How can football, in light of current circumstances, better equip itself from a catastrophic event, in the future?

Covid-19, as you may have heard in the news every single day for at least the last 3 months or so, has caused shockwaves across the world.  From the implementation of social-distancing measures, numerous countries under lockdown and the sudden necessity of face masks, the world is on constant tenterhooks as to how, and when, this virus will be eradicated.  These are (sorry but I’m going to say it) unprecedented times, and such a pandemic has made sports fanatics across the globe realise just how significantly they depend upon sport in their daily lives.  As with all industries affected by the pandemic, the repercussions of this deadly virus are endless; this is no different when one takes into consideration the impact that this has on the football industry. 

Covid-19, as you may have heard in the news every single day for at least the last 3 months or so, has caused shockwaves across the world.  From the implementation of social-distancing measures, numerous countries under lockdown and the sudden necessity of face masks, the world is on constant tenterhooks as to how, and when, this virus will be eradicated.  These are (sorry but I’m going to say it) unprecedented times, and such a pandemic has made sports fanatics across the globe realise just how significantly they depend upon sport in their daily lives.  As with all industries affected by the pandemic, the repercussions of this deadly virus are endless; this is no different when one takes into consideration the impact that this has on the football industry. 

Various news stories offering differing insights into the conclusion of the football season, and perpetual updates on new potential restart dates, have only served to further confuse stakeholders as to how the 2019/20 season will be decided.  Fans, among other stakeholders, have been left scratching their heads, wondering what’s going to happen to the rest of the season; what will be the fate of their supported club; how will football be played behind closed doors; what’s going to happen about next season, among, of course, a myriad of other questions.  The main question that presents itself now though, at least from the author’s perspective, is:  how can football better equip itself from a catastrophic event, in the future?  This brief column will look into how governing bodies can look to support clubs further, and what methods may be of use, should anything similar to this happen again.  Specifically, it will identify the differing regulations that clubs competing in European competition, and those competing at the lower tiers of the game, are subject to, as well as the dichotomy in cirumstances at both ends.

The duties of international sports governing bodies such as FIFA to create a global game, whilst also coinciding that with appropriate health and safety regulations, is the very nature of their job.  Ensuring both the well-being/integrity of sports competition and the safety of its stakeholders ought to be of paramount importance, and rightly so.  But how exactly do the current regulatory measures established in the guidelines protect football clubs from a catastrophic event, such as the one we are currently experiencing?

Well, in the context of European club football, the Union of European Football Associations (hereinafter:  UEFA) has:

  • Allowed for an extension to the initial deadline for clubs to prove that they have no “overdue payables” (usually found in the form of tax bills, transfer instalments, wage bills etc.).  This deadline, which was originally March 31st, has now been moved to April 30th
  • Reminded clubs competing in European competition that the legal principle ‘force majeure’ (a French term meaning ‘greater force’) is established within the spending rules set out by the Financial Fairplay Regulations (hereinafter: FFPR’s).
  • Suggested that COVID-19 is indeed considered a case of ‘force majeure’.  They have, however, made clear that cases of ‘force majeure’ will be interpreted on the facts of the case, and will be assessed according to conduct of each club.

By UEFA extending the deadline for clubs to pay their “overdue payables”, it has allowed clubs a greater duration of time to pay their debts, under what are unique circumstances, to say the least.  Allowing clubs the scope to concentrate on the usual operational and functional norms that exist within organisations, rather than being pressed into compliance of spending rules, seems to be a sensible method to combat what are financially troubling times.  A certain degree of leniency in this area of sport will no doubt be welcomed across the footballing world, not least by clubs whom are regularly spending millions of pounds in an array of different aspects of their business (e.g. transfer expenditure, wage bills, stadium operations etc.).  They, like everyone else, will not have planned for such an event, and as such find themselves losing income at a worrying rate. 

