship and together with the high probability of tightening of general financial rules.
- Ability for the clubs to raise additional capital via a rights issue (West Ham currently have one looking to raise 30m)

[Chester Perry]

The latest online edition of FC Business magazine is out featuring an interview with new chief of BFC in the Community Dr Sara Ward, the threat Insurance has to football and an Interview with Port Vale Co-Owner Carol Shanahan.

https://cloud.3dissue.com/6374/7271/131 ... .html?r=61

[Chester Perry]

The owners of Barnsley and FC Thun have bought their 4th European club

https://twitter.com/NewCityChienLee/sta ... 4632409088

before Barnsley they bought Nice, who they have since sold to Ineos owner Jim Ratcliffe.

I am still trying to understand the strategic model and plan, given that New City is an Investment company, there have been hints of a Moneyball/Brentford approach

https://www.forbes.com/sites/armstrongp ... lish-town/

https://www.yorkshirepost.co.uk/sport/f ... rs-1765945

but no significant investment

https://www.insidermedia.com/news/yorks ... ch-success

apparently more than half of Belgium's professional clubs are now foreign owned - many by groups operating the multi-club model - that just turns the league into a farm - though for now the national game there is apparently benefitting given the country is No 1 in FIFA rankings. Just do not expect any of the club sides to establish a presence in the UEFA club competitions

https://twitter.com/Prof_Chadwick/statu ... 8878912518

[Royboyclaret]

The latest blog from Vysyble looks at the financial impact of relegation from the Premier League for the current bottom 6 clubs - the title - a reference to the film Jaws - says it all "You're gonna need a bigger boat"

https://vysyble.com/blog

This is a very interesting piece particularly in the assumptions around revenue drop and how the TV refunds will be managed across the League. It does have one bit that has apparently ignored on the tv income side - and that is TV appearance money - With all the remaining 92 games theoretically scheduled for live tv - for the first time ever all 20 clubs will break the threshold for additional TV appearance money - money that is not even there consideration/discussion and has not been factored into Vysyble's refund calculation.

Other things to note and deliberately not discussed in the blog are:
- current know liabilities as outlined in the accounts for items like transfer stage payments and infrastructure and loans
- current rolling FFP allowance for this and next season in the Championship
- probable changes to FFP rules in the Championship and together with the high probability of tightening of general financial rules.
- Ability for the clubs to raise additional capital via a rights issue (West Ham currently have one looking to raise 30m)

That's an extensive and complex looking blog there from Vysyble, Chester. Also looking forward to the second part of The esk's article which he says is due out over this weekend.

Not sure if you've taken in his potential forecasts for possible reductions in broadcast income but, for me, they make for grim reading. Considerable discounts to be negotiated for next season if the games continue to be played behind closed doors and some overseas rights holders being unable to meet their commitments. All resulting in a potential 15%/20% reduction for the season. Then a further predicted 25% reduction from the next phase in 2022.

I'm sure the powers that be at Turf Moor will already have considered similar future projections and the silence from within the boardroom walls is deafening right now. Not sure that many on here appreciate the gravity of the situation BFC may find themselves in by around Spring of next year.

[Chester Perry]

That's an extensive and complex looking blog there from Vysyble, Chester. Also looking forward to the second part of The esk's article which he says is due out over this weekend.

Not sure if you've taken in his potential forecasts for possible reductions in broadcast income but, for me, they make for grim reading. Considerable discounts to be negotiated for next season if the games continue to be played behind closed doors and some overseas rights holders being unable to meet their commitments. All resulting in a potential 15%/20% reduction for the season. Then a further predicted 25% reduction from the next phase in 2022.

I'm sure the powers that be at Turf Moor will already have considered similar future projections and the silence from within the boardroom walls is deafening right now. Not sure that many on here appreciate the gravity of the situation BFC may find themselves in by around Spring of next year.

I have been giving it a lot of thought Roy and I am thinking on a post about it all in the next couple of days.

