Football clubs are coming under increasing pressure to cut top players’ multimillion pound wages as support staff at clubs are put on the government’s 80% furlough scheme, and EFL clubs are already struggling to pay March salaries
At a club level, individual clubs and players are supporting the fight against covid-19, with medical staff going back to work for the NHS and hotels being opened up for use, but the Professional Footballers Association (PFA), which represents the players, has been criticised for failing to call for wage cuts for players.
Following the failure of the PFA to take any unified action on how to deal with players' wages, the captains of the 20 Premier League clubs, led by Liverpool's captail Jordan Henderson convened 4 April to discuss options, including deferring salary payments until June 2020, and plans to set up a multimillion pound charitable fund, spearheaded by Manchester United's Harry Maguire, where players have already donated towards the covid-19 crisis.
However, even this is a lukewarm reaction compared with top clubs in Europe where drastic player pay cuts have been negotiated, up to 70% in the case of Barcelona and 40% at Juventus [see below].
Beyond the hugely wealthy football clubs in the Premier League where average pay is around £3m a year and clubs are rich in their own right with billionaire owners and global TV revenue, club finances at lower leagues including the Championship, are stretched with many clubs reporting annual deficits as it is. Some clubs were already struggling to pay salaries for the March month end.
The nationwide lockdown means there has been no live football since 13 March so club income has been decimated with no ticket sales or TV revenue, and uncertainty over whether the season will even be completed.
This could mean that vital parachute payments may not come through for clubs near the bottom of their leagues or games are played behind closed doors to complete the season, again with no prospect of matchday revenue.
In an update released on Friday [3 Mar], the PFA said: ‘As the month progressed, we saw first-hand correspondence from multiple EFL [English Football League] clubs telling players that they needed to immediately sign paperwork in order to receive March’s salary.
‘In several instances, this was sent the day before the squads were due to be paid. Players were being asked to agree to a range of terms including furloughs, deferrals and, in some cases, pay cuts. For some, this constituted a legal change to their contract that would have standing beyond the resumption of football.’
Already last December Championship clubs were financially stretched [Record losses in Championship as wages score £795m 13 Dec 2019]
Andy Turner, partner at Mercer & Hole, and a football finance specialist, told Accountancy Daily: ‘Many football clubs in the lower divisions have operated with a very tight cashflow often on a “hand to mouth” basis.
'Match day revenue is very important to these clubs who don’t necessarily have owners with deep pockets to keep them going or the television money that helps fund some of the bigger clubs.
‘We will definitely see some of the smaller clubs struggle for survival.
‘At the other end of the scale, in the Premier League, many clubs have significant player payrolls that are dependent upon the cash from the television companies. It is currently uncertain that if the season ends without completion how this will affect the contractual position with the television companies.
'If television revenue streams are significantly lower this could affect the ability of some of the bigger clubs to continue to pay their players at their contracted rates. This could also result in an interesting challenge for football.’
Now the PFA has to make a decision on the English club position but it is also up to individual clubs to take action. There are also serious contract issues as technically player contracts are all renewed for salary purposes at the end of each season, in this case generally in June. This contract issue also affects staff put on 80% furlough agreements - as it is a technical contract change and needs to be legally binding.
The global nature of the pandemic means that other countries have taken drastic action, for example in Italy and Spain where clubs have renegotiated contracts to cut wages.
In Spain, Barcelona players, including captain Lionel Messi, have agreed to a 70% pay cut while support staff at the club are going to be put on ERTE - temporary redundancy - during the Spanish state of emergency.
ERTE (expediente de regulación temporal de empleo) allows companies to issue temporary redundancy to its workforce as a result of force majeure, which can be activated during the covid-19 crisis in Spain.
‘The FC Barcelona board of directors, the members of all the professional sports teams and most of the basketball team have reached an agreement for a reduction in their salaries during the period of the state of alarm due to Covid-19,’ the Club said.
