English football is teetering on the brink of an abyss. By Christmas, some of the game's oldest and best-run clubs could be out of business, driven to extinction by the devastating impact of the coronavirus pandemic. None have yet succumbed to the crisis but don't be fooled into thinking it is a case of "so far, so good."
Alarm bells are beginning to sound up and down the footballing pyramid, all the way from tiny Accrington Stanley to the powerhouse of Manchester United.
"November and December is when it will all start to hit home," Mark Catlin, chief executive of English Football League (EFL) League One Portsmouth, told ESPN. "Clubs won't have cash coming in at that point. They will start to look at their debt mountain and have to make decisions about whether they can go again and continue. If you have no cash and are just accumulating debt every month, that's unsustainable for any business."
Portsmouth, a well-supported club with an average home attendance of 17,800 last season, have not reported a financial loss in seven years, but playing without paying supporters is costing them £700,000-a-month.
"On paper, the profit and loss is horrific," Catlin said. "It's running into millions."
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When Liverpool hosted Atletico Madrid in the Champions League at Anfield on March 11, nobody could have envisaged that more than six months later, the game would prove to be the last time any professional club in England would play in front of a full stadium of fans.
Oct. 1 was supposed to be the day when clubs at all levels, from the Premier League giants down to the minnows in EFL League Two, were able to breathe a collective sigh of relief by unlocking their doors for supporters to return, in managed numbers, and start the slow climb back to financial stability. But plans for stadiums to reopen at 30% capacity in the professional game were shelved by the UK government last week, and tougher social-distancing measures were introduced, in an effort to drive down an escalating COVID-19 infection rate amid fears of a second wave during autumn and winter.
The Premier League and EFL have both urged the government to reconsider, insisting it can be done safely, but also warning of disastrous consequences for clubs unable to generate crucial income from fans paying to watch games. But unless the government performs a U-turn, stadiums are likely to remain shut until March and some clubs, quite simply, will be out of business by then.
"We are a very well-run club, with a 113-year history of solvency," David Bottomley, CEO of League One Rochdale told ESPN. "We are solvent now, we don't have a bank overdraft, but even as well-run as we are, we won't be able to get past March without any form of money coming in.
"I spoke to a League Two club last week and they were saying that, following a ring round of clubs in that division, very few believed they would get past the end of November."
Dave Burgess, managing director of League One Accrington Stanley, puts it more bluntly. "If rescue money doesn't come in, football will be on its a---," Burgess told ESPN. "Clubs will closing all over the place."
To understand the financial nightmare facing clubs in the EFL, you need to rewind to 1992, when the Premier League was formed following a breakaway by England's top clubs.
There are 92 clubs in England's top four divisions: 20 in the Premier League, and 72 divided among three leagues in the EFL. The split could be described as the haves and the have-nots. Before 1992, all 92 clubs played in the Football League, from Division One to Division Four, with the money from the Football League's television deal -- worth £44m between 1988 and 1992 -- being distributed between all four divisions.
Fifty percent went to Division One; the other 50% was shared between the bottom three divisions. The big clubs wanted a larger slice of the pie, so they formed the Premier League, and their first TV deal was worth £304m over four years. The Football League was left to fend for itself, without the commercial pull of the top clubs, and the years since have created an ever-widening gulf.
The Premier League's broadcasting deal, including domestic and global rights, is worth £9.2 billion between 2019 and 2022. By contrast, the EFL's deal amounts to £595m between 2019 and 2024, a sum that's shared between 72 clubs rather than 20. Even before the pandemic, the numbers didn't stack up.
Some of the Premier League's riches trickle down to the EFL in the form of twice-yearly solidarity payments, passed along in August and January. In April, the Premier League sanctioned the advance of £125m of solidarity money to the EFL and National League (the league, a mixture of professional and semi-professional clubs, is below the EFL). Those funds are the reason why clubs have been able to function. In League One, for example, clubs receive a total of £1.6m from the EFL TV deal and Premier League solidarity payment. It drops to £1.2m in League Two.
After six months without fans, that money is running out.
"We have already been advanced the January solidarity payment so while we are OK at the moment, all we have done is kick the can down the road," Accrington MD Burgess said. "The prudent clubs will get through this next 6-12 months, but all those who have been gambling and gambled all their chips away, it is probably all coming home to roost now."
Talks are ongoing between the government, Premier League and EFL about more funds being released to help the struggling clubs in the lower leagues. A loan or grant of up to £200m is the most likely outcome, but views are split on whether the Premier League will care enough to act.
Sources told ESPN that there was a shareholders meeting of PL clubs on Tuesday, where the issue of financial help for the EFL was discussed. Discussions remain ongoing with the EFL, but the PL view is that the government moved the goalposts last week by blocking fans returning.