I thought the Manchester United quarterly update was interesting because they where telling the stock market that they were only expecting to lose £20m of Premier League TV Revenue this season and that based on a league position of 4th/5th (they confirmed refunds would be position based) very much less than the Vysyble prediction even for that of 18th place.

For Burnley, while cash balances are disrupted and the 2019/20 accounts (when issued next April) will show that in an exaggerated fashion given where our financial year ends with this season not complete, our underlying activity this season could/should? still show operational cash flow gain - before the Pandemic I was expecting our cash balance to grow by double digit millions, with operational cash flow to be closer to the £53m of 2016/17 and 2017/18 than last years £34m. That is unless there has been another sizeable increase in Staff or infrastructure development at Gawthorpe that we are not currently aware of (though I believe that was mainly complete, even for Cat 1 Academy status in the last accounts).

I still think even if both TV and Commercial Revenue dropped by 20% in a "ghost season" (zero matchday income) we can generate an operational positive cash flow (we are probably the only current Premier League club who can). I base this on the assumption that our bonus structure is based on TV revenue only so that would drop accordingly.

[Chester Perry]

Should add I am expecting "Football Shorts part 2" either tonight or in the morning - like you Roy, I am very much looking forward to seeing what Paul has to say.

[Chester Perry]

There is no indication as to size of the deals or whether their values have increased or fallen but this is an impressive number of territories for the Polish League to have sold TV rights for

https://www.sportbusiness.com/news/ekst ... f-restart/

There are an awful lot of deals still being signed for leagues across the world at the moment, though no one is talking about values of the deals.

[Chester Perry]

The Vultures are at the door - Toulouse (newly relegated to Ligue 2 in France) are to be taken over US Investment RedBird Capital

https://www.sportbusiness.com/news/us-i ... ulouse-fc/

the Disneyfication of football continues to grow

[Chester Perry]

This is interesting - the Austrian League and Sky their Primary Broadcaster have agreed to a deal to show 1 live Saturday game a week with public Service Broadcaster ORF for the remainder of the season which starts June 2nd

https://www.sportbusiness.com/news/orf- ... ve-rights/

This opens the way for the BBC to come to similar deal - it will be interesting to see if the monies go to the League or are shared by the Primary Broadcaster and the League. If next season is to be played out behind closed doors this may be useful in holding the overall rights value to the Premier League.

The sticky element in all this may be that terrestrial broadcasters like the BBC may actually be politically encouraged to show live EFL games (as a show of pyramid and whole game support in the same way they do for the women's super league and the FA Cup) rather than the Premier League.

[Royboyclaret]

I have been giving it a lot of thought Roy and I am thinking on a post about it all in the next couple of days.

I thought the Manchester United quarterly update was interesting because they where telling the stock market that they were only expecting to lose £20m of Premier League TV Revenue this season and that based on a league position of 4th/5th (they confirmed refunds would be position based) very much less than the Vysyble prediction even for that of 18th place.

For Burnley, while cash balances are disrupted and the 2019/20 accounts (when issued next April) will show that in an exaggerated fashion given where our financial year ends with this season not complete, our underlying activity this season could/should? still show operational cash flow gain - before the Pandemic I was expecting our cash balance to grow by double digit millions, with operational cash flow to be closer to the £53m of 2016/17 and 2017/18 than last years £34m. That is unless there has been another sizeable increase in Staff or infrastructure development at Gawthorpe that we are not currently aware of (though I believe that was mainly complete, even for Cat 1 Academy status in the last accounts).

I still think even if both TV and Commercial Revenue dropped by 20% in a "ghost season" (zero matchday income) we can generate an operational positive cash flow (we are probably the only current Premier League club who can). I base this on the assumption that our bonus structure is based on TV revenue so that would drop accordingly.

In terms of projected Cash balances, my records show Cash at Bank at Jun.'19 to be £41.6m, £34.4m at Jun.'18, £20.1m at Jun.'17 and £6.3m at Jun.'16. Perhaps the first hit after the Jun.'19 figure will be the cost of the disabled corner stands at some £13m.

