Are closed stadiums an existential threat to Premier League clubs?

[Beachryan]

With the UK being extremely unlikely to open stadiums til at least the Spring (assuming winter is bad) - I felt like no one was talking about the potential risk of clubs being literally unable to pay wages. So I did a little digging, and was really surprised by the results.

Firstly, I figured matchday revenue was really important to clubs - especially smaller ones - but the opposite is actually true. United actually have the highest proportion of revenue coming from matchdays, at 18%. The overall league is only 13%, with the top 6 actually making up almost 75% of the league's total figure. So smaller clubs - the ones I'd be instinctively worried about - aren't actually that impacted. From the Guardian's reporting, there are quite a few clubs that make less than 10m per year from matchday receipts!

Secondly, I looked at how close these clubs are to 'disaster'. With that small loss as above, if you take 2019 financials forward, I honestly don't see many clubs being profitable. That includes us, Liverpool and Arsenal - the 'well-run' clubs. Because shockingly 11 clubs ran at a loss last season already, and about half of the profit-makers did so because of matchday revenue.

Thirdly, we make a TON of matchday revenue. Disneyland indeed. About 110m. That's obviously not net profit - it's revenue - but still, say we halve that. That's 50m cash that simply does not exist this season/back end of last. That is a big deal.

So tl:dr: most small clubs won't be hugely impacted by Covid right now, because tv rights are the vast majority of their revenues. Big clubs will be hurt more, and likely face a cash crunch (except Arsenal who have a Scrooge McDuck vault). And we're hurt most of all. So I can totally envision the discussions at the board level about buying the most expensive player this summer being a bit heated.

Finally - if Covid continues and if the fanless 'product' is seen as less appealing than I don't want to think about what we'll do with a fall in commercial revenues. The Chevy deal is up soon. So more cheeriness - I think we're not signing anyone else not because of ineptitude, but because we can't afford it on our own. And don't make me laugh by asking the owners to 'invest' like City/Chelsea/Wolves/Villa etc.

 

[horsechoker]

Good post from the threat starter.

Sorry

 

[sun_tzu]

How much finance do spurs have to pay off on their stadium? would have thought they could be in for a very big hit

 

[UweBein]

Spurs, Arsenal would be hit pretty hard by it, because of their recent investment in their stadiums. As you mention, United as well.

It's not an existential threat, but it's pretty bad luck for a club like Tottenham, that had a pretty good plan in place.

 

[MikeUpNorth]

The next round of TV rights deals will inevitably be lower as TV ad spend is way down. Lots of companies are struggling, so I would think sponsorship revenue could also be lower.

 

[Falcow]

Good post. Can you post it in the Sancho thread also....people having a hard time in there dealing with current economic reality.

It will definitely be all of this season and perhaps even into next.

 

[sun_tzu]

The next round of TV rights deals will inevitably be lower as TV ad spend is way down. Lots of companies are struggling, so I would think sponsorship revenue could also be lower.

European super league incoming ...

 

[FrankDrebin]

Good post. Can you post it in the Sancho thread also....people having a hard time in there dealing with current economic reality.

It will definitely be all of this season and perhaps even into next.

Sancho alternative ?

 

[sammsky1]

With the UK being extremely unlikely to open stadiums til at least the Spring (assuming winter is bad) - I felt like no one was talking about the potential risk of clubs being literally unable to pay wages. So I did a little digging, and was really surprised by the results.

Firstly, I figured matchday revenue was really important to clubs - especially smaller ones - but the opposite is actually true. United actually have the highest proportion of revenue coming from matchdays, at 18%. The overall league is only 13%, with the top 6 actually making up almost 75% of the league's total figure. So smaller clubs - the ones I'd be instinctively worried about - aren't actually that impacted. From the Guardian's reporting, there are quite a few clubs that make less than 10m per year from matchday receipts!

Secondly, I looked at how close these clubs are to 'disaster'. With that small loss as above, if you take 2019 financials forward, I honestly don't see many clubs being profitable. That includes us, Liverpool and Arsenal - the 'well-run' clubs. Because shockingly 11 clubs ran at a loss last season already, and about half of the profit-makers did so because of matchday revenue.

Thirdly, we make a TON of matchday revenue. Disneyland indeed. About 110m. That's obviously not net profit - it's revenue - but still, say we halve that. That's 50m cash that simply does not exist this season/back end of last. That is a big deal.

So tl:dr: most small clubs won't be hugely impacted by Covid right now, because tv rights are the vast majority of their revenues. Big clubs will be hurt more, and likely face a cash crunch (except Arsenal who have a Scrooge McDuck vault). And we're hurt most of all. So I can totally envision the discussions at the board level about buying the most expensive player this summer being a bit heated.

