In times of crisis, you want the powers-that-be to get the easy, obvious stuff out of the way quickly. If water is gushing out of your washing machine, find the standpipe and cut the supply. If sparks are flying out of your electric oven, cut the power supply. Then you worry about how the damage was done and how you’re going to fix it. In that spirit, UEFA’s decision to postpone Euro 2020 a full year was just that: an immediate decision that no reasonable person was going to oppose given the current coronavirus outbreak.
That was the easy part, and it bought them some time. Now comes the real challenge: figuring out a calendar that works (my colleague Mark Ogden wrote about this here) and assessing and reacting to the economic impact.
That is the central sticking point. UEFA say postponing the Euros will cost around 300 million Euros ($327m), whereas cancelling it altogether would have cost close to 400m Euros ($436m). But here’s some simple math. If the tournament is held next summer, it should still generate some 2.1 billion Euros ($2.5b). Subtract 300m from 2.1 billion and you’ve still made 1.8 billion. Cancel it altogether and you’re subrtacting 400m from zero, which is what you make when you don’t stage the tournament at all.
Why does the money matter? Because UEFA’s money isn’t really their money. The vast majority of what they make flows straight back out, primarily to clubs, in the form of prize money for the Europa League and Champions League, and federations, in the form of direct support and fees when they play in UEFA competitions.
UEFA’s financial accounts are fairly clear. In 2017-18, more than 85 percent of their revenue went to teams participating in UEFA competitions, contributions to associations and solidarity payments. Event organisation, referees and match officers and technology/broadcast costs came to 9.4 percent. UEFA employee salary and benefits accounted for less than three percent.
Put differently, there’s now a 300m Euro “hole” in UEFA’s finances, and it may grow even bigger if broadcasters and commercial partners try to claw back some of the money the spent on the Europa League and Champions League. After all, they signed a contract guaranteeing a certain number of games in certain specific slots and now they’ll get less than what was promised if, as appears certain, we will get a reduced version of the competition in order to wrap everything up by the end of July.
So the 300m shortfall could grow even bigger but, as stated above, in real terms, it’s not UEFA’s money. The vast majority of it is money that goes to member football associations and clubs. The question is how to divide up those costs: do you do it proportionally, or do you do it based on need?
Julien Laurens reacts to Hans-Joachim Watzke’s comments about financial aid during the Bundesliga suspension.
In the 2017-18 accounts, Liechtenstein received 1.14m Euros ($1.24m) in yearly solidarity payments for its national team. Moldova received 1.3m Euros ($1.41m). Moldova’s population is about 70 times higher than Liechtenstein’s, and its per capita GDP of $3,400 is nearly 1/30 that of Liechtenstein’s. If cuts need to be made, I know who I think is best equipped to handle the deeper cuts.
Of course, it will get trickier with the Champions League and Europa League. Why? Because bigger clubs from wealthier TV markets may argue that they generate most of the cash. It’s true, too: Broadcasters from Luxembourg to Lithuania shell out cash for Champions League rights based on delivering their viewers games involving the likes of Real Madrid and Liverpool, not Krasnodar and Dinamo Zagreb. That’s why you already have things like the market pool and historical merit to reward the big brands from the big markets, and that’s where things will get distinctly hairy.
Many clubs don’t particularly like to share in times of plenty. They enjoy it even less when they themselves are hit in the pocketbook in other ways: from lost gate receipts to potentially domestic broadcast holders and sponsors trying to claw back money to the simple fact that if there’s in a global recession as a result of the pandemic (and in case you hadn’t noticed, the Dow is down nearly 30 percent, year on year), everybody is poorer and less likely to spend money.
“We know how clubs are managed: they’re always right at the line or even above the line,” says FIFPro General Secretary Jonas Baer-Hoffmann. “There simply aren’t a lot of reserves that clubs can bank on. If we don’t respond very quickly to stabilise the cashflow of clubs, we’ll have a massive problem of liquidity. We need to come up with a system where football helps itself.”
Julien Laurens explains why UEFA has set a hard deadline of June 30th for leagues to conclude their seasons.
The problem is that football is by nature a competitive dog-eat-dog world. Last week Hans-Joachim Watzke, the Borussia Dortmund chief executive, was very blunt: “At the end of the day, the clubs who have the effort to put a bit of money aside these past years can’t reward those who have not… We’re running businesses in a market and we’re in competition.”
He may sound like the Grinch, while those who remember back just over a decade will recognise that his own club itself was on the brink of bankruptcy, helped out by rivals like Bayern Munich. But it doesn’t mean he has a point. Any bail-out, whether it’s advance payment of TV rights, tax credits or low-interest loans, has to come with strings attached, starting with a commitment to total financial transparency going forward. There has to be serious oversight and tough requirements for liquidity and reserves. You can’t have owners borrowing against club assets or making other risky decisions as happened at Bury and at several other clubs. The best way to guarantee oversight is to crowdsource it. As well as liquidity requirements and a regulatory body with power, have all the books online so that local fans and media can keep a watchful eye.
That’s an idea for the future. Right now, the good news is that the main actors are all saying the right things. FIFA agreed to move their inaugural 24-team Club World Cup from 2021 to a future date without a peep of protest. They also said they’re open to revising both transfer regulations and the international match calendar to help in this emergency situation. That’s essential. You want to be hopeful that this sort of diplomacy and solidarity can start at the top and trickle down.
We don’t know what lies ahead and for how long. We need diplomacy and selflessness and a willingness from FIFA, UEFA and domestic leagues to put their own self-interests to one side. To paraphrase the legendary Miami Sharks coach Tony D’Amato (so legendary in fact that he’s a fictional character) the institutions that govern the game will ether stand collectively and survive, or they will fall as individuals.
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