The biggest concern for me will be the effect of the continued financial penalties from the rights holders as a result of games being played behind closed doors throughout next season (something which is looking increasingly likely). We simply could not absorb the suggested percentage reductions within our Total Revenue whilst still being committed to Wage levels based on current player contracts (even without the bonus element).

[Chester Perry]

In terms of projected Cash balances, my records show Cash at Bank at Jun.'19 to be £41.6m, £34.4m at Jun.'18, £20.1m at Jun.'17 and £6.3m at Jun.'16. Perhaps the first hit after the Jun.'19 figure will be the cost of the disabled corner stands at some £13m.

The biggest concern for me will be the effect of the continued financial penalties from the rights holders as a result of games being played behind closed doors throughout next season (something which is looking increasingly likely). We simply could not absorb the suggested percentage reductions within our Total Revenue whilst still being committed to Wage levels based on current player contracts (even without the bonus element).

That would have to be some substantial drop wouldn't it - Sean recently maintained that bonuses were 3rd of 1st team (squad, coaches and analysts) wages - which put our club wide wage bill at roughly £64m/66m before bonuses. We have recently moved up to around £15m of other operational costs - which may drop during a ghost season. I am currently thinking we could manage a 30% TV revenue drop without depleting cash balances. We wouldn't be paying substantial transfer fees, but could still maintain basic wages to the level of those received by the currently outgoing Hart, Bardsley, Lennon etc. for new signings, which is very attractive in the current climate.

[Chester Perry]

This blog piece ostensibly looks at the formats of multi-club networks, but you rapidly become aware that it is a marketing piece for investors looking to assess their options of establishing their own multi-club-network and how the publisher can facilitate that for them.

https://mrktinsights.com/index.php/2020 ... -networks/

What we have here folks is another way of making money from Football's Magic Money Tree.

One I would very much like to see made illegal within the game as it gives outrageous advantage to those who have the finances to enact it, while at the same time removing the opportunity for smaller clubs to grow and progress in their own pyramids.

[Royboyclaret]

A bit more on our Wage bill to Jun.'19 of £86.6m.

That represented an increase of £5m from £81.6m on the previous financial year and I doubt anyone outside of the Club would have predicted such an increase. According to Sean almost one third of the £81.6m to Jun.'18 covered incentive bonuses for finishing 7th which is very much confirmed by the PL merit payment for Burnley for that year of £27m. As can be seen in my previous post the equivalent payment to Jun.19 reduced to £11.5m reflecting our finishing position of 15th.

When in a recent interview Sean related to "a third of the total being bonuses", I'm convinced he was referring to the previous year as never in a million years would the £16m difference have been met by the Club last year. The bulk of the increase is clearly in additional numbers in employees over recent previous years.

Players, management & coaches :-
2016.......118
2017.......120
2018.......120
2019.......160.

Sales, admin & ancillary staff :-
2016.......44
2017.......49
2018.......43
2019.......69.

I understand the argument that the Club would require more staff when moving towards a Cat.1 academy status but 40 extra?...........and why the sudden need for 26 additional office staff?

Chester, a couple of points from my post of a month or so ago. First I remain convinced, as I did then, that Sean was referring to the previous season when he stated that "a third of the total Wages being bonuses" (£27m in a total of £81.6m). That season we finished 7th but the following season when we came 15th the PL merit payment was £11.5m within the total Wage bill of £86m.

Secondly, from the numbers above the total employees on the payroll increased by some 40% which, for me, accounted for the bulk of the increase in basic Wage bill from £54m to £75m last season. Clearly if we'd ended the season in 7th again the total would have exceeded £100m.

Based on that similar league position and coupled with a reduction of say 20% in Revenue next year (similar rights holders penalties as this season) to £110m and Overheads and other costs of say £15m was the reasoning behind a net cash outflow for the season. Indeed, from a Profit/Loss account perspective, adding Player Amortisation and Depreciation to the costs, then the Net Loss could even approach £45m. At that point, obviously, a massive cause for concern.