Additionally, the reaffirmation from UEFA that the principle of ‘force majeure’ is indeed established within the spending rules, allows for greater flexibility amongst its members (the clubs).  Force majeure, a legal principle that removes liability for unforeseeable/unavoidable circumstances, has enabled clubs to breathe a sigh of relief when looking to comply with the current spending measures established by the FFPR’s.  However, upon looking past the principle, UEFA has also noted that any cases of ‘force majeure’ will be subject to assessment, and judged on a case-by-case basis.  This was done to prevent the more financially affluent clubs from taking advantage of the relaxation of the rules, and stops clubs spending at their discretion without the fear of being non-compliant to the regulations. The message from UEFA is clear:  pursuance of the FFPR’s is still of great concern, but the exploitation from clubs of the less financially restrictive measures, as a result of the relaxation of the rules, is not to be permitted; only for financial difficulty should the new measures be exercised. 

Notwithstanding these European measures, football clubs in the lower divisions, such as those in both League 1 and League 2, have, of course, found circumstances much more difficult as they look to comply with the Profitability and Sustainability Rules (hereinafter:  P&S Rules), established in the English Football League regulations (hereinafter: EFL).  The significantly inferior revenue streams accompanied by the absence of European broadcasting funds in the lower leagues have made survival far more difficult.  The P&S Rules, which differ substantially to that of the FFPR’s previously mentioned, are vastly more draconian than those established in UEFA’s financial regulations, consequently making it hard for clubs whom don’t have the financial capacity than that of the top European sides. Such circumstances make it incredibly challenging for these less economically superior clubs to stay, not only within the regulations, but also afloat. 

The EFL are yet to loosen or ease the current restrictions too much, despite growing concerns from clubs across all 3 divisions (the Championship, League 1 & League 2) that they risk going into administration/liquidation should the measures continue.  The EFL has, however, allowed clubs to defer up to 25% of players’ wages.  This, albeit a helpful tool in the short-term, has seemingly come too late. 

We are already starting to see clubs in the lower echelons of football becoming financially restrained as a result of the inertia from the EFL to change regulatory measures.  The chairman of Gillingham, Paul Scally, has already claimed that:

“The deferrals will not be enough for League 1 and League two chairmen because we have been left with huge financial losses already.”

As was to be proved, with Colchester United owner, Robbie Cowling, already stating that he has had to reluctantly let go of 4 key first-team players, as well as release a number of promising youth prospects, simply due to the difficulty of handling the coronavirus meltdown.  In his interview with Talksport he said:

“It’s an extremely difficult time.  We’ve got nothing coming in – there’s no income coming into the club at all.”

It is no wonder then, that clubs lower down the footballing pyramid are finding it tough to comply with the EFL P&S Rules.  With income plummeting, clubs not only in England, but across the world, are finding it increasingly tougher to keep their business alive. 

Should the FA choose to come together with both the EFL and the Premier League, by working in conjunction to mitigate the current rules, they may wish to follow the actions of UEFA by easing the restrictions, so as to sufficiently help clubs in the interim.  Given that it is impossible to tell when this pandemic will end, it is crucial that governing bodies implement strategies that, alongside the safety of players, ensures the long-term sustainability of clubs. These aspects, I’m sure most would agree, should be central to any of the decisions made by governing bodies.

The dichotomy between both the UEFA and EFL measures is palpable.  On one hand, you have a governing body that is willing to ease the restrictions, but wants to ensure that the new rulings aren’t taken advantage.  Whilst the other is yet to make any substantial changes to the regulations, and finds its members constantly looking over its shoulder, continuously looking for new ways to save the business.  A completely different set of circumstances at two very different ends of the footballing pyramid.  The prospect that lower league clubs can go bust, whilst others in a higher division can simultaneously consider the idea of exploiting the rules, only accentuates the contrast in financial well-being of football clubs.

