The Financial Impact of COVID-19 on English Football Clubs

A year on from the start of the pandemic, fans have barely stepped foot through the turnstiles of their local football club. On the 13th March 2020, the FA, Premier League and English Football League (EFL) suspended all of their fixtures until 3rd April 2020 at the earliest. The financial consequences of 12 months behind-closed-doors are to be potentially catastrophic for some clubs in England.  

The announcement of all football being suspended was an inevitable side effect` of a grossly expanding epidemic in Britain, but the extent to which professional football in England would suffer could not have been predicted. English football had been consistently growing and developing into a more sustainable entity via its continued attraction of investors, sponsors, advertisers and media giants, but the arrival of COVID-19 in the U.K. put a halt on such progression.  

Deloitte’s financial review of the 2018/19 season, published in June 2020, included reports from the Football League, all the way to the top tier of the Premier League. This report projects that the Premier League’s revenue will have fallen by over £4 billion since the pandemic disrupted normal proceedings – a 17% drop on the 2018/19 season that had been the most successful financial year for the league on record.  

With the sudden and unavoidable loss of matchday earnings, clubs have become reliant on valuable sponsorships, advertisements and television deals.  With the Premier League broadcasting all matches for fans until they are able to attend stadiums, and the EFL offering a comprehensive pay-per-view service, television has become a key player in the wealth of modern-day English football clubs.  

However, it is only the elite that are able to capitalise and rely on diverse revenue streams as they attract larger, more desirable contracts with sponsors and advertisers to boost revenue and profits. With club outgoings remaining relatively balanced when compared to other seasons, as staff and players still receive their wages, the lack of matchday revenue is having a devastating impact on many clubs, particularly those towards the lower end of the English Football League.  

BDO, a business advisory firm that conducts an annual survey of football clubs and their finances, recently published their 2020 review, which is largely influenced by the pandemic and its impacts on club finance. This report discovered that 50% of clubs studied across all professional English leagues felt that their financial positions were in need of attention or of serious concern.  With money already much tighter than before, Deloitte’s 2020 finance review also revealed that approximately £330 million were to be rebated to broadcasters due to the disruption and unfulfillment of schedulings during the 2019/20 season. Such extra costs, on top of lost revenue and consistently high outgoings for club wages and maintenance have created the perfect storm of financial stress for English football clubs. 

League Two club Walsall are just one of many Football League teams that rely more on matchday earnings to balance the books. After League Two opted to end their 2019/20 season prematurely in June 2020 to limit any further financial strain from running matchdays without fans, the EFL hoped that the new season would bring fans back to stadiums in some capacity. However, as the 2020/21 season has ultimately been even tougher on matchday attendances, clubs like Walsall at the lower end of professional English football have had to acclimatise as a business in the first instance. Walsall F.C. Community Director, Adam Davy said, “The pandemic has hit clubs in the English Football League particularly hard. While there is some income from TV and international sponsors still heading to the top clubs, this is very limited for clubs like Walsall. 

"We are very reliant on fans coming through turnstiles to generate income on a match day, and the stadium has been closed to fans since March 2020. The club still has running costs, including player and staff wages, so this has been really difficult. 

"Another huge part of Walsall FC’s business model is also the commercial side. Being a venue just off the M6, the club has been a popular venue for large conferences and events in recent years, and that income obviously supports the football too. Again, none of these events have been possible during COVID, so that is another hit to the club." 

A bailout package was agreed between the EFL and Premier League at the end of 2020 in order to offer additional financial support from the elite level to those below them facing immediate financial distress due to the pandemic. A statement from the EFL said, “A fund of £50m in the form of a grant and monitored grant payments has been agreed for League One and Two Clubs while the Premier League will provide a further financial commitment to assist the EFL in securing a £200m loan facility that Championship Clubs will be able to utilise interest free.”  

The total package of £250 million is to be distributed between the EFL, with the Championship being allocated the largest sum in the form of a loan agreement, in hopes that the clubs will be able to recompensate any borrowings when normal proceedings begin.   

The £50 million for both League One and Two is said to include a lump sum payment of support, whilst further funds of around £15 million are to be dished out according to how much each respective team has lost from matchday ticketing revenue. Given the importance of turnstile income for lower league teams in England, this package of support, almost acting as a parachute payment, is a key deal for the EFL to prevent any immediate club collapses. 

At the other end of the spectrum, Premier League clubs have dodged some of the worst of the pandemic’s financial consequences by managing to fulfil the 2019/20 season, albeit behind-closed-doors. Clubs were therefore able to adhere to advertising, sponsorship and broadcasting deals, which remain over a quarter of the Premier League’s total revenue according to Deloitte’s COVID-19 Football & Digital Report earlier this year.  

Just scraping Premier League survival at the end of last season, Aston Villa posted their 2019/20 end of year accounts for public record in April 2021. The Midlands side, whose owners remain amongst the richest in the country, stated that ‘the impact of the COVID pandemic had a major effect on the financial results with significant losses of matchday income as matches went behind closed doors and a rebate being payable to broadcasters following the disruption of the season.’ 

They added, ‘the unexpected cost of the pandemic contributed to a total loss of £99.2m compared to £68.9m in 2018-19. Thanks to the unwavering support of our Owners, the operating loss and all capital investment has been funded by shareholder equity. Aston Villa remains debt free.’ The elite in the English leagues, and their wealthy owners, remain relatively sheltered from the realities facing many clubs below them in the footballing hierarchy. The bailout package therefore comes as a reasonable expectation from the Premier League, who sit at the top of the pyramid with a duty of care for the integrity of the entire English football ecosystem. 

Deloitte’s most recent instalment of their ‘Football Money League’, published in January 2021, offered suggestions of how clubs can diversify themselves as businesses to optimise their revenue during the pandemic. With new media and technology dominating the landscape of modern entertainment, the world of football must pay attention to ways in which they can utilise their role in the entertainment business with digital innovation. The report states, ‘COVID-19 has emphasised that the clubs who can remain agile, transform and innovate have a unique opportunity to stabilise and grow, whilst those that accept the status quo risk standing still, or even falling behind the pack in these uncertain times.’ 

With this in mind, beyond financial support from governing bodies, innovative business is needed from all English football clubs in order to solidify revenue in the hardest of economic times. Empty stadia will continue to pose a real risk to clubs, particularly those in the EFL. The support of the footballing elite, diversifying revenue through media platforms and consistent brand collaborations for sponsorships and advertisements must all play a part in stabilising club finances. The full extent of financial struggle for clubs is yet to be realised, but with the hope of fans returning in some capacity in 2021, there is redemption on the horizon for clubs across England to make a significant comeback post-COVID.