Then if we factor in 'The esk's' potential 25% further broadcast income reduction from 2022, the danger signals will then be sounding loud and clear. I'm certain our Chairman will have already made his own projections, but as I posted earlier, the silence from the boardroom is deafening right now.

[Chester Perry]

Roy I understand the logic you are using. I am also very certain that Sean was talking about the 2018/19 accounts and current practice when he said that a third of wages were bonus based.

That can only mean that the assumption we used that bonuses were purely merit payment based was incorrect - nothing wrong with that, it was an assumption created from piecing together the extremely limited information the club choose to share. The fact that the we have data that shows the assumption to be invalid means that we can refine our thinking.

I am currently considering three options, that the bonus is:
- TV income threshold based for the amount and triggered by Premier League survival - this is a flexible value pot
- Total Income based for the amount and triggered by Premier League survival - this is a flexible value pot
- A proportion of basic salary triggered by Premier League survival - this is much more fixed pot whose total value will be determined by appearance and performance figures.

Needless to say, in the current climate a flexible value pot triggered by income thresholds would offer the club a much stronger hand on the journey through it.

[Royboyclaret]

Interesting theories, Chester. One thing's for sure the club will never confirm the method they use for calculating the merit payments, so we'll continue to remain in the dark.

So, what proportion of the increase in Wage bill from '18 to '19 do you attribute to the increase in numbers of bodies on the payroll?.....a 40% increase or 66 people from 163 to 229, 40 of whom were in the players, management and coaches bracket.

[Chester Perry]

Alan Nixon has come out with his Premier League to bail out the EFL story again - just on Twitter not published in the paper

https://twitter.com/reluctantnicko/stat ... 8777205760

strange that absolutely no other journalist is publishing this - though the true question will be at what cost to the EFL if it was to happen

I still remain far from convinced that it will happen and confused that a government like ours expects an industry to bail out direct competitors.

Of course others have already found a route to finance - I found it surprising that a local council (apparently devastated by austerity cuts) found the means to provide a loan to it's cherished league football club at this time - especially one that has had the windfalls of a cup run including a win at Old Trafford and a record player sale in the current season.

https://www.manchestereveningnews.co.uk ... n-18283509

Though you have to say that Rochdale is a much better run club than Northampton, where the investigations are still running into the missing millions loaned by the council (pre austerity).

[MrTopTier]

Bassini in the news again this time with Charlton. You know your club are in deep trouble when this vulture is circling https://www.skysports.com/football/news ... -an-option

[Chester Perry]

Interesting theories, Chester. One thing's for sure the club will never confirm the method they use for calculating the merit payments, so we'll continue to remain in the dark.

So, what proportion of the increase in Wage bill from '18 to '19 do you attribute to the increase in numbers of bodies on the payroll?.....a 40% increase or 66 people from 163 to 229, 40 of whom were in the players, management and coaches bracket.

If you just assumed that those 66 were costing an average of £50k (many will be on substantially less) that accounts for just over half, that allows for an increase 1st team squad wage profile at a manageable level, balancing for ins and outs

It is surprising how little youth coaches and analysts can earn

[huw.Y.WattfromWare]

This opens the way for the BBC to come to similar deal - it will be interesting to see if the monies go to the League or are shared by the Primary Broadcaster and the League. If next season is to be played out behind closed doors this may be useful in holding the overall rights value to the Premier League. .

Appreciate your point is referencing next season but hasn’t the government already said they would like some of this seasons PL live free to air? The thinking on this might have changed now they want people back to work.
Would that then affect the current deals?

[Chester Perry]

Bassini in the news again this time with Charlton. You know your club are in deep trouble when this vulture is circling https://www.skysports.com/football/news ... -an-option

That has been floating around for a couple of months now

viewtopic.php?f=2&t=45887&start=50

the guy needs help - and I do not mean financial backing either