Finally - if Covid continues and if the fanless 'product' is seen as less appealing than I don't want to think about what we'll do with a fall in commercial revenues. The Chevy deal is up soon. So more cheeriness - I think we're not signing anyone else not because of ineptitude, but because we can't afford it on our own. And don't make me laugh by asking the owners to 'invest' like City/Chelsea/Wolves/Villa etc.

Please post this in Sancho thread!

 

[Beachryan]

Good post from the threat starter.

Sorry

?

 

[Mihai]

Good post from the threat starter.

Sorry

Stop threating him foreva, OMG!

 

[horsechoker]

Stop threating him foreva, OMG!

 

[diarm]

If we had a 50% profit margin on match day revenue we'd be the best run business on the planet. I'd be surprised if those profits were as high as 10% on revenue.

 

[kouroux]

Good post from the threat starter.

Sorry

?

Read the threat title

 

[youmeletsfly]

Spurs it's quite tricky, I feel they hang on a threat.

 

[OnlyTwoDaSilvas]

PL clubs will probably be fine in the long run, even if they do spend less in the next couple of windows or whatever.

But everything below the PL is greatly at risk. The further down the ladder you go, the more reliant the clubs are on matchday income. I'm surprised the EFL hasn't been allowed to take broadcasting into their own hands given that very little of the Championship, League 1 and 2 are televised fully anyway. Put it all on a streaming platform, let fans pay to stream their team's games, like an e-season ticket of sorts. Fans don't miss out on watching their team and money keeps coming in. Surely it's better than nothing.

 

[Beachryan]

Read the threat title

Ha. whoops!!!

 

[finneh]

Courtesy of Swiss Ramble:

 

[Gio]

Of all the leagues across the globe, the Premier League is the most resilient in the face of reduced match day revenues. TV revenues are so high that it only takes a relatively small readjustment to weather any storm.

As for everybody else, that's where the real concern lies. While the average for Premier League clubs and the rest of the top European 20 in @finney's post above is around 15% of income from matchday, it's much higher in other leagues beneath the top tier and elsewhere. By comparison, Rangers' matchday revenue accounts for 67% of the club's income, Porto 45%, Millwall 37%.

 

[Chesterlestreet]

What would "other revenue" be in the cases of Barca and Juventus?

(See above).

 

[The Boy]

Maybe not a problem for the premier league so much but for English football as whole this will be devastating. I fully expect to see quite a few lower league clubs file for bankruptcy either later this year or next.

 

[Chesterlestreet]

By comparison, Rangers' matchday revenue accounts for 67% of the club's income, Porto 45%, Millwall 37%.

Yeah, it's huge for everyone below the top segment.

Long-term (and "long-term" may actually be more like a pretty short-ish term in reality), you're looking at a proper disaster. Clubs all over Europe will struggle immensely to remain solvent based on current standards.

 

[GlastonSpur]

Spurs it's quite tricky, I feel they hang on a threat.

Don't be silly.

There are only 7 football clubs on the entire planet with a larger income than Spurs ... and all of these have a much bigger wage bill. The last two years of our published accounts state a combined profit (after tax) of £182m.

 

[youmeletsfly]

wo years of our published accounts state a combined profit (after tax) of £182m.

Yes man I know, I was on the threat vs thread bandwagon joke.

 

[awop]

Don't be silly.

There are only 7 football clubs on the entire planet with a larger income than Spurs ... and all of these have a much bigger wage bill. The last two years of our published accounts state a combined profit (after tax) of £182m.

Out of these 90M how much is going towards stadium loans ? This season's profit will massively go down with no deep run in the CL and no fans.

 

[Florida Man]

Stop threating him foreva, OMG!

 

[GlastonSpur]

Out of these 90M how much is going towards stadium loans ? This season's profit will massively go down with no deep run in the CL and no fans.

Yes, of course. But with no fans the profits of all clubs will go down big-time. My point is that Spurs, with their relatively low wage bill, are better placed than many big clubs to weather the storm. And the shareholders have not been taking money out of the club in the forms of dividends

It's true we have a large debt to service, but this has been secured at very favourable rates and presents no major problem.

 

[acnumber9]

Who would’ve thought that Spurs would come out the best from a global pandemic? Makes you wonder why they were so quick to furlough their staff.

 

[awop]

Yes, of course. But with no fans the profits of all clubs will go down big-time. My point is that Spurs, with their relatively low wage bill, are better placed than many big clubs to weather the storm. And the shareholders have not been taking money out of the club in the forms of dividends

It's true we have a large debt to service, but this has been secured at very favourable rates and presents no major problem.