There is a collective will on the Premier League's part to help the EFL, but talks are ongoing with no resolution as yet.
"I have been running football clubs for 30 years," former Leeds United chairman Peter Ridsdale, now the representative of Preston North End owner Trevor Hemmings, told ESPN. "And I was around when the Premier League was formed, because the top clubs felt they weren't getting their rightful share of limited TV monies at the time. That has changed out of all proportion now, and nobody could ever have envisaged that.
"When I was at Leeds, I never got the impression that the Premier League cared too much about the football pyramid," Ridsdale continued. "But what we have to remember, and remind the clubs in the Premier League, is that there have been 49 clubs out of the 92 who have been in the Premier League, so there are many clubs in the Premier League who will end up in the EFL at some point. What those clubs must do is remind themselves, no matter how big they are, is that they can't take for granted they will be there forever.
"For the vibrancy of English football, we need a strong pyramid and the Premier League can make that happen with more equitable distribution of the TV money."
For Portsmouth CEO Catlin, however, the onus should be on the government to come to football's rescue.
"I probably swim against the tide here, but I am less upset by the response of the Premier League," Catlin said. "They are businesses in their own right and, for the first time in years, Premier League owners are having to put in huge sums to help their clubs out.
"To me, it seems very difficult to go to those clubs as an outside entity and demand some of that money, especially when some owners are having to dip into their own pockets to the tune of many millions a month. They are losing significant sums in gate receipts, so they are also struggling.
"It's not the Premier League that are stopping fans entering stadiums, it's a government decision, just as it was with the theatres and the arts and they got a £1.4 billion bailout [the UK government sanctioned a £1.57 billion rescue package for the Arts in July]. At this moment in time, I don't know what the government is doing to bail out an industry that generates many billions of pounds for the UK exchequer, not to mention the work they do for their communities.
"The onus is more on the government than the Premier League to bail out football clubs."
The Premier League is aware of the financial impact up and down the pyramid, sources tell ESPN, but they are also mindful of their collective losses of £700m (and counting) last season without fans. While the EFL estimate its losses to be around £200m this season, the Premier League is divided as to unilaterally covering that, especially when money is going to Championship clubs in the form of transfer fees, with the likes of Nathan Ake (Bournemouth) joining Manchester City.
Rochdale AFC is a club that prides itself on balancing the books. Local rivals Bury were kicked out of the EFL last season because of an ongoing failure to pay the wages of players and staff, as well as taxes, whereas Rochdale have been vigilant in keeping wages realistic and selling homegrown players to keep the club afloat.
Last season, 17-year-old defender Luke Matheson's contract was sold to Premier League Wolves for £1m (he has been loaned back to Rochdale), while Rochdale's insistence on sell-on fees for players that leave also saw them bank £500,000 following Craig Dawson's £5.5m move from West Brom to Watford in July 2019, nine years after selling his contract. But even Rochdale's prudence and sensible planning has been unable to shelter them from the pandemic and there is anger within the Crown Oil Arena at the government's decision to halt the return of fans.
"We want to know why we have gone through all this work over the past eight weeks, jumping through hoops, bureaucracy, red tape, to get to a position where we could have crowds, so what has changed?" CEO Bottomley said. "We have spent a fortune to make the stadium COVID-compliant, to accommodate 2,000 people in a stadium that holds 10,000. What is unsafe about 2,000 socially distant fans inside a 10,000 capacity stadium?"
Making the stadium safe for the return of fans has not been cheap, especially for a club of Rochdale's limited means.
"The bill for physical costs is around £25,000-£30,000 -- hand sanitisers, screens, signs," Bottomley said. "The real cost has been the amount of staff we've had to un-furlough to help with the bureaucracy and red tape. We have brought them back without income coming in. And there are bills that the supporters don't see -- a new fire alarm system [£40,000], improving our changing rooms to meet EFL regulations [£25,000] and a new pitch [£500,000]. It's those things we need money for, not just wages."
That said, Bottomley says he believes that Rochdale's cautious financial approach in the past has given the club a chance to emerge safely on the other side.
"We have cash in the bank because we have been a well-run club for a long time," he said. "That's why we can survive a bit longer than most. Our financial results up to May 2020 show we made a profit as a club. We sold Matheson to Wolves, which has been a very important transfer in the history of our club. We got a payment in January, but also a payment in July.
"Craig Dawson left West Brom for Watford a year ago and, although we weren't happy at the time, in order to keep our sell-on clause, we had to agree a complicated formula so that we wouldn't get our cut until September 2020 and September 2021. Looking back, it has been a lifesaver because we had £500,000 come in as part of our sell-on fee. If we'd had it last year, we would have spent it."