‘In the case of the football first team, the reduction will be over 70% of that originally agreed with the club. This additional contribution by the team, together with the contribution that the club itself shall make, will guarantee 100% of the salaries of all non-sporting staff at the club, which will be submitted for ERTE (temporary redundancy) this week.’
In Italy, for example, where top flight football was suspended on 8 March, Juventus first team players and manager Maurizio Sarri have agreed a wage freeze for four months. This will save the club an immediate €90m (£79m) in wage costs.
In a statement Juventus FC said: ‘The understanding provides for the reduction of the compensation for an amount equal to the monthly payments of March, April, May and June 2020. In the coming weeks, personal agreements with the players and the coach will be finalised, as required by the current regulations.
‘The economic and financial effects of the understanding reached are positive for about €90m for the 2019/2020 financial year.’
‘Should the current season's matches be rescheduled, the Club will negotiate in good faith with the players and the coach conditional increases of compensations according to the actual resumption and finalisation of official competitions.’
Giving back - hotels
Before the crisis escalated in mid-March, a number of football hotel owners opened up their doors to the NHS to use the properties on their grounds for free accommodation for medical staff.
These included Chelsea Football Club’s Millennium Hotel at Stamford Bridge, which was turned over to the NHS for its use. The costs are being funded by club owner Roman Abramovich and chairman Bruce Buck, initially for two months as of mid March.
At the same time, former Manchester United players, two of the famous Class of 92 players behind Salford City Football Club, Ryan Giggs and Gary Neville, also opened up their hotels to the NHS. They jointly own two properties in Manchester - Hotel Football near the Old Trafford football ground and The Stock Exchange hotel in the city centre through their company GG Hospitality.
In a statement released on 18 March, Chelsea FC said: ‘Many of the medical staff will be working long shifts and may not be able to travel home or would otherwise have to make long commutes. Local accommodation helps maintain the health and well-being of these crucial personnel at this critical time.
‘This will be for a two-month period, and then reconsidered in light of circumstances at the time. NHS staff will be those working in hospitals in the North-West London region, but that may extend to hospitals in other districts.’
Liverpool Football Club has been working closely with North Liverpool Foodbank to help sort and pack emergency food parcels for local vulnerable families. Volunteers from the club, community programme, Red Neighbours and LFC Foundation are all involved.
‘As part of the club’s “Unity is Strength” project, Liverpool Football Club volunteers will attend the central food hub in Anfield, which has been turned into the city’s main food storage venue, to provide essential support to meet the current need during these unprecedented times,’ the Club said.
Forbes Duff, manager of Red Neighbours, said: ‘We have a long-standing relationship with the North Liverpool Foodbank and it was so important for us to be able to continue our support, especially now during these difficult times where we know the demand will be high due to school closures and social isolation.
‘I am proud that so many staff have come forward to volunteer their time to support this great cause and I look forward to working with them over the coming weeks.’
The club is also supporting foodbanks across Liverpool and Merseyside through the LFC Emergency Foodbank Fundraising Appeal. One hundred per cent of the funds collected will go towards supporting the Trussell Trust’s foodbank networks in Liverpool and Merseyside.
Liverpool FC players and manager Jurgen Klopp have been closely involved at community level, particularly through the Club's support for the central food hub by the Anfield ground, supporting efforts to fight covid-19. Over the weekend, however, the club came in for criticism for furloughing some of its support staff using the government's state backed 80% rules [updated 5 March].
Chelsea FC is running an awareness campaign supporting domestic abuse charity Refuge’s life-saving work and will help raise awareness and funds. Players and support staff are also volunteering at London and Surrey foodbanks.
Chelsea FC Women’s manager Emma Hayes, along with players from the women’s and men’s team, have taken part in a digital campaign for Refuge to ‘ensure those in need of support know they are not alone and to raise funds for Refuge, with Chelsea promising to match all donations received in the next six-week period’.
Captain Cesar Azpilicueta said: ‘Domestic violence is such a serious issue in society and we must double our efforts to look after those in danger during this ongoing pandemic.’
Report by Sara White
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