Whether football needs a re-structure to help bridge the gap that has been created by the introduction of significant broadcasting funds and commercial developments is a separate matter, but it’s a worrying trend that, at the very least, will need consideration in the future.  Should more and more clubs in the lower tiers find themselves insolvent, as a result of this pandemic, then a re-structure would surely be inevitable. 

The main recommendations that the author has going forward, in order to ameliorate any potential problems that would occur, should anything like this present itself again, would be to either:

  • Create ‘Catastrophe Guidelines/Handbook’

These guidelines would come into force when an unavoidable/unforeseeable catastrophe occurs that affects the financial well-being of stakeholders.  These guidelines, which would not be of use in any circumstance until the introduction of a catastrophe, would set out specific measures that help the overall sustainability of clubs, by way of mitigating current financial obligations and helping all members of the governing body to remain solvent.  This could be achieved by taking advice from legal experts, FA hierarchy and club chairmen, to produce a set of guidelines that can be both realistic and legally accurate; or

  • Force Majeure:

Adopt the ‘force majeure’ legal principle (or something of that nature) in all the guidelines produced by national governing bodies.  The principle could be added across various regulatory measures like of the P&S Rules etc.; or

  • Require clubs to pay a ‘Catastrophe Fund’:

A potential fund could be created in order to negate short-term financial troubles of clubs and help all members deal with the catastrophe.  As is already done with the Professional Footballers’ Pension Scheme, whereby players gain a retirement sum (through the funding of a transfer levy), a ‘Catastrophe Fund’ would require all members (clubs) to put in a certain percentage into that fund, acting as almost a safety net, should a catastrophe occur in the future.  Whether that percentage is through income generated or transfer expenditure, is to the discretion of governing bodies to decide.  Due to the unlikeliness of a catastrophe occurring, it perhaps enables the percentage to be considerably low, making it a very viable option for clubs whom don’t have the financial backing that others may possess. 

For Example:  0.1% of Club Turnover across all 92 league clubs within the English Football League; or

For Example:  0.1% of £100m spent across the calendar season by a club = £100,000 donated to the fund come the end of the season. 

The percentage could even fluctuate depending on the valuation of the club (i.e. Man Utd – 1%, Salford – 0.1%, for example).  This may look, on the face of it, relatively unfair to those sitting at the top of the football tree.  However, requiring clubs that are financially struggling to donate the same amount as the upper echelons would be, some could argue, just as equally unreasonable. 

These suggestions are, of course, only suggestions, and are no doubt bursting with legal obstacles as well as plenty of pros/cons in which to dissect.  However, these are just a handful of many ideas that governing bodies may wish to take further once this virus comes to a very welcome conclusion.  Football clubs simply cannot afford to be so financially restrained in the future, and correct procedure for a potential next time ought to be found in order to ensure the sustainability of clubs across the world. 

Fundamentally, and perhaps understandably, there has been a lack of foresight from governing bodies regarding the damage that a catastrophic event can cause.  The lack of proactivity has been met with uncertainty in almost every possible aspect since its emergence into football.  As with any walk of life, you must learn from your mistakes in order to develop.  Rectifying the current problems caused, should anything like this happen again, and learning from the effects of the catastrophe, must now be the priority for, not only football’s governing bodies, but all sports governing bodies across the industry.

The coronavirus disease is sport’s biggest economical setback since World War Two, and needs to be handled with the utmost care and consideration.  Cursory and slapdash decision-making processes by governing bodies will only cause greater harm to an industry that has already felt heavy blows since its arrival. Governing bodies, in football specifically, must address the sums of money that are being lost, otherwise they risk losing entire clubs at the lower end of the footballing spectrum.  Clubs don’t know whether they will even exist come the new season; players are unsure as to when they will be able to play again and fans aren’t even sure whether they’ll see another ball being kicked this season.  But sadly one thing is for sure – the effects of this pandemic will be seen for years to come, and has opened up ‘Pandora’s Box’ when it comes to the possible litigation proceedings that are inevitably forthcoming. 

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