Yes Spurs won't be in a red alert mode but this will surely halt any progress in the club's vision and plan for at least a year in terms of investments in the team.
Bale is a nice gift but i doubt he will stay on once the season is over. As much as he loves Spurs, when he loses his Madrid wages,he will look to go to China or MLS and make massive bank.

Do you know how much Spurs are paying yearly in loans ? KSE taking on the Emirates Stadium debt loan on them will be very helpful if the situation doesn't improve.

 

[Powderfinger]

Yes, of course. But with no fans the profits of all clubs will go down big-time. My point is that Spurs, with their relatively low wage bill, are better placed than many big clubs to weather the storm. And the shareholders have not been taking money out of the club in the forms of dividends

It's true we have a large debt to service, but this has been secured at very favourable rates and presents no major problem.

Lower wage bill is a huge short term help but Tottenham is also paying £23.5m to managers and even at very favorable rates that debt service will probably be in the £30-40m range going forward (last financial reports I can see said there was £639m debt with 23 year maturity on average). Put those two factors into the mix and the wage gap between Spurs and a club like Arsenal basically disappears (although there is still a big wage gap with the very high spending clubs).

More generally, its not clear that the lower wage bill is sustainable going forward if Spurs wants to compete for the top. The lower wage bill is a legacy of a period of really good recruitment/development of cheaper and lesser known players, who were then happy to sign long term contracts or contract extensions that were relatively low compared to their production on the field. But that model only works if you can keep successfully buying or developing cheap gems and Spurs haven't done that very successfully in several years. If you're buying more sought after players who have offers from other clubs, you pay market wages - ie, the 200K or so Spurs are paying N'Dombele.

 

[Pagh Wraith]

Meanwhile I'll be attending another match with probably 15,000 fans in the stadium at the weekend. In Berlin, Union are even planning to get rid of all restrictions and distancing fairly soon.

 

[Stacks]

Spurs, Arsenal would be hit pretty hard by it, because of their recent investment in their stadiums. As you mention, United as well.

It's not an existential threat, but it's pretty bad luck for a club like Tottenham, that had a pretty good plan in place.

this is sooo deep. Just at the wrong time. especially for SPurs.

 

[Leftback99]

We should just pay whatever Dortmund want for Sancho though.

 

[GlastonSpur]

Yes Spurs won't be in a red alert mode but this will surely halt any progress in the club's vision and plan for at least a year in terms of investments in the team.
Bale is a nice gift but i doubt he will stay on once the season is over. As much as he loves Spurs, when he loses his Madrid wages,he will look to go to China or MLS and make massive bank.

Do you know how much Spurs are paying yearly in loans ? KSE taking on the Emirates Stadium debt loan on them will be very helpful if the situation doesn't improve.

All the info. is in here (the most recent financial statement as of April this year): https://www.tottenhamhotspur.com/media/28139/tottenham-hotspur-limited-signed-accounts-30-6-19.pdf

 

[Greck]

Good post. Can you post it in the Sancho thread also....people having a hard time in there dealing with current economic reality.

It will definitely be all of this season and perhaps even into next.

Like that would matter to anyone with their cocks out. Will be made another reason to sign him. "all the more reason to sign Sancho so we make the CL"

 

[LVGSdive]

The next round of TV rights deals will inevitably be lower as TV ad spend is way down. Lots of companies are struggling, so I would think sponsorship revenue could also be lower.

Sky advertising income is plummeting and their sky sports subscriptions are down around 12%. DAZN has tried to defer payments to the Premier league and the Premier league cut ties on their Chinese TV deal. Clubs are going to be losing money from pretty much every revenue source in the short term and potentially long-term.

 

[horsechoker]

We should just pay whatever Dortmund want for Sancho though.

I'd be ok with laying off some staff to make the Sancho move happen, it's not like Ruth the tea lady can put in a decent cross.

joking

 

[Yorkeontop]

https://www.skysports.com/football/...ort-to-efl-during-pandemic-says-frank-lampard
Similar topic.
Roman could write a check tomorrow. Mubadala; City's owners don't need the good PR as much but MBS over there in Saudi Arabia is getting them into sports;oil money all over F1 these with ARAMCO.

 

[United58]

Courtesy of Swiss Ramble:

Looks like this will really affect Arsenal

 

[cyberman]

The Utd stat is a bit of a liar when you consider its a bigger pie. 18 percent of 600 odd million is better than 16 percent of 300m.
We can more than cope with it.