Money in the bank is one thing, but when that money belongs to supporters, it raises a difficult issue. Rochdale sold season tickets and corporate facilities in the expectation fans would be allowed back in by October, but now that it has been delayed, people are unsurprisingly asking for refunds. "Our executive boxes are a big a part of our revenue, but we now have people who've paid £10,000 for a box for the season wanting their money back," Bottomley said. "That's the impact.
"We also persuaded well over a thousand people to part with season-ticket money, so we have over £400,000 worth of season-ticket money that we may have to refund. We are inundated with calls from fans who want their money back, but we are just saying, 'Please, give us some breathing space' because we don't know where we are right now."
Clubs in the EFL are not required to test their players for COVID-19. Premier League clubs test their players and staff twice a week -- there were 10 positives from 1,595 tests between Sept 21-27 in the Premier League -- but in the EFL, there has been no stipulation to test since the week before the opening games of the season.
This presents another dilemma for the EFL. Testing is expensive (£125 per player) and positive tests would risk games being postponed. League Two Grimsby Town's game against Cheltenham was called off last Saturday after midfielder Jock Curran tested positive, and their next two fixtures have also been postponed as a result. No testing means that COVID-19 can go undetected, posing obvious health issues for all concerned. But no testing also means that games go ahead and disruption is kept to a minimum.
This issue came to the fore when Leyton Orient's Carabao Cup tie against Tottenham last week was postponed because the League Two team posted an unspecified number of positive tests, which had been paid for by Spurs due to the Premier League club wanting to avoid their own players being exposed to the risk of infection.
Orient had to forfeit the tie and miss out on a £75,000 broadcast fee for the game -- a devastating financial blow. Yet on the same night, West Ham faced Hull City, despite the League One team declining the Hammers' offer to pay for their entire squad and staff to be tested. "We didn't want to create anything," Hull manager Grant McCann said when asked why they rejected West Ham's offer. "We are comfortable that we were following the guidelines in and around the club.
"Just because somebody offers you free tests doesn't mean you do it."
West Ham manager David Moyes and players Issa Diop and Jon Cullen missed the game after receiving positive test results while inside the stadium, less than two hours before kickoff.
Despite the obvious health risk as a result of not testing players, Accrington MD Burgess admits that many EFL clubs simply cannot afford to test their players and staff. "The players had to be tested when they returned to training in July, halfway through preseason and then before the first game," he said. "That was the EFL criteria. We have to look at it both ways. You have to make sure you keep people as safe as possible, but we can't afford to spend £4,000 a week on testing. All of our non-playing staff, myself included, had to get a test [through the NHS, public health system] because we couldn't afford to do them privately at £125 a go."
In the cash-strapped world of the EFL, every pound saved is a pound earned.
"The courier service wanted £300 to take the tests to the lab to be processed on the same day, but because of the costs, I delivered them myself," Burgess said. "It was over 100 miles, but I just jumped in the car and drove down."
So what happens now? Football's authorities are lobbying the government to reconsider their decision not to allow some portion of fans inside stadiums. Meanwhile, the Premier League is coming under increasing pressure to financially bail the lower leagues.
Some clubs are closer to the brink than others. League Two Southend United (formed in 1906) have until Oct. 28 to pay an outstanding tax bill of £493,991 or face closure. In September, Macclesfield Town -- formed in 1874 and relegated from the EFL last season -- were shut down due to debts in excess of £500,000. On Tuesday, they were officially removed from the National League as well, the final bit of administrative business in their demise.
Perversely, the smaller clubs like Accrington and Rochdale are better placed to survive than others.
"We had probably the lowest budget in League One last season, so once we went into hibernation, our ongoing costs weren't too bad," Accrington's Burgess said. "By contrast, Sunderland's playing budget was £14m last season and ours was £1.6m. There isn't a good position to be in this, but we are in a better place than most because our risks and liabilities are far smaller than many other clubs.
"People have called us a tin-pot club over the years because we live hand to mouth," Burgess continued. "But that approach is our biggest strength at the moment. We have battened down the hatches and only spent what we needed to spend. Yet we are more or less rock-bottom now. Things can't get any worse than they are -- the only thing that could make it worse is if they stop football again."
Such a prospect is unthinkable for many, but so is the thought of empty stadiums throughout the winter.
"As an industry, we have tried to put our case in a logical and calm manner," Portsmouth CEO Catlin said. "But are we at a point where it needs somebody to be standing up, kicking tables over and throwing things at windows? Probably yes, because the correct way doesn't seem to have got us anywhere.
"We are at a real pinch-point. I'm not trying to panic or create hysteria here, but I do think there will be a huge domino effect when one or two clubs go down. Others won't be able to fulfill their fixtures, and pretty soon those who are left will wonder what is the point of carrying on.
"But this isn't a 'them and us' situation, this is just us, the industry of football, and we all have a responsibility to each other because when you start to lose the base of a pyramid, the top end starts to crumble and that's what will happen if we not careful."